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Amazon launched the entire pharmacy industry in great shape last week when it announced its intention to acquire PillPack, a small startup that sends prescriptions to people who take multiple medications.
Among the companies affected: the main rival Walmart, who lost about $ 3 billion in market capitalization after the announcement of the deal.
Walmart offered $ 700 million for PillPack, but dragged its feet on regulatory concerns, according to CNBC. Amazon stepped in and offered an advertised bid of just under $ 1 billion.
The drop in inventories that resulted from the fact that Walmart did not buy PillPack shows just how much the rivalry between Amazon and Walmart has intensified, especially around the elderly population.
An aging population
The American population is aging. By 2050, the number of people over 65 is expected to double from 2012.
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An aging population means we will see an increase in health problems and chronic diseases such as diseases cardiac, neurodegenerative diseases and cancer that can be expensive to manage. It also offers a business opportunity for companies best placed to meet the health needs of this growing population.
PillPack, which focuses on patients with a number of prescriptions to manage, serves this aging population squarely, and the bidding war on the suggests that it's a key area for Amazon and Walmart.
Walmart has historically had an interest in the Medicare population. For example, Humana and Walmart have a Medicare drug plan and an initiative that provides healthy food credits, and there were rumors that Walmart was considering buying Humana.
The aging of the population has been one of the few health topics addressed by Amazon executives. In February, Babak Parviz, vice president of Amazon, said at an event that the elderly were something "that we care deeply."
Flipping out
The fight against PillPack is only the latest example of the growing rivalry between the two retailers. As Amazon goes offline and Walmart moves more online, the two companies start arguing more often.
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Although Amazon eventually triumphed with PillPack, it faced defeat in India early in the year facing another target of acquisition. In May, Walmart eventually bought about 77% of the Indian e-commerce startup Flipkart for about $ 16 billion, beating Amazon, which had also made an offer for the company, according to Bloomberg.
The Flipkart deal gives Walmart an edge over Amazon in the booming Indian market, where Amazon is considered the number two in ecommerce behind Flipkart.
Flipkart and PillPack, taken together, show a trend of two retail giants surpassing each other.
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