Becoming more aggressive in its quest to push into the health care space, Amazon.com Inc. (AMZN, Financial) announced on Thursday it is acquiring online pharmacy PillPack.
The specific details of the transaction were not disclosed.
PillPack, which is based in Boston, packages, organizes and delivers pharmaceutical drugs to customers who order through its online platform. What makes this process unique is that it sends the consumer parcels with the specific number of medications they are supposed to take at specific times, thereby making it easier on the consumer as they save time by not having to sort the pills themselves. In addition, the company, which is licensed to ship prescriptions in all 50 states, handles refills and renewals.
“PillPack makes it simple for any customer to take the right medication at the right time, and feel healthier,” TJ Parker, co-founder and CEO of PillPack, said.
Having obtained pharmacy licenses in several states and established a partnership with Perrigo to sell private-label, over-the-counter drugs, it is clear why Amazon is interested in the startup. Rather than having to start from scratch, the company will gain an established platform through which it can sell prescription drugs to customers.
Jeff Wilke, Amazon CEO Worldwide Consumer, praised PillPack’s business, saying its “visionary team has a combination of deep pharmacy experience and a focus on technology.”
“We’re excited to see what we can do together on behalf of customers over time,” he added.
Amazon’s encroachment on the space spells trouble for traditional pharmacy retailers like CVS Health (CVS, Financial), Walgreens Boots Alliance (WBA, Financial) and Rite Aid (RAD, Financial), who have been successful in keeping pharmacy sales alive while front-of-store sales have slipped as shoppers have opted to buy household staples online or from other retailers.
Shares of all three drugstore chains cratered following the announcement. The stocks of drug distributors like Cardinal Health (CAH, Financial), AmerisourceBergen (ABC, Financial) and McKesson (MCK, Financial), which are the three largest companies in that industry, also took a hit.
The Seattle-based company said it hopes to close the deal in the second half of the year.
Amazon shares were up about 0.56% at $1,669.61 on Thursday morning. GuruFocus estimates the stock has gained 41% year to date.
Disclosure: No positions.
