Amazon takes a big step into online pharma

Jeff dispenses more disruption

FOR roughly a year speculation has been feverish: would Amazon, an online retail giant, muscle into America’s prescription-drugs market? On June 28th that uncertainty ended when it bought a small online pharmacy, PillPack, based in Manchester, New Hampshire, for about $1bn. When the deal is completed later this year, Amazon will be able to sell prescription drugs to customers in the 50 states where PillPack has licenses.

The news of Amazon’s entry had a predictable effect on incumbent firms. Shares of three large bricks-and-mortar pharmacy chains, Walgreens Boots Alliance, Rite Aid and CVS Health, lost $11bn in value. Drug distributors such as Cardinal Health and AmerisourceBergen were also hit. Amazon gained $19.8bn. Michael Rea, boss of Rx Savings Solutions, a health-technology firm, says the purchase increased the speed with which Amazon can get into the prescription-drug market, making slimmer profit margins “imminent”.

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