Online giant Amazon.com has reached an agreement to acquire PillPack, the online pharmacy that offers pre-sorted doses and home delivery, the companies said. Terms of the deal were not disclosed, but TechCrunch, citing sources close to the deal, said the price tag was just under $1 billion.

The deal is seen as a challenge, by Amazon, to traditional retail pharmacy chains, whose stocks fell on the news.

“Amazon’s acquisition of PillPack is a warning shot in what is about to become a major battle within the pharmacy space,” Neil Saunders, managing director of GlobalData Retail, wrote in an email. “Not only has Amazon finally made a solid move into pharmacy, it has done so via an innovative supplier which helps patients manage and organize their prescription drugs.”

According to the PillPack website, “each month, customers receive a personalized roll of pre-sorted medications, along with a dispenser and any other medications that cannot be placed into packets, like liquids and inhalers. Each shipment includes a medication label that has a picture of each pill and notes on how it should be taken.”

“Yes, it’s a declaration of intent from Amazon,” Walgreens Boots Alliance CEO Stefano Pessina said in a planned earnings call. “[But] the pharmacy world is much more complex than the delivery of certain [pills or] packages.”

Shares of Walgreens Boots, CVS Health, and Rite Aid all were down sharply on Thursday morning.

PillPack was reportedly in talks with Walmart this past spring in a deal that would have valued the company at less than $1 billion.

“PillPack is meaningfully improving its customers’ lives, and we want to help them continue making it easy for people to save time, simplify their lives, and feel healthier,” Amazon Worldwide Consumer Chief Executive Jeff Wilke said. “We’re excited to see what we can do together on behalf of customers over time.”

PillPack CEO TJ Parker said, ““Together with Amazon, we are eager to continue working with partners across the health-care industry to help people throughout the [United States] who can benefit from a better pharmacy experience.”

The transaction is expected to close in the second half of the year, the companies said.

According to PillPack’s website, it had raised $118 million to date.

Illustration: Getty Images

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