Drone Delivery’s Impact on Healthcare

Mark Pappas, SVP, Innovation

May 27, 2021

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When the subject of drone delivery comes up, people often picture a far off dystopia where small aircraft swarm the sky ferrying packages back and forth. Think Blade Runner, Ready Player One and  others. People have become used to same day or two day shipping but the thought of 5 minute  delivery for essential items and medications seems pretty far off.

It is actually here.

Drone delivery has been seen as something teased by Amazon but seemingly far off. When Amazon  first announced Prime Air in 2016, the internet went crazy with spoof videos of drones taking over the  skies armed with all manner of packages, and since that time it has not become a reality. Well, the  future is here, and very soon, due to vast improvements in battery technology and decreasing  manufacturing costs and new changes to the laws governing drone use, a large portion of our goods  including food, medicine and critical supplies for various industries will be brought to your door via  drone. And with it, customer expectations will change. If you thought that same-day delivery was  fast – wait until under 30-minute delivery starts becoming normal.

Applications

While everyone wants their packages as soon as  possible and drone delivery will help accomplish  that, there are many applications specifically  during the pandemic.

Drones are able to deliver medical devices, testing supplies, training and visual aids, PPE, emergency dwelling (pop up isolation wards) as well as personal accessories.

Major companies are already delivering medicine, pharmacy deliveries and food.

Cost and Convenience

The rapid changes in regard to battery  technology have made longer drone deliveries much more possible and affordable.

As of 2020, batteries can safely accommodate 12+ mile flights as well as necessary reserve power needed to fly safely. This has also helped  to bring the cost of a 10-mile drone delivery down from $7.80 to just $.25 when flown autonomously.

Currently, for pharmaceutical delivery/pickup looking at cost vs. time – mail order may be the  cheapest option, but current delivery times are  the longest. Taking your personal car to a pharmacy is much quicker, but fuel costs put it at  the priciest option and it’s far less convenient  than delivery. Drone delivery brings the delivery  time under 10 minutes with a cost under $1.

The same applies to parcel deliveries. FedEx Ground is one of the more affordable options, but  delivery times are the longest. Amazon Prime Air  drone delivery provides the quickest delivery time and the lowest cost.

The last mile of delivery is often the most costly to companies. With drone delivery, those last-mile costs plummet.

Amazon

In 2015, the FAA first gave Amazon an experimental airworthiness certificate to their logistics division in order  to get their drone fleet off the ground (pun intended). Amazon successfully delivered their first package by drone on  December 7th, 2016 in the UK. It took all of 13 minutes from  purchase to delivery.

While this was part of a small test in the UK, Amazon received FAA approval in August of 2020 and in December of 2020, the  FAA issued new guidance on the use of larger drones to address safety and security concerns further paving the way for Amazon’s drone fleet to take to the skies.

Current Amazon drone deliveries have a payload limitation of 5 lbs., however, Amazon says 75% of its packages weigh less  than that. In the image below, we can see what a potential Amazon drone delivery distribution center could look like. It is  almost beehive-like in nature with tractor trailers coming in at  the ground floor and drones taking off from above.

With the rollout of Amazon Pharmacy and PillPack acquisition  it only makes sense that Amazon will be providing medical deliveries by drone at the quickest possible delivery times.

Potential Amazon drone delivery distribution center.

UPS

While Amazon is one of the most high-profile  companies to roll out a drone delivery option, UPS has been hot on their heels. In 2019 UPS created an entirely new subsidiary called Flight Forward specifically to service hospitals  transferring materials for lab tests. Currently, lab samples typically take several hours to arrive by  ground, but with drones that drops to a few minutes. That time can be life saving for patients. UPS launched (again, pun intended) Flight  Forward at WakeMed’s flagship hospital in  Raleigh, North Carolina with up to 10 drone flights per day. So far UPS has completed over  1500 flights at WakeMed saving doctors much  valuable time.

UPS is now teaming up with Kaiser Permanente to bring drone delivers to its 39-hospital network  as well as with AmerisourceBergen to deliver pharmaceuticals, supplies and records to  medical campuses.

Moving beyond hospitals, UPS and CVS  announced a drone delivery partnership to  deliver prescriptions and retail products from CVS  stores to customers. In April of 2020, UPS and CVS partnered to deliver prescription medications to residents of The Villages retirement community in Florida, helping the 135,000 residents maintain  social distance while being able to receive their  important medications.

For Flight Forward, UPS partnered with Matternet for their drone technology. Matternet specializes in healthcare applications for drones. This partnership between the two companies resulted  in the first drone delivery services to receive full  certification from the FAA to operate a drone airline.

Google/FedEx/Walgreens

Not to be outdone, Google has gotten into the  drone game with Wing, which falls under the umbrella of their parent company, Alphabet. Wing became the first US organization to receive  permission from the FAA to start testing  deliveries. Wing has partnered with FedEx and Walgreens to test drone deliveries as Walgreens  has stores across 78% of the US. This means the  majority of the US population is within the 5 mile delivery range of a Walgreens. Wing claims it can deliver items 6 miles away in 6 minutes. Currently the only US city being serviced by Wing is Christiansburg, VA. Deliveries have doubled in Christiansburg as a result of Covid-19. Walgreens deliveries via Wing consisted of toilet paper, medicine and toothpaste. Recently pasta and baby food were added as well.

Unlike the other companies in the drone delivery market, Wing allows business in towns they service to sign us to have their products delivered by drone. According to Bloomberg, Mockingbird Cafe in Christiansburg sold 50% more pastries through Wing’s drones in its first weekend with the company than it typically sold in its store prior to the virus-related business disruptions.

Walmart/Zipline

Announced earlier this year, Walmart will be partnering with Zipline to deliver products by drone from their Arkansas stores this summer. This will be a pilot for Walmart with a 50-mile radius from their Pea Ridge, Arkansas store.

Zipline has been around since 2014 with a primary focus of delivering on-demand medical supplies in Rwanda. Since then, Zipline has completed over 200,0000 deliveries and has delivered over 1 million vaccines across Africa. Zipline specializes in medical and healthcare needs. Zipline has been in the news recently for their solution to help deliver Covid-19 vaccines. The ultra-low temperatures required for vaccines can cause logistical issues with the supply chain. Zipline has developed end-to-end cold chain capabilities helping to facilitate vaccine delivery in less developed areas.

Growth

While we only touched on a few of the companies in the drone delivery business, it is enough to see that  drone deliveries are for real and will be much more commonplace in the near future. ARK Investments  believe drone deliveries will make up 40% of all ecommerce deliveries by 2030 with revenue increasing  from $15 billion in 2025 to $115 billion in 2030. With medicine and medical supplies being the leading  category with current drone deliveries, Amazon’s purchase of PillPack and Google’s push into health, it  only makes sense this will become the next big distribution channel for healthcare.