Amazon buys PillPack

In June 2018, Amazon announced the acquisition of PillPack, an online pharmacy. The value of the deal is estimated to be $1 billion. The move was the strongest indication yet of Amazon’s intent to push further into the healthcare industry. Amazon, which has a market value of over $840 billion, surpassed Walmart in order to buy PillPack.

This advent of online retailers’ intent to enter the healthcare industry is expected to affect the sales of traditional retailers such as Walgreens Boots Alliance, CVS Health and Rite Aid, as shoppers would increasingly buy branded drugs either via online or from convenience store. In 2016, consumers in the US spent $328.6 billion on retail prescription drugs. CVS Health sold $59.5 billion worth prescription drugs, while Walgreens witnessed sales of $57.8 billion in 2017.

The prescription medicine market is considered to be a humongous industry. Over 90% of prescription filled are for generics products and Pill Pak’s website states that they substitute for generics as does any other pharmacy. PillsPack delivers medications in pre-sorted dose packaging, and manages refills and renewals. The company has raised $123 million till date with investors such as Accel, Accomplice, Charles River Ventures, and Menlo Ventures. PillPack’s service targets people who take multiple daily prescriptions. Amazon is expected to rapidly cash on PillPack’s mail-order pharmacy licenses in every state in the US. Moreover, PillPack possess good relationships with major drug-benefit managers, such as Express Scripts and CVS. These alliances are expected to help Amazon further in the prescription drug market in the US.

– Victor Mukherjee,
Assistant Manager,
Infoholic Research