Amazon has struck an acquisition deal that has the potential to cause huge ripples in the drugstore industry. The largest e-commerce firm in the world is all set to purchase online pharmacy PillPack.
None of the companies have disclosed any details of the deal. The companies also announced that they anticipated to close the deal by the second half of the year.
This deal is a strong reflection of the plans and intention of Amazon to venture into the health-care industry. The existing players in the industry are worried because the entry of Amazon in to the industry hast he potential to remove one of the very few differentiating elements that the pharmacy chains have traditionally depended on to try and fight out Amazon – the sale of prescription drugs. The rising trend among consumers to increasingly prefer to purchase buy household staples from online platforms or from the nearby convenience stores has resulted in threat to the sales of the so-called “front of store” of retailers such as Walgreen Boots Alliance, CVS health and Rite Aid.
The new of the acquisition resulted in a drop in the shares of all the three retailers in addition to those of drug distributors Cardinal Health, AmerisourceBergen and McKesson.
“Yes, it’s a declaration of intent from Amazon,” Walgreens Boots Alliance CEO Stefano Pessina acknowledged to analysts during a planned call for discussing the quarterly earnings of the company, according to an initial transcript from FactSet. “[But] the pharmacy world is much more complex than the delivery of a certain [pills or] packages.
PillPack, engaged in the business of organizing and delivering of packages of medications on behalf of consumers has licenses to ship prescriptions in 49 states of the country. There were earlier reports that Walmart had shown interest in purchasing the company and the retailer had initial plans of acquisition of the company for less than $1 billion.
A partnership with Perrigo already allows Amazon to sell private label over-the-counter drugs. The company has also got licenses for pharmacy in a few states. Licenses for medical delivery in almost all of the states of the US is already with Amazon.
“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” Jeff Wilke, Amazon CEO Worldwide Consumer, said in a statement. “PillPack is meaningfully improving its customers’ lives, and we want to help them continue making it easy for people to save time, simplify their lives, and feel healthier. We’re excited to see what we can do together on behalf of customers over time”
(Adapted from CNBC.com)