June 28 — Amazon.com Inc said on Thursday that it would buy online pharmacy PillPack for an undisclosed amount, sending shares of drug distributors and retailers tumbling as the e-commerce giant moves deeper into health care sector.
Shares of drug retailers CVS Health and Walgreens Boots Alliance plunged 7 percent each in premarket trading. Drug wholesalers McKesson Corp, Cardinal Health and AmerisourceBergen were also down.
PillPack organizes and delivers prescription medications for its customers, including those with multiple chronic conditions, and is authorized to deliver in 49 states.
The company had attracted interest from Walmart Inc, which was looking to buy it for under $1 billion, CNBC had reported in April.
The pharmaceutical supply chain, including pharmacy benefit managers and wholesalers, has been under pressure for the past one year as media reports of Amazon’s push into the market spooked investors.
Shares of pharmacy benefit manager Express Scripts fell 3 percent.
Amazon, Berkshire Hathaway and JPMorgan announced a joint venture in January, saying U.S. health care costs were rising too fast and holding back economic growth. The three companies said they would use big-data analysis and other high-tech tools to improve care and cut waste.
Last year, Amazon gained approval from a number of state pharmaceutical boards to become a wholesale distributor, according to media reports.
The PillPack deal is expected to close during the second half of 2018.