Amazon (NASDAQ: AMZN) has announced it will be acquiring pharmaceutical startup PillPack. The companies said they expect to close the deal in the second half of 2018. The terms of the deal have yet to be disclosed. Amazon’s CEO of worldwide consumers Jeff Wilke 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.”
PillPack is an online pharmacy startup that provides consumers with prescription medication in prepackaged doses. The company works with doctors and insurance companies to manage refills and cost coverage and is an in-network pharmacy with most pharmacy benefit managers, including Medicare Part D plans. The company’s website suggests that it is licensed to ship prescriptions in 49 states.
PillPack has raised $118 million in funding from venture capital firms since its inception. As of November, it was on track to post more than $100 million in revenue for 2017. TJ Parker, cofounder and CEO of PillPack, said in a press release, “Together with Amazon, we are eager to continue working with partners across the healthcare industry to help people throughout the U.S. who can benefit from a better pharmacy experience.”
The purchase could end up sparking a potentially huge disruption in the United States healthcare market. An estimated $300 billion was spent on prescription drugs in 2015. Amazon is looking to capture a big slice of the more than 4 billion prescriptions ordered in the U.S. every year.
The acquisition announcement sent brick-and-mortar pharmacy stock prices plunging, losing approximately $11 billion in combined market value. Walgreens Boots Alliance declined 9.9 percent, Rite Aid fell 11.1 percent, and CVS Health dropped 6.1 percent. Drug distributor stocks were also affected, with AmerisourceBergen and Cardinal Health dropping more than 4 percent, while McKesson fell 6 percent on the news. Amazon shares gained 2.1 percent after the announcement, increasing the company’s market value by $16 billion.