Behind PillPack’s $1 Billion Sale, a Frustrated 32-Year-Old Pharmacist

June 28, 2018 1:49 p.m. ET

TJ Parker grew up working the counter for his father’s pharmacy in Concord, N.H., where he became frustrated by how much customers struggled to keep track of their medications.

He went to pharmacy school but rather than take up the family business, he and a friend set out to change it. In 2013, they launched an online pharmacy from Manchester, N.H. On Thursday, the 32-year-old CEO said he sold his startup to

It was a roughly $1 billion deal, according to people familiar with the deal. Mr. Parker is expected to stay involved after the deal, said a person familiar with the matter.

The idea behind PillPack Inc. was to create a faster, simpler way to deliver medicines. By last year, the company, Mr. Parker said in a blog post in November, had amassed “hundreds of thousands” of monthly customers and was on track to generate more than $100 million in annual revenue. PillPack declined to make Mr. Parker available for an interview.

The company’s genesis traces back to an entrepreneurship competition at the Massachusetts Institute of Technology, when Mr. Parker was in pharmacy school. He teamed up with his friend

Elliot Cohen, an engineer who was pursuing an M.B.A. at MIT.

The duo put forward a nascent idea for PillPack and won the competition, said Zen Chu, a Boston-based venture-capital investor who oversaw the contest. He knew Mr. Cohen and was a fan of the duo and their ambition.

“I gave them a blank check and said, hopefully it helps you build confidence and get other investors,” Mr. Chu said. “It was a very clear vision.” Ultimately, the duo raised $120,000 from investors including startup accelerator Techstars, according to PitchBook.

“We believe that if it’s easy to take medications as prescribed, people will do it,” Mr. Parker wrote in a blog post last year. “For folks with chronic conditions, research shows that medication adherence goes a long way towards achieving health goals. It’s a simple premise.”

It has been a dizzying rise for PillPack. When it received its first large slug of investment in 2014—a $4 million infusion—it was valued at just $9.4 million, according to PitchBook. As it gathered steam, more money flowed in from large venture-capital firms like Accel Partners and CRV, and by 2016, investors put in money at a $360 million valuation, according to PitchBook. In all, it collected $118 million of venture funding.

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One of the company’s earliest investors, David Frankel of Boston-based Founders Collective, wrote in a post on the website Medium Thursday that the company showed promise with two founders that complement each other.

“TJ cherishes beautiful design but has the bearing of a doctor,” he wrote of Mr. Parker, while Mr. Cohen was able to master the technical challenges behind an “indispensable pill dispensing solution.”

“Their vision and progress made for a compelling pitch,” he wrote.

Before going to pharmacy school, Mr. Parker worked at his father’s business, which supplied medicines to nursing homes and long-term care facilities. The business grew quickly and eventually amassed its own fleet of delivery drivers, giving Mr. Parker an appreciation of the logistics involved in drug delivery, he said in a 2015 interview with technology-news site Pando.com.

While attending the Massachusetts College of Pharmacy and Health Sciences in Boston, he started taking fashion-design classes at the nearby Massachusetts College of Art. “Pharmacy school was sooo boring,” he said in the interview.

His design-school stint was short-lived, but the expertise, he said, inspired PillPack’s concept of simplifying medication regimens by sorting pills into so-called “dose packets,” dispensed from a small box in baggies marked with the date and time they are to be taken.

It turned out to be a billion-dollar idea.

Eliot Brown and