Amazon to buy online pharmacy PillPack

Amazon said it's buying online pharmacy PillPack, sending shares of drug distributors and retailers tumbling.

SEATTLE (REUTERS) - Amazon said it is buying online pharmacy PillPack.

The announcement cost investors in the pharma sector around US$19 billion (S$25.9 billion).

That included pharmacy benefits managers like CVS and Express Scripts, insurer Aetna, and drug wholesalers such as McKesson.

At the same time, Amazon gained about US$5 billion in value.

PillPack sorts medication by the dose and delivers it in pockets and dispensers to patients. It also sells other pharmacy products such as creams and inhalers.

PA Consulting US chief innovation officer Hsiu Mei Wong says: "It's $450 billion dollars spent on medications every single year. About a quarter of that is focused on the home delivery market. Amazon and PillPack can change that industry quite significantly. Firstly, they focus on the consumer, will shift consumer expectations, and that will impact pharmacy and also the broader health care. With PillPack's ability to distribute medications in 49 states, that's quite a significant reach for Amazon, and also quite a big play in the American market."

The value of the deal was not disclosed, but Bloomberg put it at US$1 billion.

Says Forrester senior analyst Arielle Trzcinski: "If you think about the impact to the way that a consumer picks up their medications today, typically they're going in they're waiting in line, as you know, in a brick-and-mortar pharmacy, which is, typically, if you're not feeling well, not a great patient experience. So, we think about the, you know, the potential applications for Prime, being able to do that home delivery. But, even think, in longer terms, of the same day delivery practices that are available today in certain cities."

The news comes just a week after a joint venture of Amazon, Berkshire Hathaway, and JPMorgan Chase named a chief executive officer. The executive will be tasked with cutting health care costs for one million people who get insurance through all the firms.