How digital pharmacies like Alto, Capsule, and Medly, which together have raised $650M+ since Jan. 2020, are trying to disrupt incumbents like CVS and Walgreens
Filling a prescription can be time-consuming and frustrating. There's the trip to the pharmacy, then the wait in line. Tweets: @chirag_kulkarni and @larryvc Tweets: Chirag Kulkarni / @chirag_kulkarni : Thanks to @angelicalavito on the feature of @medlypharmacy in her latest article in Bloomberg. The same trends we saw in grocery is what we will continue to see in this space, if not greater, given how ripe this space is for a better experience. https://www.bloomberg.com/... Larry Cheng / @larryvc : Enjoyed spending time with @angelicalavito on this piece about @MedlyPharmacy and the digital pharmacy space. It would not surprise me at all if more market value is created in digital pharmacy than any other vertical e-commerce category. https://www.bloomberg.com/...
Context & Ripple Effects
Bloomberg's profile lands at the top of a funding arc that has been building since 2018: NYC's Capsule went from a $50M round to expand nationally to a $300M Series D at a $1B+ valuation this May, while Alto scaled from its 2018 Series C into a SoftBank-led round worth roughly $250M at over a billion-dollar valuation. Together with Medly, they anchor a cohort that has raised $650M+ since January 2020.
The backdrop is Amazon's acquisition of PillPack, which positioned it as a direct challenger to CVS and Walgreens in the $500B-a-year prescription drug market — meaning the incumbents face well-funded startups and Big Tech simultaneously.
First-order effects
- CVS and Walgreens' store-anchored refill model is now directly undercut by Alto, Capsule, and Medly's same-day delivery and real-time pharmacist access, aimed squarely at the trip-and-wait experience Bloomberg describes.
- Medly gets a national spotlight through founder Chirag Kulkarni's promotion of the feature, putting the smallest of the three on the same footing as its better-funded peers.
Second-order effects
- With Capsule and Alto both past unicorn valuations, more venture capital is pulled toward delivery-first pharmacy models, forcing CVS and Walgreens to defend their home turf by investing in their own delivery and digital experiences.
- Amazon's PillPack presence means any incumbent response must counter two fronts at once — venture-backed startups on convenience and Amazon on scale — compressing margins across the dispensing business.
Third-order effects
- The cohort's 2021 funding peak sits just before a sharp reversal: by late 2024, roughly 66% of 39 public digital health companies had lost value while the Nasdaq rose 32%, following a record $29.1B digital health fundraise in 2021 — suggesting many of these pharmacy challengers will consolidate or fold rather than outlast the incumbents.
- If the pattern holds, US prescription fulfillment splits between a few scaled delivery platforms and traditional chains absorbing their playbook, rather than a wholesale replacement of retail pharmacy.
The trend: Pharmacy retail is shifting from store-anchored dispensing to delivery-first platforms, riding the digital health funding boom whose subsequent correction will decide which challengers survive.