Amazon buys PillPack for $1 billion

Amazon adds to its portfolio

PillPack, a Boston-based pharmacy startup, has just made a $1 billion deal with Amazon, from which the two co-founders will make $100 million each.

The five-year-old company uses software to speed up the refill and co-pay processes; plus, it ships combined prescriptions for people that take multiple kinds of drugs. It has roughly 50,000 customers and pharmacy licenses in all US states, making it a formidable opponent to standard pharmacies like Walgreens and CVS.

In fact, after the news last Thursday, CVS stock fell 9% and Walgreens dropped 10%. Amazon beat out Walmart’s bid for the pharmacy startup, and consequently, it will be able to penetrate into the pharmacy industry, which is worth $300 billion annually.

Moreover, Amazon isn’t the only company to invest in pharmaceutical companies. Mergers are taking the pharmacy industry by storm with CVS buying insurance company Aetna and Cigna purchasing pharmacy firm Express Scripts.

All of PillPack’s investors will receive a heavy payday from Amazon’s purchase. Accel, Sherpa Capital, and Queensbridge Venture Partners own a combined 60% in the company, its employees own another 20%, and the co-founders own the last 20%. Consequently, all parties involved are set for a pretty high payday.

The deal may have been a bit premature for PillPack, as it has only been around for five years. While there are no estimates of PillPack’s net value, Amazon likely got an extraordinary deal for the young startup, as the pharmaceutical industry continues to grow annually.

Nonetheless, this deal places Amazon favorably in yet another high-paying industry. CVS and Walgreens are just the two most recent firms to suffer due to Amazon’s growth and expansion.

 

Featured image via PublicDomainPictures/George Hodan

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