Amazon Shakes up the Pharmacy Business

July 31st, 2018


Today’s post is by Gayl Southard, Administrative Consultant, SafeSourcing.

PillPack, Inc. is being bought by Amazon. This e-commerce giant will be able to ship prescriptions across the country, and even overnight them, except to Hawaii.  The purchase price is $1 billion in cash.  CVS Health Corp. and Walmart currently have a hefty investment in the pharmacy business.  “The acquisition means Amazon doesn’t have to build capabilities in-house that current players have spent years assembling.”1.

This health care market may prove difficult to penetrate for Amazon. This is a highly regulated and complex market depends on a complex web of contracts, interconnected data systems and other relationships with health plans, drug-benefit managers, and various health care providers which could alienate Amazon.  Walgreens CEO Stefan Pessina indicated he is not overly concerned with the acquisition as he believes the drug market is not just about delivering pills and packages.  He still believes that the physical pharmacy still plays an important role with consumers.  PillPack’s specializes in a month’s worth of pills for chronic-disease patients.  This is a small market; however, with the acquisition, Amazon will keep the brand name along with the pharmaceutical licensing.  This is the same strategy that Amazon used when they bought Whole Foods and Inc.

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1 Sharon Terkel and Laura Stevens, WSJ, 6/29/2018




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