Walgreens plays down Amazon pharmacy entry, but investors spooked

Walgreens plays down Amazon pharmacy entry, but investors spooked

Amazon.com Inc. said that it had agreed to buy online pharmacy PillPack in a deal that will further the retail giant's ambitions in health care. The parties expect to close the transaction during the second half of 2018.

'PillPack's visionary team has a combination of deep pharmacy experience and a focus on technology, ' said Jeff Wilke, head of Amazon Worldwide Consumer.

PillPack supplies pre-sorted prescription drugs and other services for people who take multiple medications, a growing market as the USA population ages and requires treatment for multiple complex, chronic conditions.

Financial terms of the deal were not disclosed, but sources cited by TechCrunch peg the price at just under $1 billion.

An aging population means we'll see an increase in health concerns and chronic conditions like heart disease, neurodegenerative diseases, and cancer that can be costly to manage. In January, the company announced a collaboration with JPMorgan and Berkshire Hathaway meant to reduce healthcare costs for United States workers.


Shares of CVS Health (CVS.N) were down almost 8 percent, while Walgreen Boots Alliance (WBA.O) fell 10 percent.

"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. The firm also helps to co-ordinate refills and renewals.

Echoing that sentiment, Morningstar senior analyst Vishnu Lekraj called the stock's tumble after the Amazon news a "huge overreaction", in an interview after the call. The company serves patients who take multiple medications, sorting those medications into individual packets, so patients don't have sort the drugs themselves. Pharmacy benefit manager Express Scripts was also lower.

PillPack was founded in 2013 and had a reported valuation of about $330 million as of two years ago, according to Fortune.

With Amazon's (amzn) firepower behind it, PillPack can upend how customers buy and receive their prescription medications.

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