Amazon’s PillPack: A better, simpler, smarter pharmacy.

Corporate Startup of the Week

Did you know that in the U.S., 89% of adults take prescription medication? In fact, according to Web MD, the average American over 65 takes at least 6 medications daily!   

That’s millions of people every day, standing in line, filling prescriptions, sorting their meds, and making sure to take them at the right time. It can turn into quite an endeavor if you’re too sick to leave home, juggling various prescriptions, or dealing with some of the new challenges of the Covid-19 pandemic. 

PillPack by Amazon Pharmacy is on a mission to change all that, making your pharmacy experience safer and way more convenient. With PillPack, you can have your meds pre-sorted in single-serve packs, labeled with a time and date of consumption, and delivered right to your door.   

No more long lines, no more sorting, and no more tracking. PillPack has got you covered!

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Founded.

2013

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Parent company.

Amazon (Since 2018)

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Revenue.

$1.2 Billion

(End of 2020 projection)

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Number of employees.

501 - 1000

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Flagship products.

Pillpack Deliveries and
PharmacyOS software

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Activity

Currently U.S. only

(Plans for Canada, UK, and Australia)

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Amazon expands into healthcare.

No matter where you are in the world, chances are you’ve ordered something from Amazon. It’s the largest online marketplace in the world, with 44% of Americans making a first stop there before browsing Google or other online retailers.

So far, the e-commerce giant has explored almost every industry in its quest to grow and expand. This includes fashion, electronics, cloud computing, logistics, A.I., and groceries (just to name a few). More recently the company has set its sights on the trillion-dollar healthcare and pharmaceuticals industry.    

Amazon has always been renowned for its ability to stay at the forefront of technology and innovation, with several cutting-edge projects under its belt (e.g. Prime Air and Alexa). It was exactly those qualities that were missing in the pharmaceutical industry.

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Meet PillPack.

PillPack is an online pharmacy that delivers right to your door. Aside from prescription medications, you can also order vitamins, inhalers, and over-the-counter (OTC) drugs like Ibuprofen. 

One of PillPack’s standout features is that your meds come in pre-sorted, single-serve packs with clear instructions on when they should be consumed. This makes it considerably easier (and safer) for people taking multiple medications at different times of the day. Best of all, both the sorting service and the deliveries are free, and customers only pay for the cost of their medications.  

One of the keys to PillPack’s value proposition is the company’s PharmacyOS platform. The software tool automatically requests refills, confirms co-pays with insurers, and warns customers about potential drug interactions. As explained by CEO and co-founder TJ Parker:

“For customers, this means streamlined service, fewer back-and-forth phone calls, and more control over how their end-to-end medication plan is managed.”

The startup also uses robots to sort medications, cutting down on both cost and human error.

How it works.

Here’s how the service works:

    1. First, PillPack customers share their prescriptions and insurance coverage with the company through its secure, HIPAA-compliant website. 

    2. The prescriptions are then transferred to a pharmacy and distribution facility to be sorted by a robot dispensing system.

    3. Licensed pharmacists supervise the process to ensure quality and accuracy. 

    4. The meds are shipped in unmarked boxes to ensure privacy.

    5. Customers can track their orders through tracking numbers. 

Generally, each customer’s prescriptions are coordinated so that all the medications arrive together. However, special requests can be made for medications that are urgently needed.

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The benefits.

Online pharmaceuticals seem like an excellent place for Amazon to begin its quest to dominate the healthcare industry. On the other hand, PillPack would be hard-pressed to find a partner with more resources than Amazon. It’s clearly a match made in venture heaven.  

The benefits for Amazon:

  • The average PillPack user in 2018 was worth $5,000 in revenue, while the average Prime member spends about $1,300 a year.   
  • Amazon can access PillPack’s older demographic (many users are in their 50s and 60s)  and gain them as clients for other products and services. 
  • PillPack is a certified U.S. retail pharmacy with licenses in all 50 states. It would have taken Amazon years to gain these licenses. 
  • PillPack’s know-how and technology can be leveraged and used in other areas of Amazon’s business. 
  • PillPack services will also be extended to Amazon’s many employees, enabling the company to cut costs and reduce overhead.

The benefits for PillPack:

  • For a startup like PillPack, Amazon could have become a partner or a competitor. The first option was more profitable.
  • Amazon’s funding, partnerships, and resources can help PillPack expand quickly and gain a competitive advantage over newcomers in the market. 
  • It will also gain the corporate muscle it needs to take on market leaders like CVS, Wal-Mart, and Walgreens Boots Alliance (WGA).  
  • PillPack can access over 100 million Prime users from Amazon. 
  • Amazon has the market access that will enable PillPack to scale quickly using a proven business model.

The story behind PillPack.

The concept was brought to life by co-founders TJ Parker (CEO) and Elliot Cohen (Chief Product Officer). They met while Parker was studying to be a pharmacist and Cohen was getting his MBA at MIT (he also had a degree in computer science).

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Parker, whose father was also a pharmacist understood the market gaps within the pharmaceutical industry well. As explained by Parker himself:

“As a kid, I worked at the pharmacy and delivered medication to people in their homes. I was very aware at an early age of how complicated it can be to manage prescriptions. PillPack makes it simple for any customer to take the right medication at the right time, and feel healthier.”

Although Cohen wasn’t on board with the concept at first, he changed his mind after witnessing the challenges faced by his father (who had quadruple bypass heart surgery) in managing his own medications. 

According to an article by CNBC, it took one weekend for the co-founders to put together the prototype that ended up winning the 2012 Hacking Medicine hackathon. The rest is history.

What’s Next?

Amazon has managed to dominate various retail sectors with its now famous business model. A combination of tight margins, quick deliveries, and an overall focus on convenience for the customer – and there are no signs that the pharmaceutical industry will be any different.

According to CNBC, Amazon has recently made arrangements to trademark “Amazon Pharmacy” in Canada, the U.K., and Australia. A signal that they’re getting ready to explore markets outside the U.S. 

The know-how from PillPack will certainly come in handy during the expansion.

This year the company also announced it would be collaborating with Crossover Health. The goal is to locate convenient health centers close to their fulfillment centers and operation facilities. The first will be in Texas, with additional centers planned for other states in the months ahead.

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Sem Janssens

Sem Janssens

Junior Growth Hacker