The Mergers of Healthcare Companies Are in Serious Doubt as Amazon Threatens to Become a Major Player in This Segment

The Mergers of Healthcare Companies Are in Serious Doubt as Amazon Threatens to Become a Major Player in This Segment

Business

The Healthcare sector is not really in a healthy state. CVS Pharmacy, the drug store chain intends to buy Aetna, the insurer but the Insurance Commissioner from California wants the Department of Justice to prevent the $69 billion deal from taking place. This is due to their concern over the possible price rise and a decrease in competition.

Cigna, another insurance company, has hopes of buying Express Scripts, the pharmacy benefits manager for the total worth of $67 billion. Though last week, some reports had come out that Carl Icahn, the activist investor has got some stake in Cigna.

CVS is supposed to release their recent results on Wednesday morning. Investors would be eagerly waiting to listen to CVS if they have any comment regarding the claims made by the Insurance Commissioner of California. The shareholders of both CVS and Aetna have approved the deal.

Last month, there were reports that the Department of Justice would possibly give the go-ahead signal to the deal between CVS and Aetna.

The two large insurer mergers had got blocked in early 2018 by the federal judges citing antitrust issues. Aetna had wished to get combined with Humana, whereas Cigna had plans to get tied-up with Anthem.

There is a possibility that antitrust officials might decide that the deal between CVS-Aetna and Cigna-Express Scripts would not adversely affect the consumers, due to the rapid change in healthcare landscape in the midst of emerging competition.

Amazon is in the process of creating a healthcare organization in association with JP Morgan Chase and Berkshire Hathaway. They had also announced in June that they would be buying online pharmacy Pill Pack, which has already got licenses for pharmacy in 50 states. The shares of CVS and their rival Walgreens had gone down, the day Pill Pack got acquired.

There is an increased amount of worry among the investors that Amazon, which has already managed to turn the retail world along with media and cloud computing on their heads, is now entertaining thoughts of becoming a significant player in healthcare as well.

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