Amazon's entry into the pharmacy business could disrupt major players in the field nationwide, with mail-order pharmacies seen fighting the biggest battles.
PillPack has pharmacy licenses in all 50 states and brings in-house expertise that could help Amazon move more quickly into a space filled with regulatory obstacles, said Michael Rea, chief executive of Rx Savings Solutions, a company that develops software to help consumers lower the cost of prescription drugs.
The company's board authorized a $10 billion stock buyback, a hefty sum given the $65.7 billion market cap at Wednesday's close.
Shares of drug wholesalers, like those of AmerisourceBergen, McKesson and Express Scripts, also took a smaller hit following news of the deal.
PillPack, which is aimed at consumers who take multiple medications, presorts customers' prescriptions and helps manage refills and shipping. Over time, the goal is to incubate new healthcare models that are scalable to the healthcare market as a whole.
The acquisition comes after Amazon in January teamed with Warren Buffett's holding company Berkshire Hathaway and financial services giant JPMorgan Chase to form a not-for-profit organization aimed at serving the health care needs of their US-based employees.
It's not clear yet just what Amazon plans for PillPack.
Some analysts played down the immediate threat Amazon poses.
These and other health care stocks rose a few months ago after reports that Amazon may not have been interested in selling prescription drugs.
The PillPack deal is scaring investors in the top two drugstore chains.
Pharmacist TJ Parker and computer scientist Elliot Cohen founded PillPack in 2013 after meeting at a medical-technology program at the Massachusetts Institute of Technology. It's raised more than $118 million from brand-name investors including Accel, Sherpa Capital and NY rapper Nas's Queensbridge Venture Partners. The startup has raised upwards of $120 million in funding from backers including TechStars, Menlo Ventures, and Accel. News of the acquisition is also a bitter pill to swallow for Walmart, which was said to be looking into buying PillPack for under $1 billion earlier this year, according to CNBC. Now, that deal appears to have fallen through as Amazon came through with an undisclosed offer.
In a conference call with analysts on Thursday, Walgreens CEO Stefano Pessina seemed nonplussed about the damage coursing through his company's stock, saying he's "not particularly worried" about the one-day move.
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