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Published: Fri, June 29, 2018
Medical | By Garry George

Amazon acquires pharmacy startup PillPack; purchase price thought to be near $1b

Amazon acquires pharmacy startup PillPack; purchase price thought to be near $1b

Pharmacy stocks in the United States market dropped on the deal announcement, most notably those of CVS (-8.1%), Rite Aid (-3.1%), and Walgreens Boots Alliance (-9.2%). Kroger Co., the biggest USA supermarket chain, saw $2 billion in market value wiped out in one day.

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

With its far-reaching and widely popular online site, Amazon moves closer to establishing beachheads in medicine chests across the USA and using that muscle to alter the traditional playbook for prescription drug distribution.

Walgreens shareholders seem particularly nervous about Amazon's advances into the pharmaceutical space.

At the same time, Amazon shares rose 2.1 percent, adding more than $16 billion in market value, the story said. Amazon says it expects the deal to close during the second half of this year, pending regulatory approval. Big packaged food stocks also took a hit.

Prescription drugs sales are largely intertwined with groceries and personal items like makeup and shampoo and Amazon already sells bulk packs of latex gloves, bed pads and syringes.

Bezos has been thinking about the drug business for almost two decades; in 1999, Amazon purchased a stake in Drugstore.com. That effort ultimately failed and Walgreens purchased the money-losing startup in 2011.

PillPack's services include pharmacy-by-mail products that are meant to focus on patients' experiences rather than individual drugs.

TJ Parker, of Pillpack. The company had previously been linked to a potential deal with Walmart for under $1 billion according to CNBC.

The company's backers include Accel Partners, Atlas Venture, CRV, Founder Collective, Menlo Ventures, Sherpa Ventures and Techstars.

It has raised $121 million in capital since its founding in 2013, according to figures from Crunchbase. Now, that deal appears to have fallen through as Amazon came through with an undisclosed offer. Just hours before Amazon announced it's buying PillPack, Walgreens beat analyst estimates on third-quarter revenue and earnings.

Starbucks dropped 4.1 percent after the company said its Chief Financial Officer Scott Maw will retire at the end of November. "I strongly believe that the role of the physical pharmacy will continue to be very, very important in the future".

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