- Amazon (NASDAQ:AMZN) said it will buy online pharmacy PillPack, marking its latest push into the healthcare industry.
- The announcement reverberated through the entire supply chain, with the stocks of pharmacies and drug wholesalers getting hit hard.
- This is just the most recent example of Amazon's ability to disrupt an entire industry with a single corporate action.
Amazon announced on Thursday that it has signed an agreement to acquire PillPack, an online pharmacy.
PillPack's business is built around customers who take multiple daily prescriptions. It offers medications in pre-sorted dose packaging, coordinates refills, and handles shipments.
The deal — for which terms were not immediately disclosed — marks Amazon's latest push into the healthcare industry. In January, the company announced a collaboration with JPMorgan (NYSE:JPM) and Berkshire Hathaway (NYSE:BRKa) to reduce healthcare costs for US workers.
"PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology," Jeff Wilke, Amazon's CEO of worldwide consumer said in a release. "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."
Pharmacy stocks in the US market dropped on the deal announcement, most notably CVS (-8.1%), Rite Aid (-3.1%), and Walgreens Boots Alliance (NASDAQ:WBA) (-9.2%).
The damage also spread throughout the entire pharmacy supply chain, with drug wholesalers seeing deep losses. Cardinal Health (NYSE:CAH), AmerisourceBergen (NYSE:ABC), McKesson (NYSE:MCK), and Express Scripts all dropped more than 3% on the news.
Amazon's ability to rock an entire industry
Pharmacy shareholders will perhaps find solace in the fact that they're not the only industry to have billions in market value erased by one simple Amazon announcement. It's a trend that's been playing out repeatedly over the past year, with grocery stores, athletic apparel retailers, and package-delivery services among the afflicted groups.
The reasoning is simple — Amazon has a ton of cash and an unparalleled logistical network, and when it looks poised to enter or expand its position in a market, traders get scared and bail out of existing holdings in other companies.
And if Amazon's torrid stock performance in recent months is any indication, the company's shareholders love the deal activity, among other fundamental drivers. The firm's shares have spiked 435% since the beginning of 2015, more than 14 times the return for the benchmark S&P 500 over the same period.
This story is developing. Check back here for more updates.