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Amazon leaps into healthcare; acquires PillPack

Just a week after appointing a CEO for its healthcare joint venture with JP Morgan Chase and Berkshire Hathaway, Amazon has made its second giant leap into healthcare: it has purchased online pharmacy PillPack for reportedly a valuation of just under $1 billion.

PillPack is a five-year-old venture which pre-packages and distributes prescription drugs. It holds licenses to operate in all 50 states of the US and has built its own system for operations — PharmacyOS, a platform that helps manage patient data and figure out how to balance medicines together in safe doses. It is one of few startups that has a Verified Internet Pharmacy Practice Sites (VIPPS) license from the US National Association of Boards of Pharmacy needed to run an online pharmacy.

The acquisition was not entirely unexpected owing to speculation about Amazon’s plans to enter the drug distribution market. Amazon managed to edge out Walmart, which also was trying to strike a deal with PillPack.

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“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” says Jeff Wilke, Amazon’s CEO for worldwide consumers. “PillPack is meaningfully improving its customers’ lives, and we want to help them continue making it easy for people to save time, simplify their lives, and feel healthier. We’re excited to see what we can do together on behalf of customers over time.”

Following the acquisition announcement, stock prices for brick-mortar-pharmacy chains like Rite Aid, Walgreens, and CVS fell dramatically, losing approximately $11 billion in combined market value. Amazon shares rose 2.1% after the announcement, earning the company $16 billion in market value in one day.

This is not Amazon’s first foray into healthcare. In January, it announced a joint venture with JP Morgan Chase and Berkshire Hathaway which would set up an independent healthcare company to replan healthcare for their own employees. Last week, the trio announced that renowned doctor and researcher Atul Gawande would head the company. Although any other details about the company, even the name, remain under the wraps, the JV along with this acquisition indicates that Amazon is taking healthcare seriously.

TJ Parker, co-founder and CEO of PillPack will stay on to help run the company. “Together with Amazon, we are eager to continue working with partners across the healthcare industry to help people throughout the U.S. who can benefit from a better pharmacy experience,” he said in a statement.

Online pharmacies in India

Although there are a number of online pharmacy start-ups operating in the country, the regulatory policy and rules were non-existent until recently. According to a report by ET, the new draft rules suggest that e-pharmacies will be required to seek only one license from the Drug Control General of India, the apex regulatory and licensing body of the country. An earlier draft proposed that an e-pharmacy will have to apply for licenses in every state they would sell medicines in.

The license granted by the central authority would be valid for a period of three years and e-pharmacies would have to pay a fee of Rs 50,000 to renew the license after it expires, according to the draft. “It is a welcome move. We have been urging the government to bring in regulation so that we can do business under legal framework,” Prashant Tandon, founder and CEO of online pharmacy 1mg told The Indian Express. Online pharmacies currently account for 1% of total pharma sales, according to Pradeep Dadha, CEO of Netmeds Marketplace Ltd., another e-pharmacy. Most recently, in February, e-pharmacy PharmEasy raised around $30 million in a Series C round led by previous investor Bessemer Venture Partners.

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