Insight Bite: Amazon’s PillPack deal signals significant disruption for pharma industry

Amazon has bought PillPack, an online pharmacy business, in a deal that shows that Amazon is serious about moving into healthcare as it aims to become the go-to place for consumers’ every need.

PillPack had previously been in talks with US retail giant Walmart, but Amazon came along and topped the offer. The deal value was not disclosed, but PillPack was valued at $361 million after a 2016 funding round so it’s safe to say the bidding round drove the price well up past this point – Walmart’s offer is rumoured to be at least $700 million.

The deal demonstrates that the e-health market is a rising star, and under Amazon’s ownership, PillPack is likely to scale up. PillPack’s business model is to deliver medications in pre-sorted dose packaging, coordinate refills, and make sure shipments are sent on time – all done electronically.

“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” Jeff Wilke, Amazon CEO Worldwide Consumer, said in a statement.

The deal has made competing pharmacy companies sit up in rapt attention, as this signals a disruption ahead for the industry. On the morning of the deal announcement, big pharmacy brands including Rite Aid, Walgreens, and CVS lost approximately $11 billion in combined market value. PillPack is licenced to ship prescription medications in 49 US states, and the company has a technology-first approach with its own operating system which organises patient and pharmaceutical data.

The Amazon deal is a shot across the bow for the legacy pharmaceutical industry not just in the US, but also in the UK. Once the digital generation sees that it’s possible to get prescriptions in a quicker and easier way than the current in-person system, they won’t go back. There’s no doubt: major disruption lies ahead for the pharma sector.

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