Published: Fri, June 29, 2018
Markets | By Erika Turner

Amazon To Buy Somerville-Based Online Pharmacy PillPack

Amazon To Buy Somerville-Based Online Pharmacy PillPack

Amazon's purchase of an online chemist that opens an immediate nationwide drug network in the United States has shaved billions off the value of three major pharmacy chains.

Amazon announced on Thursday it had signed a deal to acquire PillPack, an online pharmacy that organizes prescription medication by the dose and delivers it to customers. Bloomberg reported that an unnamed source with knowledge of the matter said that Amazon will pay about $1 billion for PillPack.

The acquisition is expected to close in the second half of this year.

With Amazon's announcement Mizuho analyst Ann Hynes, in a note, said pending health insurer/PBM mergers of Aetna Inc with CVS and Cigna Corp with Express Scripts "are even more critical now". PillPack is an online pharmacy that packages, organized and delivers presorted doses of medications and it's created to help patients who take multiple medications. "And for those patients that do desire to transition, we offer the option to ship their prescriptions to their home from our pharmacies or obtain the prescriptions through our Caremark mail facilities". Its plans to entice entrepreneurs to set up their own package-delivery businesses sent shares of United Parcel Service and FedEx skidding more than 2 percent.

A PillPack spokesperson said the deal won't have any impact on the Somerville workforce.

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What transpired was the most recent in a long list of instances where Amazon has taken huge bites out of entire industries. In January, the company announced a collaboration with JPMorgan and Berkshire Hathaway meant to reduce healthcare costs for USA workers.

US stocks rose on Thursday as technology and other growth sectors rebounded from the prior day's declines and financial shares snapped a 13-day losing streak.

Some analysts played down the immediate threat Amazon poses.

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.

The company's backers include Accel Partners, Atlas Venture, CRV, Founder Collective, Menlo Ventures, Sherpa Ventures and Techstars. It had raised $123 million in financing, most recently $5 million in debt from TriplePoint Venture Growth in August 2017, according to data from industry research firm PitchBook. Pessina insisted that physical pharmacies would continue to be "very important".

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