Editor's PickPoliticsAmazon, Walmart Heating Up Competition in Prescription Management

2 years ago346 min

The last couple of years has seen Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT) open their wallets to acquire their way into the prescription management business.

Amazon spent just over $750 million to acquire PillPack in 2008, while in June Walmart acquired the technology and intellectual property from CareZone, a startup which helps people manage their medications, in a deal that is believed to be for about $200 million.

The companies are going after the nearly $500 billion spent on prescription medications in the U.S., according to IQVIA. IQVIA predicts 2% to 5% net spending growth to 2022, with growth of 1% to 4% in retail and mail-order prescription drugs. The U.S. Centers for Disease Control and Prevention found 6 in 10 adults in the U.S. have a chronic disease, with 4 in 10 having two or more.

UnitedHealth Group (NYSE:UNH), the largest healthcare company in the world by revenue and the largest health insurer in the U.S., decided it isn’t going to sit back and watch Amazon and Walmart take over the online pharmacy space. UnitedHealth reportedly acquired startup DivvyDose, which delivers medicines in pre-sorted packages and competes with PillPack, for more than $300 million. Both companies have yet to announce a deal has been completed.

Once users transfer their prescriptions to DivvyDose, they’ll begin receiving “divvyPACKS with the pills that need to be taken each day. The company also handles refills, accepts all major insurance plans and says the prices stay about the same as a typical 30-day refill price.

If the deal materializes, it will be a big payday for DivvyDose founder Dr. Arvind Movva, who founded the company in 2015. According to Crunchbase, the company hasn’t raised any institutional funds from venture capital funds or private equity investors. Movva’s biography says he’s a former physician who “became increasingly frustrated watching his patients suffer with chronic diseases that could be managed by taking the right medication at the right dose at the right time.”

The prescription management space is attracting a lot of money. Alto Pharmacy, which is a digital pharmacy that delivers prescriptions, raised $250 million earlier this year at a valuation of more than $1 billion. Capsule, which delivers medications in as quick as two hours, raised $200 million last year to expand to other large cities. Even Uber (NYSE:UBER) recently announced it has teamed up with NimbleRx to offer pharmaceutical delivery in Seattle and Dallas, with plans to grow in the coming months.

As money pours into the quickly growing prescription drug delivery and management business, it will be fun to watch industry giants such as UnitedHealth try to fight off the likes of Amazon and Walmart.

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