Rise of Drones for Medical Supply Delivery

Kim BellardFor those of us of a certain age, we expected to be living in a Jetsons-type world, complete with flying cars. That hasn't happened, but it is starting to appear as though the skies may, indeed, soon be full of flying vehicles. It's just that they may not have people in them.

Welcome to the brave new world of drones.

Many people may have viewed drones as a toy akin to radio-controlled airplanes (indeed, that's how they've been regulated). We're beyond that now. Last summer PwC asked "Are commercial drones ready for take-off?" They thought so, estimating the total available market for drone-enabled services at $127b.

Many companies have already been testing use of drones for various kinds of delivery. Domino's, for example, has tested drones to deliver pizza, and Chiptole delivered burritos (in partnership with Alphabet).

The company everyone is waiting for, though, has been Amazon. They've already piloted Prime Air Service in England. It offers a large but limited set of items, stored in a specially designed fulfillment center, while promising delivery within thirty minutes, as if you were ordering a pizza.

I don't know how crazy I'd be about having my new Fire TV delivered to the middle of a wet field, as happened to the customer in the video, but one takes their point. If you already thought Amazon was fast, be prepared to think again.

Bloomberg reports that Amazon has now opened up a drone research center in France, aimed at developing their own flight control system. It is one thing to program drones to avoid stationary landmarks like buildings or hills, and it's certainly easy to imagine using transponders to avoid other drones, but Amazon is thinking about "non-collaborative flying objects."

Zipline drone medical drop - Credit Atlas of the Future CC-BYA.K.A., birds. As Paul Meisner, Amazon's vice president for global innovation and communications, told Bloomberg, "Geese will never be collaborative so we have to sense and avoid those obstacles." He admitted that there are many regulatory hurdles ahead, which may take years to fully resolve, but vowed, "We’re not going to launch this until we can demonstrate its safety." This is not going to all be about getting your books, or your socks, or even your new HD television faster. It is going to impact many industries -- including health care.

And that impact has already started to happen.

Zipline International, for example, is already delivering medical supplies by drone in Rwanda. They deliver directly to isolated clinics despite any intervening "challenging terrain and gaps in infrastructure." They plan to limit themselves to medical supplies, but not only in developing countries; they see rural areas in the U.S. as potential opportunities as well. Last fall they raised $25 million in Series B funding.

Drones are also being considered for medical supply delivery in Guyana, Haiti, and the Philippines.

And drone delivery is already being tested in more urban areas. The Verge reported that Swiss Post, its national postal service, is working with two hospitals in Lugano to ferry lab samples between them, which Swiss Post claims is the first commercial deployment of drones in an urban area. Its press release claimed that "the regular use of drones between the two hospitals will become an everyday occurrence."

Similarly, Johns Hopkins has been testing drone transport of blood supplies, concluding that it is "an effective, safe, and timely way to get blood products to remote accident or natural catastrophe sites, or other time-sensitive destinations."

Zipline Team - Credit Atlas of the Future CC-BY

Airbus is developing the A-180 drone specifically to deliver medical supplies, especially for emergencies. Its cargo capsule is "capable of transporting everything from medicine and antivenin to supplemental blood and even organs." A company called Otherlab is going a different direction. Wired reports that their drone will deliver its package -- then decompose, making it ideal for deliveries to humanitarian crises (or to battle sites, since Darpa helped fund them).

Lest we focus too narrowly on the concept of drones delivering medical supplies, argodesign has proposed a flying ambulance, which could be operated as a drone or by a pilot. If you've ever seen ambulances stuck in traffic and felt sorry for the patients relying on them, such ambulances could be the solution -- arriving faster and to locations regular ambulances could not reach.

But for real impact, let's go back to Amazon. CNBC's Christina Farr broke the news last week that Amazon was considering getting into the pharmacy business. They reportedly have been considering the move for several years, but now are starting to hire experts in the field, including a business lead. They already sell various medical supplies and equipment.

Amazon knows prescription drugs is a complicated market, but one that experts and consumers agree needs significant change, due to high prices that are further obscured by various middlemen, hidden rebates, manufacturer coupons, and health plan discounts. Stephen Buck, cofounder of GoodRx, told Ms. Farr, "I think Amazon would introduce a lot of transparency to what drugs really cost," estimating that it could be a $25b to $50b market opportunity for Amazon.

Even for Amazon, that's a lot of money.

Put rapid delivery -- especially with drones -- together with lower and more transparent prices, and it is no wonder that the stocks of CVS and Walgreens took a hit when the news broke about Amazon's new interest.

Dan Diamond writes in Forbes that Amazon's entry could be a game-changer. He says: "for all of the major new players eying the health care market — with Apple pushing to collect health data through the Apple Watch, or Walmart beginning to deliver care at its stores — Amazon's innovative plan is arguably best-positioned to fill an existing gap."

Can anyone imagine Amazon would have much patience with PBMs like Express Scripts or Optum?

Kevin Schulman, a Duke professor of medicine, is intrigued by other possibilities Amazon could take advantage of, telling the Washington Post: “If Amazon would know that you have diabetes or hypertension they could do a lot with that data. In principle, they could set up a marketplace where they behave differently, with different rules and different privacy practices.”

Health care has been all-too-much a story of waiting. That's quickly changing, with telemedicine, WebMD, retail clinics, and -- soon -- 3D printing and health care robots. We can add health care drones to the list, allowing 30-minutes-or-less kinds of promises that we haven't even begun to tease out yet.

Bring on the drones!