Amazon deal shakes healthcare sector

Amazon began two decades ago as an online bookseller but has mushroomed into one of the world's largest companies whose assets also include groceries and a hardware division

When Amazon announced plans to buy pharmacy startup PillPack, the reckoning across the entire industry's supply chain was swift and brutal.

PillPack sells presorted packets of prescriptions drugs, delivering them to customers in their homes.

"Together with Amazon, we are eager to continue working with partners across the healthcare industry to help people throughout the USA who can benefit from a better pharmacy experience", T.J. Parker, co-founder of PillPack, said in the press release.

But the prospect of major retailers like Amazon getting into the business has roiled the traditional pharmacy world even further. PillPack has a relatively small market presence compared to CVS and the other industry leaders, but Amazon could scale up the operation by tapping into its massive logistics network. According to Reuters, the share prices of drug wholesalers like Mckesson, Cardinal Health and Amerisource Bergen also dropped.

Jeff Wilke, Amazon's worldwide consumer boss, said: "Pillpack's visionary team has a combination of deep pharmacy experience and a focus on technology".

Both companies expect to close the deal during the second half of this year. Customers can also email, text, or call their PillPack pharmacist any time to ask questions or clarify instructions.

With its far-reaching and widely popular online site, Amazon moves closer to establishing beachheads in medicine chests across the USA and using that muscle to alter the traditional playbook for prescription drug distribution.

The move is aimed to improve health care for the three companies' more than a million combined USA employees and also at the same time make it more cost-effective.

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The value of the deal was not disclosed.

The purchase represents Amazon's long-awaited and much-discussed move into the pharmacy, a space ripe for disruption, especially from the company that used the internet to turn commerce on its head.

The online retail giant also announced a joint venture with JPMorgan Chase and Berkshire Hathaway aimed at lowering health costs for the companies' U.S. employees.

PillPack holds pharmacy licenses in all 50 states.

But no area of the market felt the pain worse than pharmacies themselves.

Those deals were announced after two mega insurer mergers were blocked by federal judges early previous year on antitrust grounds.

PillPack earned an "excellent" rating in PCMag's 2014 review.

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