Cardinal Health Inc. plans to test drone delivery to a pharmacy customer with San Francisco-area unicorn Zipline Inc.
The aim is to improve to-the-second precision of deliveries, especially for urgent orders of medications and supplies, but the autonomous aircraft also can bring cost savings compared with trucking, a Cardinal spokesman said. In recent years, the Dublin, Ohio-based health-care giant has made large investments in software to increase end-to-end visibility in its distribution network.
Since its first flights in Rwanda five years ago, Zipline has made more than 200,000 deliveries in four countries, including shipments of Covid-19 vaccines and other emergency medical supplies in Ghana last year. In October, it signed its first partnership with a U.S. hospital system, Intermountain Health in Utah.
The carrier's autonomous aircraft drop packages with parachutes.
The Cardinal (NYSE: CAH) test will be to a single, undisclosed pharmacy customer from Zipline's existing distribution center in Kannapolis. The center serves a 50-mile radius and aims for deliveries in 15 to 30 minutes. If successful, the program could expand among Cardinal's customers operating 60,000 independent and chain pharmacies.
Financial terms of the deal were not disclosed.
"Our customers value access to the right medication and medical supplies ordered at the right time for their patient care needs — and that begins with an effective distribution strategy,” Josh Dolan, Cardinal's senior vice president of pharmaceutical operations, said in a news release.
"Together, we can help transform the healthcare supply chain to establish a new standard for access, efficiency and convenience with instant logistics," Zipline founder and CEO Keller Rinaudo said in the release.
The pilot program will require approval from the Federal Aviation Administration before the anticipated launch next year. So far, the FAA has approved only two private operators for drone package deliveries in the U.S., with six other certifications in process, according to the agency website.
Last year, Zipline was approved under an FAA waiver to deliver protective equipment and supplies from the Kannapolis site to Novant Health. In late 2020, the company announced a delivery partnership with Walmart; the first site has not yet been announced.
This June, Zipline raised $250 million in funding at a valuation of $2.8 billion, the San Francisco Business Times reports.
