Amazon agrees to buy PillPack, an online pharmacy



But the online retail giant's decision to buy online pharmacy PillPack rapidly accelerates the threat posed to entrenched retailers, suppliers and middlemen.

Founded in 2013, Boston-based PillPack is an online pharmacy that ships pre-packaged doses of medication straight to customers' doors. PillPack has also developed expertise in battling with payers and pharmacy benefit managers to have its services covered, and Amazon will bring new clout to those negotiations.

TJ Parker, PillPack's co-founder and chief executive, said: "Together with Amazon, we are eager to continue working with partners across the healthcare industry to help people throughout the USA who can benefit from a better pharmacy experience". The parties expect to close the transaction during the second half of 2018.

Amazon's ambitions to become an online pharmacy are finally coming to fruition.

PillPack sorts prescription medications into packages based on when doses need to be taken. The company had raised $118 million and TechCrunch pegged the acquisition price at almost $1 billion, which would make it one of Amazon's largest acquisitions to date.

Amazon's acquisition of PillPack is sure to rankle the business-development team at Walmart, which was reportedly looking at buying the pharmacy startup in early April.

Amazon is also working with JP Morgan Chase and Berkshire Hathaway on a new health care company that is seeking to lower costs and improve care. CVS Health, Walgreens and Express Scripts Holding opened down on the news. Evercore ISI analysts wrote that it's now "undeniable" that Amazon is entering the pharmacy industry, according to CNBC's Meg Tirrell. Walgreens shares dropped roughly 10 percent, while CVS shed almost 9 percent in premarket trading in NY.

CVS Health noted that PillPack isn't the only company in the space with drug delivery capabilities.

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

Amazon did not say how much it was paying for PillPack.

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

Some analysts played down the immediate threat Amazon poses.

"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.

On its own, PillPack had raised $118 million in funding from venture capital firms and has been valued at $360 million. The company raised more than $118 million from brand-name investors including Accel, Sherpa Capital and NY rapper Nas's Queensbridge Venture Partners.

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