In a significant move towards automation, Walgreens announced plans to enhance its pharmacy operations by increasing the use of robotic technology in filling prescriptions. The company aims to expand its network of micro-fulfillment centers, which utilize advanced robotics for prescription management, to support 5,000 pharmacies by the end of this year.

Current State of Automation

As of February, Walgreens has incorporated these robotic hubs into 4,800 locations, a notable increase from 4,300 just a few months prior. The micro-fulfillment centers currently handle 40% of prescriptions for participating pharmacies, equating to around 16 million orders per month.

Micro-Fulfillment Center Functionality

When a prescription is received at a Walgreens pharmacy, an automated system evaluates whether the order should be processed at the local store or sent to a micro-fulfillment center. Generally, routine refill prescriptions that do not require immediate attention are routed to these centers. Robotic systems, conveyor belts, and scanners are employed to ensure accurate and efficient fulfillment.

Human oversight is essential in these facilities; pharmacists and pharmacy technicians diligently verify that the correct medications are dispensed into suitable containers, maintaining quality control throughout the process.

Cost Efficiency and Impact

The introduction of micro-fulfillment centers has proven beneficial for Walgreens, resulting in $500 million in savings to date. With this innovative model, the company has seen a year-over-year increase in prescription volume by 126% while simultaneously reducing fulfillment costs by nearly 13%. Currently, Walgreens aims to fill over 170 million prescriptions annually, with plans to boost that figure to 180 million.

According to Kayla Heffington, Walgreens’ vice president of pharmacy, these centers serve as a crucial resource to help alleviate workload in their physical stores, allowing pharmacists to devote more time to patient engagement.

Competitive Landscape

Walgreens operates in a competitive market, where major players like Amazon Pharmacy and CVS have also adopted automation strategies. For instance, Amazon’s fulfillment centers strive to deliver medications within a two-day timeframe, while CVS has integrated automation in its distribution networks, employing multiple robots in various facilities.

With the expansion of robotic fulfillment, Walgreens is solidifying its position as the second-largest pharmacy chain in the U.S., closely following CVS in market share as of 2024.