Walgreens doubled its automation volume as struggling pharmacy chains restored their foothold.
The company is expanding the number of retail stores serving its micro-implementation centers that use robots to fill thousands of prescriptions for patients taking medication or treating diabetes, hypertension and other conditions.
Walgreens’ goal is to make time for pharmacy staff, reduce their regular tasks and eliminate inventory waste. Less prescription filler will allow employees to interact directly with patients and perform more clinical services, such as vaccination and testing.
Walgreens first launched the robot-powered center in 2021, but suspended its expansion in 2023, focusing on collecting feedback and improving performance at existing locations. After more than a year of upgrades, including new internal tools, the company said it is ready to expand the technology's reach again.
Walgreens told CNBC it hopes to have more than 11 microcurrency centers by the end of this year, from 4,800 in February and 4,300 stores in October 2023. As of February, these centers processed 40% of the average prescription volumes that support pharmacies.
The company said this translates to about 16 million prescriptions per month at different locations each month.
Walgreens is preparing to reach a about $10 billion deal with Sycamore Partners, and the automation driver for the update is private by the end of the year.
The deal will serve as a turbulent chapter of Walgreens as a publicly traded company, with a pandemic rock transition, a decline in pharmacy reimbursement rates, weaker consumer spending and fierce competition from CVS Health, Amazon and other retail giants.
Like resumes, Walgreens has moved from opening new stores to closing hundreds of underperforming locations, boosting profits. Both companies are competing to stay relevant as online retailers attract customers and increasingly opt for fast home delivery rather than traditional pharmacy visits.
The changes also follow the dissatisfaction of pharmacy staff: In 2023, the national strike focused on burnout and long-term deficiencies, forcing the chain to re-examine its operating model.
Walgreens said investments in robotic pharmacy fillings have already paid off.
Kayla Heffington, vice president of pharmacy operation model at Walgreens, said that to date, the Micro Realization Center has saved about $500 million by reducing inventory and increasing efficiency. Heffington added that stores using these facilities had 40% more vaccines than those not.
"At the moment, they are the backbone that really helps us offset some of the workload in the store, obviously giving our pharmacists and technicians more time with patients," said Rick Gates, chief pharmacy officer at Walgreens.
“This gives us more flexibility to reduce costs, increase care and increase treatment speeds – all of these things,” he said.
Gates added that the centers provide Walgreens with competitive advantages as independent pharmacies and some competitors do not have centralized support for their stores. Still, Walmart, Albertsons and Kroger have already conducted similar tests, or are currently using their own micro-facilities to distribute grocery stores and other prescriptions.
Micro-implementation centers have their own risks, for example, rely heavily on complex robotics that can cause interference if errors occur. But facilities are becoming a permanent cargo for retail because of the cost savings they offer and the ability to streamline workflows, reduce the burden on employees and deliver goods to customers faster.
When the Walgreens retail pharmacy receives a prescription, the system determines whether the system should be filled in at that location or routed to a nearby micro-implementation center. Maintenance medications or prescription medications are used regularly to manage chronic health conditions, and supplements that do not require immediate extraction are often sent to the microfilling.
At the heart of each facility is a highly automated system that uses tools such as robotics, conveyor belts and barcode scanners, and other tools to fill prescriptions. These operations are supported by teams of pharmacists and pharmacy technicians and other professionals.
Instead of manually filling prescription staff in the store, the bottles move through an automatically orchestrated assembly line.
Pharmacy technicians fill the jars with medication from machine pods and verify the jars to ensure they are accurate. The yellow robot arm grabbed the label marked with the prescription vial and secured it in the can, which just dispensed with the specific medicine for the bottle.
Certain prescriptions are filled in separate manual stations, including inhalers and contraceptive pill packs. Each prescription is then sorted and packaged to deliver it back to the retail pharmacy for final pickup.
There are other safety and safety measures throughout the process, said Ahlam Antar, director of the registration team at the Micro Implementation Center in Mansfield, Massachusetts.
She said, for example, if the worker has a jar attached to the wrong dispenser, the robot pods will automatically lock and issue an error with a red and orange light, preventing incorrect pill prescriptions.
Sarah Gonsalves, a senior certified pharmacy technician at Mansfield, said it is also crucial to conduct appropriate staff training at the center to ensure accuracy and patient safety.
The core part of her role, she said, is to make sure that technicians can perform different tasks correctly in the process.
Since opening in 2022, Antar has worked on site in Mansfield, and he said Walgreens has improved the microfilling process after considering feedback from stores and patients during the suspension of expansion. This includes building new roles required to support the site process, such as training managers at all 11 locations.
A Walgreens spokesman said the facility also plans to transition to using smaller prescription vials after hearing the current bottles too big. This will allow the center to ship more prescriptions per order and reduce costs, they said.
Huffington said automated locations helped reduce Walgreens' overall prescription fulfillment costs by nearly 13% compared to a year ago.
Walgreens’ prescription volumes increased by 126% year-on-year, and now fills more than $170 million in annual prescriptions, she said. The company hopes to increase that number to 180 million or more.
Huffington added that Walgreens has implemented new internal tools to track work in all 11 centers and provide real-time data on where patients prescriptions are located during the microfilling process.
“If a patient calls the store and says, ‘Hey, can you tell me where my prescription is today?’ Huffington said (workers) can do that well.
Despite the company's progress, Gates said there's more to do in the Micro Realization Center.
For example, he pointed out that it is possible to ship the prescription directly to the patient’s doorstep instead of putting this burden in a retail store.
"It's just the first step now," he said.
According to some reports, the facility may still require additional improvements. For example, WRAL News reported in April that some customers at a Walgreens store in Garner, North Carolina said they would only get some prescription filler, missing several pills, or that their medication was postponed.
Customers believe that the items are for sale at the Walgreens store near Hollywood in Los Angeles.
Christopher Lee | Bloomberg | Getty Images
Before Brian Gange's Arizona store began relying on automation facilities, he walked into the pharmacy every morning and knew there were a large list of prescriptions in his work queue, waiting for the day to fill.
Now, with the help of micro-implementation, the list is much larger and smaller every day.
“We don’t have to spend too much time on those repetitive fulfillment tasks,” he told CNBC. “It really puts a lot of weight off our shoulders.”
Gange said this gives him and his team time to fall behind the pharmacy counter and interact with customers face to face, answer questions, provide advice, perform health tests or manage vaccines.
This concern can make the patient different.
For example, Ganger recalls overwhelmed the task of working at a different Walgreens job a few years ago, but overwhelmed the task of working at a Walgreens job, but another five minutes. He eventually sent the person to the emergency room because their blood pressure "was off the chart."
The patient's wife visited the pharmacy the next day and thanked Gantch for saying that her husband "may not be with us today" without a blood pressure test.
“I don’t have to question whether I have five to 10 minutes to check the patient’s blood pressure,” Gange said. “Micro implementations and centralized services really allow us to do that.”
“It really allows us to provide them with better care,” he added.