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Amazon.com
Inc.
Acquires PillPack Online Pharmacy Inc. Under Agreement That Could Turn E-commerce Giant into National Drug Force of order and threaten to undermine an industry that is the agreement will give Amazon pharmaceutical licenses and the ability to ship prescriptions to 49 US states, excluding the ## 147 ############################################################################################ 39, Hawaii, and will give him a night footprint in the pharmaceutical industry of over $ 400 billion. PillPack preserves medication and ships it to customers.
Amazon pays about $ 1 billion in cash for the five-year startup, according to people familiar with the subject. The online retailer beat
Walmart
Inc.,
who was also in talks for PillPack, one of the people said. Walmart did not make any immediate comments.
The agreement for PillPack sends a warning to pharmacy chains and retailers, including
CVS Health
Corp.
and Walmart, which have large parts of the prescription market. As the industry prepares for a potential entry into the Amazon market for months, the tangible move is now facing a proven disrupter.
The news could have an impact on other companies playing an important role in the drug supply chain beyond retail pharmacies, including intermediaries such as
Express scripts
Holding Co. which oversees prescription drug benefits for employers and health insurers, as well as drug wholesalers such as
AmerisourceBergen
Corp.
The acquisition adds to the recent steps taken by Amazon to go further in health care, to push supplies for hospitals to help form a nonprofit aimed at responding to the rise costs. It is also the latest acquisition by Amazon of a major new category following its takeover last year of Whole Foods Market, which has allowed it to acquire chain expertise. Supply and a physical network of shops
. CVS,
Walgreens Alliance Boots
Inc.
and
Rite
Aid Corp. tumbling Thursday. These three companies lost more than $ 12 billion in market value. Shares of Express Scripts and AmerisourceBergen also declined.
Walgreens executives held a conference call with financial badysts when Amazon announced the deal. CEO of Walgreens
Stefano Pessina
stated that the company was "not particularly worried" about the move.
The pharmacy chain is "not complacent," he said, but "the world of pharmacy is much more complex than just delivering some pills or packets." I firmly believe that the role the physical pharmacy will continue to be very, very important in the future. "
CVS also downplayed the threat of Amazon's agreement, saying that it already offers some Multi-dose packs that can be sent to a patient's home or local pharmacy for pickup. "We believe that we are well positioned in the market and ahead in this area," said a spokesman. "Keep in mind that we have not seen a large number of patients who are seeking their medications to deliver rather than coming to a retail pharmacy."
Boston-based PillPack, which began in 2013, raised $ 118 million in venture capital, including Atlas Venture, Accel Partners and CRV. His co-founder and CEO, TJ Parker, said in November that he had tens of thousands of clients and was on track to generate more than $ 100 million in annual revenue.
Amazon has long debated the pharmacy market. to people familiar with his thought. This is a natural next step for the giant of online sales, but the industry is complex.
Amazon generally builds most businesses from scratch, choosing acquisitions when it thinks that an agreement will allow it to more quickly access that market or acquire expertise, according to people familiar with his thought. In the case of PillPack, it is probably a combination of both.
The transaction is expected to close in the second half of the year, companies announced on Thursday
. Earlier this month, CVS reached an agreement with the US Postal Service to make orders at CVS stores and bring them to customers in one or two days. Customers will be billed $ 4.99 per delivery, which could include over-the-counter products such as aspirin or face wash.
The $ 66 billion CVS bid for insurer Aetna Inc. was partly aimed at better defending itself against Amazon as a potential rival.
Medication Managers, such as the CVS Caremark Unit, Express Scripts and
UnitedHealth
OptumRx of Group Inc., have mail-order pharmacies that ship prescriptions to patients. PillPack works with all major drug managers, but the purchase of Amazon threatens a new source of powerful competition.
The entry of the online retailer could also squeeze another set of companies that play an important role in the drug supply chain. Wholesalers like AmerisourceBergen,
McKesson
Corp.
and
Cardinal Health
Inc.
buy drugs from their manufacturers and ship the therapies to pharmacies. Their relatively small margins could be pushed even further by Amazon.
But Evercore ISI notes that Amazon tends to use secondary distributors, such as
FedEx
and UPS, rather than undercutting them in order to extract profits.
In anticipation of the online threat to their businesses, the drug supply chain has begun to consolidate. Express Scripts accepted to be purchased by Medicare
Cigna
Corp.
For $ 54 billion, while AmerisourceBergen discussed an agreement with Walgreens, the Wall Street Journal reported.
Amazon regained interest in health care. In 1999, she bought a 40% stake in Drugstore.com Inc. Drugstore.com was eventually bought out by Walgreens, who said in 2016 that she was closing the site to focus on her own digital efforts.
Amazon shook the health care market when he announced earlier this year that he was forming a non-profit company with
JPMorgan Chase
& Co. and
Berkshire Hathaway
Inc.
to reduce the health costs of the three companies. The company announced last week its new CEO.
– Yuliya Chernova and Jonathan D. Rockoff contributed to this article.
Write to Sharon Terlep at [email protected] and Laura Stevens at [email protected]
