AMAZON PRIMED FOR HEALTH
Acquires Somerville Rx startup
Amazon’s acquisition of Somerville-based PillPack, an online pharmacy startup, marked the company’s first internal foray into the health care industry, and sent ripples through the stock market as pharmacy retail stocks plunged.
“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” said Jeff Wilke, Amazon CEO Worldwide Consumer. “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.”
News of the acquisition sent pharmacy stocks tumbling yesterday, with Walgreens falling nearly 10 percent and CVS sliding more than 6 percent.
PillPack’s services include pharmacy-by-mail products that are meant to focus on patients’ experiences rather than individual drugs. Drugs are sorted by day and time, rather than medication. “PillPack makes it simple for any customer to take the right medication at the right time, and feel healthier,” said TJ Parker, cofounder and CEO of PillPack. “Together with Amazon, we are eager to continue working with partners across the health care industry to help people throughout the U.S. who can benefit from a better pharmacy experience.”
“This is a fairly big move for Amazon,” said Patrick Pilch, head of the BDO Center for Healthcare Excellence & Innovation. “I think there’s the potential for (this to be) a very powerful deal, a powerful acquisition.”
Still, health care is a much harder industry to enter than retail or groceries, said Vishnu Lekraj, a pharmacy industry analyst with Morningstar.
“The health care space and pharmaceutical space in particular are very complex, nuanced markets,” Lekraj said. “It’s going to take a long time for them to disrupt the market.”
Amazon did not say what its plans for the company and its employees are, but the move comes as the Seattle-based company is making a bigger push into both Boston and the health care industry.
The company said earlier this year it will bring about 2,000 new employees to a new Seaport building, on top of an additional 900 in a new Fort Point office.
Last week, Amazon, JPMorgan Chase and Berkshire Hathaway announced Boston doctor Atul Gawande as the chief executive of the companies’ new health care venture, which will be based in Boston.
PillPack has raised $118 million in investor funding. Terms of the deal were not disclosed, but TechCrunch and Bloomberg reported the deal was for “just under $1 billion.”