CEO TJ Parker talks about recent developments—and if PillPack has the wherewithal to compete in the wildly changing internet drug store market.

The online pharmacy market is undergoing tremendous change.

Walgreens Co., the biggest online pharmacy with Internet Retailer-estimated annual web sales of $1.58 billion, continues to develop new digital healthcare services, including enabling consumers a range of ways to order and refill prescriptions or visit a doctor online. CVS/Caremark Corp. is spending nearly $70 billion to acquire health insurer Aetna and build a digital health services delivery business that could iserve about 65 million consumers.

Meanwhile, the biggest online retailer, Amazon.com Inc., has quietly lined up drug distribution licenses in a dozen states and is looking over the pharmacy market for possible new business development opportunities. More publicly, Amazon, in conjunction with Warren Buffett’s Berkshire Hathaway Inc. and JPMorgan Chase & Co., have announced plans for a new company that aims to create a new healthcare delivery system that will streamline drug costs and other expenses for their combined base of hundreds of thousands of employees.

But big companies aren’t the only ones out to change the digital pharmacy market. Five years ago CEO and pharmacist TJ Parker launched PillPack Inc., a digital pharmacy that now operates in 49 states. Annual sales have grown to $100 million and the customer base to 40,000 consumers. In September a ranking by Forbes estimated that PillPack could be valued as a $1 billion company inside five years.

PillPack is using the web to make it easier and faster for consumer to get a prescription filled than at the corner drugstore, the company says. PillPack manages multiple prescription medications for customers by pre-sorting, packaging and delivering the drugs—all with a 24/7 pharmacy staff that can be contacted either online or via phone. Every two weeks, customers receive a personalized roll of pre-sorted medications, along with a recyclable dispenser and any other medications that cannot be placed into packets, like liquids and inhalers. Each shipment includes a medication label that explains what each pill is and how it should be taken.

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PillPack CEO TJ Parker

In addition to pre-sorting medications, PillPack coordinates refills and guarantees the shipment of all medications on time. Online tools allow customers to track their shipments, refills, and co-pays. Customers can e-mail or call a PillPack pharmacist any time to ask questions or clarify instructions. In late 2107 PillPack rolled out a redesigned website and drug prescription management technology called PharmacyOS, which PillPack says gives consumers better and faster ways to handle multiple prescriptions for chronic diseases that often require patients to take several pills at once.

PillPack calls itself the only the only independent web pharmacy that serves customers nationwide. In this question-and-answer session, Parker talks about recent developments at PillPack—and whether PillPack has the long term wherewithal to compete with Walgreens, CVS/Aetna, Amazon and others in the rapidly evolving internet drug store market.

Q: You are now at $100 million in annual web sales. How was this accomplished?

A: Our customers are people who live with chronic conditions and take multiple daily medications. We aim to make it simple to take these medications as prescribed, which is shown to support better health. There are over 60 million people in the United States who take three or more prescription medications every day, and we currently serve tens of thousands. So, there is a lot of room to grow.

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Q: How fast can you grow?

A: I think if we’re double or triple in five years we’ll be pretty disappointed.

Q: What new features and functions have you added to the website in the past 6 months, and why?

A: Last summer we launched a suite of new physical products, targeted at improving adherence, and announced our home-grown software platform, PharmacyOS, that now powers all our pharmacy operations and delivers a better customer experience. And, in the fall, we introduced offerings specifically for caregivers.

PharmacyOS is allowing us to continuously improve our back-end operations, which are invisible to customers, but result in an increasingly simple and frictionless service. We’re executing on the promise we make as a companywhich we’ll do everything we can to make it as easy as possible for people to take their medications as prescribed. Today, we’re working on making the ecosystem as useful as possible. While a customer might only go to their doctor once every few months, they interact with medications every day. We want to make the most of that daily opportunity to support our customers and helping them take control of their health. In the future that will likely include new digital services, offline programs, and additional tools for caregivers.

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Q: What are PillPack’s top business development priorities in 2018 and how will you fulfill them?

A: We’re focused on reaching more customers and delivering excellent service.

Q: What do you think the impact of the CVS/Aetna deal will be on the future of the online pharmacy market? Also, Amazon will likely be your competitor soonwhat does PillPack think of this and what can you do better than them?

A: Recent moves by these and other legacy players suggest that pharmacy is still prime for disruption. We welcome allies in the shakeup.

Q: Any plans to add more digital healthcare services like telehealth for more diversity?

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A: We’re committed to meeting our customers where they are and will add services to meet those needs. Our aim is to make sure that however a customer wants to interact with us (via mobile app, website, text, phone call, or even through the mail), that we can be there for them when they need us.

Q: How are you growing your customer base?

A: PillPack is primarily a B2C [business-to-consumer] business. We use traditional digital channels, as well as partnerships with payers, like Aetna, to identify and reach customers that could benefit from PillPack’s services.

 

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