Amazon deals big pharma a quick $23.5B blow with a $1B acquisition of PillPack

Amazon came onto the pharma scene swingin’ for the fences with the $1B purchase of PillPack.

Amazon acquired a rapidly growing online pharmacy startup called PillPack for just shy of $1B, marking the start of the e-commerce giant’s long-anticipated takeover of the drug business. 

Amazon deals big pharma a quick $23.5B blow with a $1B acquisition of PillPack

After Amazon announced the purchase, investors across the country started flushing their drug stocks down the toilet — knocking $23.5B worth of market value off of the biggest drug companies.

Big win for Amazon, bigger win for PillPack

Started in Boston in 2013, PillPack had raised less than $120m, making their $1B acquisition a huge financial victory.

The sale was also a big deal for Amazon, who has been publicly plotting their entry into the healthcare business since announcing their joint healthcare venture with Berkshire Hathaway and JPMorgan. 

Amazon, which outbid Walmart for PillPack, now has direct prescription access to customers in 49 states (Hawaii coming soon). 

A bitter pill to swallow

The industry response was immediate — Rite Aid’s value plummeted 11.1%, Walgreens fell 9.9%, and CVS dropped 6.1%. Meanwhile, Amazon’s market cap rose $5.5B.

Amazon’s Hathaway-JPMorgan announcement also knocked $30B in market value off the competition, meaning all 3 companies are down more than 10% on the year.

The pharma industry better prescribe itself a solution, fast

Both Walgreens and CVS recently debuted same-day delivery programs to maintain an edge over the impending Amazocalypse, but it will be tough to stay competitive with Bezos’ nearly unlimited resources.

PillPack’s $100m in revenue is tiny compared to other pharma-giants. But Amazon wasn’t after the company’s revenue, it wanted the company’s 50 licenses (for each state) and innovative sorting service — which will enable resource-rich Amazon to ramp up distribution immediately.

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