PillPack is Amazon‘s latest acquisition

(FinancialPress) — Amazon (AMZN) shook up the pharmaceutical industry. On Thursday, they announced the acquisition of online pharmacy PillPack to the tune of $1 billion.

PillPack was launched in 2013. It delivers prescription drugs straight to the patients‘ homes. The data it gathers from its customers is used to remind them when they should re-up their purchases, or if the insurance they‘ve contracted is the right one for their needs. The fact that it has operation licenses all over the United States places its growth vertical in launch position after being bought by “the king of everything“, Amazon.

Amazon started its move into the pharma industry in early 2018. With Berkshire Hathaway and JPMorgan Chase, it announced the launch of a healthcare company without giving out too many details. The news alone was enough to send several healthcare operators‘ stock diving down, amidst fears of diminishing business.

The health care sector at large is in the middle of an undeniable stage of change. Drug retailers are buying up insurance companies and distributers in order to stay competitive in today‘s heavily competitive, data-driven market. With this move, Amazon has the tools to become a factor right off the gate.

Ripple effect

Just as when the new healthcare venture was announced, Thursday‘s news sent sector stock prices crashing. CVS Health Corporation and Walgreens Boots Alliance – the two largest pharmacies in the United States – took 10% dives when the news dropped. Amazon‘s policy of acquiring pre-established companies and slashing prices to quickly gain market share likely has investors fearing lower profits. Companies already established in the market find themselves forced to drop their prices in order to remain competitive – with no guarantee of success.

2017 saw Americans spend an ipressive $330 billion on prescription medicine. The number is expected to double by 2021. This shows that the pharmaceutical industry is quickly gaining importance in the American economy – and was likely a catalyst for Amazon‘s move.

 

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