Amazon has announced it is buying online retail pharmaceutical retailer PillPack for an undisclosed price.
PillPack has a staff of 1,000 and is not a major player in the US pharmacy industry, bringing in about $US100 million in revenue in 2017, according to the company.
The company, which started in 2013, distributes pills in easy-to-use packages designed for consumers with chronic conditions and multiple prescriptions. It sorts prescriptions by the dose and includes a label with a picture of each pill and directions on how it should be taken.
Anxiety over what Amazon might do in health care has unsettled the industry, with the company’s interest in drugs considered a factor in a wave of recently proposed mergers, including CVS’s acquisition of Aetna and a union between the health insurer Cigna and Express Scripts, the pharmacy benefit manager.
Amazon’s entry could make it easier for some of those deals to get approval from regulators, by adding a new competitor.
When Amazon announced on 28 June that it was buying PillPack, the news immediately shook the industry. Shares of Walgreens and Rite Aid tumbled more than 9 per cent, while CVS Health dropped 6.6 per cent.
Even as Americans have shifted their buying habits online, prescription drugs have remained a stubbornly bricks-and-mortar purchase. About 90 per cent of all prescriptions are filled at a pharmacy counter, according to Iqvia, a research firm.
In January, Amazon, Berkshire Hathaway and JPMorgan Chase announced plans to form an independent health care company for their employees in the United States, in what could become an incubator for new ideas. Last week, the companies said Dr. Atul Gawande, a Harvard surgeon and staff writer for The New Yorker, would become chief executive of the business.
Amazon has also pushed to expand its medical supplies business, seeking to become a major supplier for hospitals and outpatient clinics. It received wholesale pharmacy licences from several states this year that permit it to start selling medical equipment to businesses. Its products could be used to supply operating and emergency rooms, along with outpatient locations.
The company previously tried to enter the pharmaceutical world in 1999 by purchasing 40 per cent of Drugstore.com, however, it ran into logistical and regulatory challenges that ultimately derailed the effort.