Terms were not disclosed on the deal for PillPack, an online pharmacy which operates in all 50 U.S. states and offers pre-sorted dose packaging and home delivery.
Such a move had always been expected by investors in established health care companies, who have long feared the world's biggest online retailer's potential to disrupt the complex and opaque USA drugs business. Walgreens (NASDAQ:WBA) dropped nearly 10%, CVS (NYSE:CVS) fell 6%, and the beleaguered Rite Aid (NYSE:RAD) was pummeled to the tune of 10.66%.
The companies expect to close the deal later this year.
The deal comes as the health care industry is undergoing a series of convulsions in response to rising costs and pressure on drug makers, pharmacy benefit managers, and insurers. CVS Health, for example, has launched next-day prescription delivery services nationwide and same-day delivery in select cities, including New York, Boston, Miami, Philadelphia, San Francisco and the District. It has also developed pharmacy software that helps coordinate refills, makes sure the shipments are on time, and provides an online dashboard for patients. And what's notable about this particular case is the outsized degree of the market cap erased, relative to the price Amazon paid for PillPack.
Some analysts played down the immediate threat Amazon poses.
Amazon set its sights on the pharmacy market Thursday with the acquisition of tech-focused retailer PillPack, sending shock waves through the sector over prospects of disruption by the United States online colossus. "We're seeing a snap-back today, more or less". It counts Accel Partners, Atlas Venture, CRV, Founder Collective, Menlo Ventures, Sherpa Ventures, Techstars among its investors. PillPack previously raised $118 million from venture capitalists and is said to have surpassed $100 million in sales for 2017.
Pessina added that physical pharmacies "will continue to be very, very important in the future".