JPMorgan Analyst Lisa Gill said Amazon’s (AMZN) agreement to acquire PillPack is expected to drive a “significant overhang” on sentiment across the prescription channel, even though she doesn’t expect PillPack to capture a material share of the market in the near term. While the deal establishes an initial foothold for Amazon in the mail pharmacy space, she thinks it will take time to scale up and she does not believe PillPack’s unit dose packaging technology is unique. Gill also noted that Express Scripts (ESRX) said it would remove PillPack from its pharmacy network in 2016 on allegations it had misrepresented itself as a retail pharmacy and not a mail pharmacy, though within weeks PillPack was added back by the PBM. Shares of retail pharmacy operators CVS Health (CVS), Walgreens (WBA) and Rite Aid (RAD) have all been pressured by the news of Amazon’s deal, as have the shares of drug distributors AmerisourceBergen (ABC), Cardinal Health (CAH) and McKesson (MCK). Diplomat Pharmacy (DPLO), an operator of a specialty pharmacy, is also sharply lower following the announcement from Amazon.
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