Health IT

Amazon will acquire PillPack, ending months of speculation

Just a few months ago Walmart seemed poised to acquire the business. The deal seems to address speculation over how online retailer Amazon would move into the prescription drug business but the news sent share prices for retail pharmacies tumbling.

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After months of speculation that online pharmacy PillPack was to be acquired, it turns out that Amazon, not Walmart, emerged as the buyer. It’s fitting since the deal also seems to address speculation over how online retailer Amazon would move into the prescription drug business and offers a clue as to the types of acquisitions that might interest the joint healthcare initiative between Amazon, JP Morgan, and Berkshire Hathaway.

A PillPack spokeswoman declined to address questions beyond the information contained in the press release and on the company’s press page.

TechCrunch, citing sources familiar with the deal, said the price tag was just under $1 billion and that Amazon had outbid Walmart.

Jeff Wilke, Amazon CEO Worldwide Consumer, described PillPack in a press release as a visionary team with a combination of deep pharmacy experience and a focus on technology. PillPack was founded in 2013 soon after an MIT  healthcare hackathon brought together cofounders Parker, a second generation pharmacist, and CTO Elliot Cohen.

“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,” Wilke said. “We’re excited to see what we can do together on behalf of customers over time.”

Amazon’s interest in moving into healthcare services has spurred a significant reaction from companies worried about the impact amidst speculation about possible targets. CVS Health launched prescription drug deliveries for its retail pharmacy division at 9,800 locations earlier this month in a move signaling it was more than a bricks-and-mortar retailer.

A few tweets highlighted the immediate impact on the share price of healthcare businesses, such as CVS Health, Walgreens, Rite Aid and others:

PillPack has raised $118 million to date from investors that include Accel Partners, Atlas Venture, CRV, Founder Collective, Menlo Ventures, Sherpa Ventures, and Techstars.

Each month, customers receive a personalized roll of pre-sorted medications, with the time, day and date those medications should be taken stamped on each packet. They also receive a dispenser and any other medications that cannot be placed into packets, like liquids and inhalers, according to the company’s website. Each shipment includes a medication label that has a picture of each pill and notes on how it should be taken.  The company also developed software to help customers manage shipments, refills, and copays.

Among the pharmacy benefit managers PillPack works with are CVS Caremark, Express Scripts, Optum Rx, Prime Therapeutics, Humana Pharmacy Solutions, Cigna, Aetna, MedImpact, EnvisionRx, and CastiaRX.

Founder Collective led PillPack’s seed round in 2014. In an analysis of the Amazon acquisition in a Medium blog post, Managing Partner David Frankel noted that PillPack had successfully overcome significant challenges to arrive at this point and reflected the kind of healthcare reform Amazon is interested in achieving.

I think of this acquisition like a staged rocket launch. The venture phase helped the company reach heights no other pharma retailer has broached in decades. The resources of Amazon will help the company achieve escape velocity and positively impact the lives of millions.