The S&P 500 financial index was on track to post its first gain in 14 sessions ahead of results from the second round of the U.S. Federal Reserve's stress test for banks and lenders. While some drugstores already do home delivery, the news is still painful for brands that may not be ready to compete against the might of Amazon. Amazon has acquired PillPack, an online pharmacy which enables customers to buy medications in pre-made doses.
US stocks rose on Thursday, as losses in shares of healthcare companies, battered by Amazon's foray into drug retailing, were offset by gains in the technology and financial sectors.
The soaring price of health care has shone a spotlight on an interconnected machine of players that comprise the USA health care system - one that Amazon has been keen to disrupt. Walgreens Boots Alliance was down almost 7% at the open, CVS dropped more than 9% and Rite Aid was down more than 11%. Those reports, it turns out, were premature. In early morning trading, CVS Health Group shares are down 8.75 percent. According to Reuters, the share prices of drug wholesalers like Mckesson, Cardinal Health and Amerisource Bergen also dropped.
Amazon adds that the closure of this transaction is subject to regulatory approvals and other conditions. PillPack is a niche player now, with more than 50,000 customers. But its expectation of over $100 million in 2018 revenue pales compared with larger rivals. It has also developed pharmacy software that helps coordinate refills, makes sure the shipments are on time, and provides an online dashboard for patients.
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The remaining equity is owned by the firm's employees, the person said.
"The pharmacy world is much more complex than just delivering certain pills or certain packages", Pessina said.
Some analysts played down the immediate threat Amazon poses. Boylan said he thinks any impact Amazon has on the health care system will take time to unfold. Customers can use the technology to contact pharmacists that can answer questions. Ann Hynes, an analyst with Mizuho Securities USA, wrote in a research note that "the bark is likely worse than its bite, at least initially", and noted that PillPack is not a very innovative offering and only has 40,000 customers. The two reached an agreement a month later.
PillPack has a license to operate in all 50 states in the US and has other accreeditations such as URAC AND VIPPS, but it doesn't seem to be operational in global markets. Walmart Inc. (WMT) had reportedly been in talks to buy PillPack with an offer of just over $700 million, but Amazon snapped up PillPack for a $300 million more.