Amazon moves to disrupt pharmacy sector with new acquisition

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Amazon said Thursday that it's buying PillPack, an online pharmacy startup that ships pre-packaged medications based on prescribed patient dosages.

"We wouldn't be surprised to see pharmacies in Whole Foods at some point", he told the news service.

Jeff Wilke, CEO of Amazon's World Wide Consumer unit, added: "PillPack's visionary team has a combination of deep pharmacy experience and a focus on technology".

But today's deal comes with few details and no promise that Amazon will be able to scale up PillPack's business, which earned about $100 million in 2017.

Importantly for Amazon, PillPack already has mail-order pharmacy licenses in all 50 US states, which could enable Amazon to expand quickly into the broader mail-order pharmacy business.

PillPack sorts prescription medications into packages based on when doses need to be taken.

The acquisition marks the second time that Amazon has purchased a company that counted Queensbridge Venture Partners as an early investor.

Walmart was looking to buy PillPack for under $1 billion, CNBC had reported in April.

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Of course, Amazon is in the midst of developing a joint healthcare venture in partnership with the CEOs of Berkshire Hathaway and JP Morgan Chase.

Walgreens" chief executive, Stefano Pessina, said he was "not particularly worried" about the PillPack deal in an earnings conference call with analysts on Thursday, describing it only as a "declaration of intent' by Amazon. CVS Health, Walgreens and Express Scripts Holding opened down on the news. PillPack is meaningfully improving its customers' lives, and we want to help [PillPack] continue making it easy for people to save time, simplify their lives, and feel healthier. Our subscribers rely on FiercePharma as their must-read source for the latest news, analysis and data on drugs and the companies that make them.

Pharmacy stocks in the U.S. market dropped on the deal announcement, most notably those of CVS (-8.1%), Rite Aid (-3.1%), and Walgreens Boots Alliance (-9.2%).

The deal could give Amazon another major foothold in New England, where it has made several major acquisitions and investments in recent years.

The pact follows months of speculation about Amazon's plans to get into the pharmacy or drug-distribution business.

Walgreens stock was down 9.46% in pre-market trading.

"When Amazon sneezes, everybody else catches a cold", said Joseph Feldman, an analyst with Telsey Advisory.

Amazon did not say how much it was paying for PillPack. PillPack already raised over $120 million in funding, according to Crunchbase.