PillPack, an online pharmacy that delivers personalized packets of medication to customers at home, will be acquired by retail giant Amazon for “just under $1 billion,” TechCrunch reports.
Amazon announced in a press release Thursday morning that the Manchester, New Hampshire-based startup, co-founded by MIT Sloan alumnus Elliot Cohen in 2013, would be acquired in a “definitive merger agreement.” The exact terms of the deal were not disclosed.
PillPack is designed to provide a convenient delivery service for people who take multiple daily prescription medications. It packages the medication in pre-sorted doses, coordinates refills and renewals, and makes sure shipments are sent on time.
Cohen met his co-founder TJ Parker, a pharmacist, while working on the MIT $100K Entrepreneurship Competition. The pair worked on their idea at the Martin Trust Center for MIT Entrepreneurship, and won the MIT Hacking Medicine hackathon in 2012.
“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” Amazon CEO of Worldwide Consumer and MIT Sloan alumnus Jeff Wilke said in a press 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. We’re excited to see what we can do together on behalf of customers over time.”
For Trust Center managing director Bill Aulet, PillPack represents the quintessential digital disruption success story. Cohen, who helped create MIT Hacking Medicine, was the first entrepreneur-in-residence Aulet hired when he took over leadership at the center.
“There were a lot of naysayers,” Aulet said. “They said ‘It’s putting pills in a package. What’s so magical about that?’ But Elliot said it’s about the user experience. We teach people that innovation isn’t just about technology; it’s about creating value and you can create value through tech or new processes, but also through generating a new user experience.”
PillPack’s approach to running a pharmacy filled many of the gaps that industry incumbents like CVS and Walgreens could not, he said. “He did a lot of work on user-centered design. He was convinced that he knew the problem, and that the current solution within pharmacy was woefully inadequate, but it wasn’t going to change because it was an oligopoly,” Aulet said.
The company’s efficiency made it a natural target for acquisition by Amazon. “Amazon is all about efficiencies and PillPack is very efficient about delivering things,” Aulet said. “You don’t have brick and mortar — you have an extremely optimized backend operation using data like other companies don’t. The cost structure is much lower.”
The transaction’s completion is subject to regulatory approval and other closing conditions. The parties expect to close the transaction during the second half of 2018, Amazon said.
PillPack had also reportedly been in talks with Walmart about a potential acquisition.
The announcement saw stocks for rival pharmacy companies CVS, RiteAid, and Walgreens tank by as much as 10 percent.