Automated solutions streamline operations in the pharmaceutical and health-products industry.
Mark Cuban, the billionaire entrepreneur and television personality, made big news last January when his Cost Plus Drug Co. launched its online pharmacy, selling generic medications wholesale to retailers and directly to consumers paying in cash.
By limiting its profit margin to 15% and cutting middlemen out of the supply chain, Cost Plus Drug Co. intends to be a lifeline to uninsured and underinsured Americans who struggle to pay for their medications. But there’s more to this story than cost savings.
Cost Plus Drug Co. was scheduled in November to open its $11 million manufacturing plant in Dallas. The 22,000-square-foot facility has been described as an “all-robotic plant” by news organizations such as Forbes. It will enable the company to manufacture medications that other drug companies deem unprofitable or that it can’t procure from other manufacturers. It also will allow the company to respond rapidly to drug shortages and to combat price-gouging.
These ambitious plans wouldn’t be possible without the major advancements in material-handling technology that are changing the way prescription drugs, over-the-counter medications and health care products are sold.
Whether it’s through robotic piece-picking and packing solutions, automated storage and retrieval systems (ASRS) or totes that keep drugs refrigerated, new technology is helping patients get the health care products they need faster and more cheaply than could possibly be achieved through manual operations.
The right kind of products
Several aspects of the pharmaceutical and health care sector make it ideal for automated solutions, according to Vince Martinelli, head of marketing for MHI member RightHand Robotics. Items such as pill bottles and packaged medications typically are small, relatively lightweight, similar in size and easy for robotic vision and grasping systems to recognize and handle, he said.
These goods are much less seasonal than many products, and that steady consumer demand helps to justify investments in automation, Martinelli said. Similarly, the pharma sector can count on SKU proliferation as more drugs gain FDA approval and new OTC products are launched, he added.
Amid a persistent labor shortage, online pharmacies would struggle to meet rising demand, driven in part by electronic prescription filing and the COVID-19 pandemic, which accelerated the migration to ecommerce in many industries, Martinelli said.
That certainly would be the case for Apotea, Sweden’s largest online pharmacy, which ships out more than a million parcels per month. In May, RightHand Robotics announced that it had installed its RightPick picking solution at the online pharmacy’s facility in Morgongåva, Sweden.
Powered by artificial-intelligence software, the piece-picking system is integrated with the facility’s ASRS from MHI member AutoStore, a goods-to-person storage solution with a cubic layout that greatly increases vertical storage capacity.
Through machine learning, the three-pronged gripper is able to determine the best way to grab items from storage totes and place them in outbound boxes. The robot scans the barcode on each item and checks with the facility’s order management system to confirm that prescriptions and other products are going to the right person.
If there’s a discrepancy, the robot will put the item back in the storage bin or set it aside for a worker to evaluate. Once orders are complete, humans at packing stations perform a final check for order accuracy, insert protective packaging materials and packing slips and seal the box.
The system drastically reduces the manpower required to run the facility, reducing labor costs and eliminating many of the tedious, repetitive tasks that lead many employees to quit, Martinelli said.
Until recently, these automated solutions would have been too expensive for smaller online pharmacies, but as costs have decreased, adoption is picking up, he said. And since these solutions typically are easy to scale up, they offer the flexibility that online pharmacies need to accommodate growth.
“The price of robotic arms has been consistently coming down over the last 10 to 15 years, and the pieces and parts are readily available,” Martinelli said. “That makes it very practical for end users and system integrators who design warehouses to consider these kinds of robots.
“Another trend is the continued rise of the modern ASRS,” he said. “Systems like the AutoStore have shown that you don’t need to have a huge warehouse shipping out a ton of orders a day to be able to afford an ASRS that is cost-effective for your operation. Some of the payback economics for these online pharmacies are pretty compelling, which is helpful in making the case for automation.”
As more customers get prescriptions and health care products delivered to their home, brick-and-mortar pharmacy chains are seeking to expand their services by offering vaccinations and walk-in medical clinics. The labor-cost savings achieved through automated solutions allow drugstores to redirect their limited resources toward these services, helping these companies maintain relevance with consumers, Martinelli said.
“These companies don’t just want to be a drugstore with a pharmacy in the back,” he said. “They want to be more than that.”
ASRS are improving operations
ASRS are a powerful tool for pharma and health-products companies dealing with robust growth and SKU proliferation, especially those with warehouses in areas where real estate is expensive. By vastly increasing a warehouse’s vertical storage capacity, ASRS allow shippers to expand operations without enlarging their footprint, said Mike Stein, vice president of marketing and product management at MHI member Signode.
As an example, Stein points to India-based Aurobindo Pharma, one of world’s leading generic pharmaceutical companies. In 2016, the company broke ground on a state-of-the-art 567,000-square-foot distribution center in East Windsor, N.J. The facility now ships more than 200 million items across 200 product categories to hospitals, doctor’s offices, pharmacies and retail stores nationwide, and volume is growing by double-digit percentage points each year, Stein said.
With ecommerce consumers expecting fast delivery, shippers need to be close to the urban population centers where most of their customers live, so the ability to expand “up rather than wide” is key to controlling costs, Stein said.
Expanding that facility or building a new one so close to New York City would be quite costly indeed, but by using an ASRS, Aurobindo Pharma USA was able to increase its pallet positions by a remarkable 450%, from 7,000 pallets to 34,000, Stein said. The shuttle-and-cart system can manage the storage and retrieval of up to 80 pallets an hour simultaneously.
“ASRS is the best thing we’ve ever invested in,” said Lorie Johnson Lawson, distribution manager for inbound import receiving at Aurobindo Pharma USA. “From where we are now, we can move more product faster and with greater accuracy to our customers.”