Guess who’s raiding the medicine chest


News reports have seen it coming for months, but now it’s official: (AMZN) is attacking drug distributors.

AMZN announced the purchase of closely held PillPack. The smaller company caters to patients who routinely take large numbers of medicines, like for high blood pressure or HIV. Their value-add is prepackaging the pills for each day, saving people time and reducing the risk of overdoses. Of course, there’s also a handy mobile app.

It’s not clear how many customers PillPack had before the deal, but they will obviously grow exponentially with AMZN’s heft behind it. That’s being viewed as confirmation the e-commerce giant is going after companies like WBA and CVS.

Walgreen Boots (WBA), barely a week after joining the prestigious Dow Jones Industrial Average, cratered 10 percent on the news. That was its biggest drop since October 2015. CVS Health (CVS) had its worst day in over a year, down almost 8 percent. McKesson (MCK), Cardinal Health (CAH) and Amerisourcebergen (ABC) also get hammered on the news.

The PillPack deal wasn’t a huge surprise because news reports have talked on-again, off-again about such a move since last summer. AMZN CEO Jeff Bezos has also been working with fellow tycoons Warren Buffett and Jamie Dimon to lower health-care costs.

In conclusion, drug distribution is another huge industry that’s in the process of getting disrupted by AMZN.

Walgreen Boots (WBA) chart showing bearish put volume and 50-day moving average.
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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.