Chemists beware: Amazon's attack on pharmacies has just begun


Watch out, CVS and Walgreens: Amazon on Thursday announced plans to acquire PillPack for an undisclosed sum. The company is aimed at people who take multiple prescriptions, offering services like pre-sorted dose packaging and home delivery.

The company, which has its primary pharmacy in Manchester, New Hampshire, ships to all states except Hawaii. Amazon says it expects the deal to close during the second half of this year, pending regulatory approval.

Founded out of Boston in 2013, PillPack invites customers to sign up online, and the company then dispatches "over-the-counter" and prescription medications in individual packs organized by date and time.

"Not only has Amazon finally made a solid move into pharmacy, it has done so via an innovative supplier which helps patients manage and organize their prescription drugs", Saunders said in a research note. PillPack streamlines delivery of prescription and over-the-counter medications by pre-sorting them into handy dose packets sent directly to customers' doors nationwide in monthly supplies. In January, Amazon, Berkshire Hathaway and JPMorgan Chase announced plans to create an independent company that's "free from profit-making incentive" and geared toward providing innovative healthcare solutions to their USA employees. Amazon didn't disclose the value of the deal. McKesson, Cardinal Health and AmerisourceBergen shares were all down after the news. Evercore ISI analysts wrote that it's now "undeniable" that Amazon is entering the pharmacy industry, according to CNBC's Meg Tirrell.

Shares of CVS and Walgreens declined on the news of Amazon's purchase.

"However, we have learned never to discount a potential Amazon entrance into any market", the analyst said.

But the prospect of major retailers like Amazon getting into the business has roiled the traditional pharmacy world even further.

"I think this move jump-starts efforts and clears some hurdles [for Amazon], and what it's really going to do is fast-track any moves they want to make to get licensed", Rea said.

The startup has raised north of $120 million in funding from big-name backers that include TechStars, Menlo Ventures, and Accel. The company raised more than $118 million from brand-name investors including Accel, Sherpa Capital and NY rapper Nas's Queensbridge Venture Partners.