After much speculation, is buying PillPack Inc. and getting into the pharmacy business and taking on Walgreens, CVS and all comers.

After much speculation, is finally getting into the pharmacy business.

This morning the biggest online retailer announced it was buying Manchester New Hampshire-based PillPack Inc. for an undisclosed sum. Other than saying the two companies expect to close the deal later this year, Amazon disclosed few other details about the deal.

Amazon is buying PillPack for its unique business and e-commerce business model, says Colin Sebastian, a senior research analyst with Robert W. Baird and a seasoned Amazon observer. PillPack claims to make it easier and faster for consumers to get prescriptions filled. 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 package containing pre-sorted medications, along with a recyclable dispenser and any other medications that cannot be placed into packets, such as liquids and inhalers. Each shipment includes a medication label that explains what each pill is and how it should be taken.

In addition to pre-sorting medications, PillPack coordinates refills and guarantees all medications will ship on time. Online tools allow customers to track their shipments, refills and co-pays. In late 2017, 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.


Amazon’s acquisition of Pillpack follows its announcement earlier this year that it would work with Warren Buffet investment firm Berkshire Hathaway and big New York bank JP Morgan Chase & Co. to develop an improved healthcare system for the three companies’ employees.

“In conjunction with its recent health venture established with Berkshire Hathaway and JPMorgan, we believe Amazon is beginning to push more aggressively into the online healthcare market, creating a new market growth opportunity in an area where they previously had little exposure,” Sebastian says.

PillPack’s sales total $100 million and the company has about 40,000 consumers. In September, a ranking by Forbes estimated that PillPack could be valued as a $1 billion company inside five years. PillPack had been rumored to be connected with a deal to be purchased by Walmart Inc., which is locked in a fierce battle with Amazon for e-commerce market share.

But in the end, the deal with Amazon was struck primarily because of PillPack’s unique mix of e-commerce technology and prescription delivery, Amazon says. PillPack’s team has a combination of deep pharmacy experience and a focus on technology,” says Jeff Wilke, Amazon CEO Worldwide Consumer.

Pillpack CEO TJ Parker, a second generation pharmacist who launched PillPack five years ago, claims PillPack is the only online pharmacy with national delivery capability. “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,” Parker told Internet Health Management in January 2018. “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.”


PillPack’ prescription and delivery program—combined with Amazon’s deep pockets, technology base, more than 100 million subscribers to Amazon Prime and its two-day delivery service—make Amazon an instant player in the $300 billion retail prescription drug market,” Sebastian says. “PillPack provides a full-service online pharmacy experience and delivers medication in pre-sorted dose packaging for customers across the U.S.,” Sebastian says. “Timing of refills, renewals and shipments is critical for medication deliveries, and we believe Amazon’s logistics capabilities (and loyal Prime user base) could create a formidable competitor to brick-and-mortar peers, as well as create another competitive advantage over competing e-commerce platforms.”

The two largest drugstore chains, CVS Health and Walgreens Co., have yet to speak publicly about Amazon’s official entry into the online drugstore market. But both chains have been developing broader national delivery options for consumers. Last week, CVS Pharmacy, the retail pharmacy division of CVS Health, also is rolling out additional delivery options for its stores and mobile app. CVS Pharmacy customers nationally can now opt to have their prescriptions delivered to their home, rather than going to the store to pick them up. Customers can place orders for one- to two-day prescription delivery service through the CVS app or by calling their local CVS store. The delivery service charge is $4.99.

Along with eligible prescriptions, cold and flu remedies, allergy medications, pain relief, first aid, digestive health, vitamins, baby, personal and feminine care products are also available to add to delivery orders, CVS says.

Walgreens is currently piloting same-day prescription delivery through its Walgreens Plus program in Gainesville, Florida, as well as same-day/next-day prescription delivery in other select markets, which it didn’t identify. Walgreens Plus is a customer loyalty and frequent shopper program that, for a $20 fee, includes a 20% discount on online and store items, up to a 60% discount on some prescriptions and expedited prescription delivery.

With the addition of Pillpack to its business base, Amazon also can now leverage PillPack’s online delivery business with Whole Foods, which it acquired in June 2017 for about $14 billion. “With Whole Foods, Amazon now has a network of 470 stores in which it could set up pharmacies or pickup points,” says Forrester analyst Kate McCarthy.