NEW YORK – Amazon is buying online pharmacy PillPack – a move that could disrupt the drug store business as change from technology continues to impact the nation’s retail sector.
Also on Thursday, Kroger Co. is about to test whether it can steer supermarket customers away from crowded grocery aisles with a fleet of diminutive driverless cars designed to lower delivery costs.
PillPack has pharmacy licenses in all 50 states. The company delivers medications to customers in pre-sorted doses designed to make it easier for people to take multiple medications a day.
Amazon was widely expected to move into the pharmacy business.
And Amazon CEO Jeff Bezos, the world’s richest man, is creating a health care company along with JPMorgan Chase and Warren Buffett’s Berkshire Hathaway.
The PillPack deal is already scaring investors in the top two drug store chains.
CVS fell 8% in early trading. Walgreens Boots Alliance, the newest Dow component, plunged nearly 10%. Walgreens was already trading lower after reporting lower same-store sales at its US pharmacies.
Rite Aid shares also fell, as did the stocks of big drug distributors Cardinal Health and AmerisourceBergen.
These and other health care stocks rose a few months ago after reports that Amazon may not have been interested in selling prescription drugs. So much for that.
The PillPack acquisition comes just a week after CVS announced it will start delivering prescriptions to people’s homes – a response to growing competition from PillPack and Capsule, another online pharmacy startup.
Kroger’s test
The test program announced Thursday could make Kroger the first U.S. grocer to make deliveries with robotic cars that won’t have a human riding along to take control in case something goes wrong.
Cincinnati-based Kroger is teaming up with Nuro, a Silicon Valley startup founded two years ago by two engineers who worked on self-driving cars at Google. That Google project is now known as Waymo, which plans to introduce a ride-hailing service that is supposed to begin picking up passengers in fully autonomous cars by the end of this year.
Like Waymo, Kroger is only saying its self-driving delivery service will start by the end of this year.
The location of the delivery service hasn’t been determined yet either, although it most likely will involve Fry’s supermarkets in California or Arizona, said Nuro co-founder Dave Ferguson.
Customers will be able to order groceries from a mobile app, much like people summon an Uber or Lyft ride. After the order is placed, a driverless vehicle will deliver the groceries at a curb, requiring the customers to be present to fetch the items. The vehicles will probably be opened with a numeric code.
Kroger currently offers grocery delivery in vehicles driven by people at about 1,200 of its 2,800 stores, covering about 20 different markets in the U.S. If the Nuro tests go well, Kroger say it’s likely to expand its use of driverless cars, potentially allowing its supermarkets to reduce its delivery fees and reassign workers who had been driving cars to other jobs focused on improving customer service.
