Hello again, happy Thursday.
I know I’m a millennial, and that means I’m all about max convenience, impulse purchases on the Internet, etc, etc … but still, why wouldn’t you want to get your monthly prescriptions while you’re restocking your paper towels? Am I wrong?
It’s been a couple weeks since Amazon spent a reported $1 billion to disrupt the traditional pharmacy industry through its deal for online pharmacy startup PillPack. Besides the fact that you can’t ignore anything Amazon does, I’ve since learned about a smaller competitor, UpScript Health, prepping for a sales process … but more on that later.
To be fair, I’ve never actually used one of these services. But if you live in New York like me, you’ve probably seen thecontroversial Capsule subway ads that have suggested things like doctors spying on their patients. Capsule, btw, is backed by venture firms including Thrive Capital and Virgin Group.
Ok. So let’s talk a little about the business of home-delivered meds.
First of all, from Amazon’s perspective, the e-commerce giant was smart to make its push into the space through M&A, as opposed to building something internally, one source said. With so much variety in terms of shipping mechanisms as you get into the specialty pharmacy space, buying PillPack gives Amazon immediate access to the technology that provides reliable shipping.
As this source put it: It’s one thing to get the wrong colored tennis shoes, it’s another to get the wrong pills or dosage form.
In other words, the deal gives Amazon credibility: $1 billion may be a hefty pricetag, but after all, Amazon can move PillPack – which is licensed to ship drugs in 49 states – through its network pretty quickly.
So what about the Amazon effect? For the rest of the industry, you’ll likely see smaller players make moves to gain some market size, sources said. We all know what that means: More consolidation.
That’s right … Further deal activity in the direct-to-consumer digital pharmacy universe is already brewing. Scottsdale, Arizona’s UpScript has tapped Berkery Noyes to run a sales process later this summer. Read my story to learn more about the anticipated process.
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