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Online retail giant Amazon is entering the pharmacy business after months of speculation that the company could disrupt how prescription drugs are sold the same way it upended bricks-and-mortar retail.

Amazon announced Thursday that it would acquire PillPack, an online pharmacy that seeks to simplify medication for people who take multiple drugs, by delivering packets with presorted doses. A person who takes five different medications each morning, for example, could receive a packet with all the pills in a single pouch, instead of having to manually sort the doses into pill boxes for each day.

“I think this is a fundamental step for Amazon, to begin to attack the pharmacy industry,” said Adam Fein, president of Pembroke Consulting and an expert on the drug supply chain. “This is the beginning of the pharmacy industry shakeout. … I think everyone right now is scrambling to figure out what this means for their business model.”

In a statement after Amazon’s announcement, Express Scripts sought to downplay the competitive threat, pointing out it sent 100 million prescriptions to its members’ homes last year.

“Our scale and quality of care provides patients with access to a broader suite of products than other smaller pharmacies,” the north St. Louis County-based pharmacy benefit manager said.

Walgreens also signaled it wasn’t worried about Amazon’s push into the health care sector.

“You see, the pharmacy world is much more complex than just delivering certain pills or certain packages,” Walgreens Boots Alliance Inc. CEO Stefano Pessina said on a post-earnings call that was dominated by discussions about Amazon’s foray.

Still, investors were rattled. Walgreens’ shares fell 9.9 percent. Stock prices for other major players also dropped: CVS Health fell 6.1 percent, while Express Scripts slipped 1.4 percent.

Eric Coldwell, an analyst with Baird Equity Research, said in a note to investors that Wall Street would see Amazon’s move “as a full-front attack” on companies in the prescription drug supply chain.

The PillPack acquisition gives Amazon a foothold in the regulated pharmacy business. PillPack has pharmacy licenses in all 50 states and brings in-house expertise that could help Amazon move more quickly into a space filled with regulatory obstacles, said Michael Rea, chief executive of Rx Savings Solutions, a company that develops software to help consumers lower the cost of prescription drugs.

“I think this move jump-starts efforts and clears some hurdles [for Amazon], and what it’s really going to do is fast-track any moves they want to make to get licensed,” Rea said. “PillPack has got a good, fast-growing business, they’ve got infrastructure in place, and they’ve got the regulatory compliance piece in place. … It brings speed.”

Other companies have already been preparing for the competition. CVS Health, for example, has launched next-day prescription delivery services nationwide and same-day delivery in select cities, including New York, Boston, Miami, Philadelphia, San Francisco and Washington.

Experts said buying the company outright would allow Amazon to develop and scale a mail-order pharmacy business more quickly than if it had to develop the expertise from scratch. PillPack has also developed expertise in battling with payers and pharmacy benefit managers to have its services covered, and Amazon will bring new clout to those negotiations.

“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” Jeff Wilke, chief executive of Amazon Worldwide Consumer, said in a statement. Beyond a joint press release, Amazon declined to disclose terms of the deal or comment on how the business would be integrated. The acquisition will close in the second half of the year.

PillPack also declined to comment but disclosed that it has tens of thousands of customers and brought in more than $100 million in revenue last year.

“Together with Amazon, we are eager to continue working with partners across the health care industry to help people throughout the U.S. who can benefit from a better pharmacy experience,” T.J. Parker, co-founder of PillPack, said in the news release.

Michael Carrier, a law professor at Rutgers with expertise in the pharmaceutical space, said the process for obtaining prescription drugs has been “shrouded in secrecy” resulting in profits for companies along the way.

“The entry into this space of Amazon, which is renowned for cutting costs and facilitating access, could upend the industry, leading to losses for wholesalers and PBMs like Express Scripts,” Carrier said.

Express Scripts is in the process of being acquired by Cigna.

If Cigna’s deal to acquire Express Scripts is terminated, either party could owe a fee of either $2.1 billion or $1.6 billion depending on the reason for the breakup, according to a regulatory filing.

In 2016, Express Scripts booted PillPack from its pharmacy network, causing the startup to lose nearly a third of its customers, according to reports from the time. PillPack said it was shut out because the company posed a threat to Express Scripts’ business. But Express Scripts maintained that PillPack “misrepresented” itself. Express Scripts said PillPack should be licensed differently, as a mail-order pharmacy and not as a retail pharmacy, according to a CNN report.

The partnership was later resumed, allowing Express Scripts members to continue receiving prescriptions from PillPack.{span style=”background-color: #fdd8d8;”}

Express Scripts employs 4,687 people in the region and 26,600 worldwide. Its headquarters has been on the campus of the University of Missouri-St. Louis since 2007, and executives at both companies stressed a commitment to St. Louis operations.

Reuters, The Washington Post and the Post-Dispatch contributed to this report.

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