Amazon Plans to Disrupt Another Industry: the Online Pharmacy Sector

One of Amazon’s key competitive advantages is the vast range of products it is able to offer—and with the acquisition of online pharmacy startup PillPack, the online retail giant was able to take its product range one step further.

Amazon announced its acquisition of PillPack last June, shortly after drug store chain CVS launched their own nationwide prescription delivery service. For many industry analysts, Amazon’s purchase of PillPack came as a surprise; the press statement publicizing the deal came only months after reports began circulating that the Internet giant was backing away from plans to enter the large-scale drug distribution business.

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Unsurprisingly, shares of CVS, Rite Aid and Walgreens took a tumble after Amazon’s announcement—losing a collective $11 billion in market value on the day of the announcement alone—based on concerns that Amazon was further invading their territory after already capturing much of the market for household goods and toiletries.

PillPack’s model is simple: it aims to provide top-notch, comprehensive care for its customers who typically take several prescription medications daily. Its online pharmacy service delivers customer’s prescriptions already presorted by dose as well as organizing prescription refills and renewals to ensure that patients receive their prescriptions on time.

PillPack’s co-founder and CEO TJ Parker—a former pharmacist turned entrepreneur—released a statement when the deal was announced: “PillPack makes it simple for any customer to take the right medication at the right time, and feel healthier. Together with Amazon, we are eager to continue working with partners across the healthcare industry to help people throughout the U.S. who can benefit from a better pharmacy experience.”

Amazon CEO of global consumer concurred with Parker’s sentiments, noting that “PillPack’s visionary team has a combination of deep pharmacy experience, and a focus on technology…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.”

Of course, PillPack is just one piece in Amazon’s broad plan to disrupt the healthcare industry. The company has begun working with Berkshire Hathaway and J.P. Morgan Chase on a venture called Haven, aimed at improving healthcare and bringing down costs. It also plans on opening its own health clinics for employees, as well as launching a closely-guarded group named Grand Challenge aimed at telemedicine and using machine learning in cancer research. Overall, Amazon’s grand plan at taking on the pharmaceutical and healthcare industry appears to be in its first—but important—stages.