Shares of Walgreens and CVS dropped Thursday morning after Amazon said it's buying online pharmacy start-up PillPack in a deal reportedly worth a little less than $1 billion.
The move was the latest indication of the e-commerce giant's intent to get into the prescription drug business. Boston-based PillPack organizes delivery of medications for patients, dividing doses by when they should be taken and automatically refilling and renewing orders.
"Part of the execution that PillPack is supposed to be bringing here is dealing with insurance and copays and refills," said John Divine, Senior Investing Reporter at U.S. News & World Report. "A lot of consumers do want those to be streamlined."
"Maybe millennials especially are used to the stay-at-home economy and having everything come to them. With the prospect of overnight delivery here, that's where the game-changing aspect of this is."
Amazon's ambitions in the healthcare space have been no secret. The company received wholesale pharmacy licenses in 12 states last year, and in January it announced a joint venture with JPMorgan and Berkshire Hathaway to provide health insurance and other services to employees. The threesome last week named well-known surgeon and writer Atul Gawande to lead that project as CEO.
"If there's one thing that [Amazon CEO] Jeff Bezos is known for, it's long-term execution," Devine said. "I don't think that other peers in this industry need to worry today, but I think that longer term, over the next three to five years, they need to watch out."
The PillPack acquisition was also a win for Amazon over rival Walmart. CNBC reported in April that the big box retailer had been looking to buy the company for about $1 billion. Amazon didn't officially disclose the terms of its deal.
But that wasn't the only news out of Amazon on Thursday -- the company also announced a new plan to tackle issue of "last mile" delivery. That sent shares of FedEx and UPS plunging.
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