Amazon's PillPack Purchase Wipes Out $20 Billion in Pharmacy-Related Market Cap

Health and Healthcare

Published: June 28, 2018 11:10 am

Last Updated: January 11, 2020 9:44 pm

Last October, Amazon.com Inc. (NASDAQ: AMZN) was rumored to be getting into the pharmacy business. The stocks of pharmacy retailers dropped 6%. Thursday morning, Amazon announced that it is acquiring PillPack and pharmacy stocks dropped around 9%.

Anytime Amazon takes aim at a new line of business, the old-line participants get the heebie-jeebies. And with good reason: Amazon is widely blamed for forcing brick-and-mortar retailers to close thousands of stores in the past few years.

PillPack is a pharmacy that delivers medications to customers in presorted dose packaging, coordinates refills and renewals, and ensures that shipments are made on time. The deal is expected to close in the second half of this year, but no other details were provided.

Not only does PillPack give Amazon an entry to the pharmacy business, it also serves some of the same functions as pharmacy benefits management (PBM) or distribution companies. Those stocks also took a hit this morning.

Here’s a look at the impact of Amazon’s announcement on pharmacies and PBMs.

Walgreens Boots Alliance Inc. (NASDAQ: WBA) shares traded down 10.4% at $59.35, after posting a new 52-week low of $59.07 earlier. The 52-week high is $83.89. The company’s market cap dropped by about $7 billion. Walgreens also reported quarterly earnings this morning.

CVS Health Corp. (NYSE: CVS) traded down nearly 9.5%, at $53.45 in a 52-week range of $60.14 to $84.00. The hit to the company’s market cap was around $6.5 billion.

Rite Aid Corp. (NYSE: RAD) traded down nearly 11%, at $1.76 in a 52-week range of $1.38 to $3.12. The company’s market cap dropped by about $180 million.

Diplomat Pharmacy Inc. (NYSE: DPLO) traded down about 5.8% to $25.74. The 52-week range is $28.74 to $14.24. Diplomat’s market cap dropped by about $80 million.

McKesson Corp. (NYSE: MCK) down about 7.5%, at $133.93 after posting a new 52-week low of $131.70. The 52-week high is $1768.86. McKesson’s market cap dropped by nearly $2.7 billion.

Express Scripts Holding Co. (NASDAQ: ESRX) traded down more than 3% to $76.25, in a 52-week range of $55.80 to $85.07. Express Scripts has seen its market cap shrink nearly $1.9 billion.

AmerisourceBergen Corp. (NYSE: ABC) traded down 6.3%, at $84.16 in a 52-week range of $71.90 to $106.27. The company’s market cap has dipped by about $1.2 billion.

Cardinal Health Inc. (NYSE: CAH) traded down 7.8% to $48.83, after posting a new 52-week low of $48.77. The 52-week high is $79.28. Cardinal’s market cap lost nearly $1.4 billion.