Walgreens doubles down on robots to fill prescriptions amid turnaround

As struggling drugstore chains work to regain their footing, Walgreens is doubling down on automation. 

The company is expanding the number of retail stores served by its micro-fulfillment centers, which use robots to fill thousands of prescriptions for patients who take medications to manage or treat diabetes, high blood pressure and other conditions. 

Walgreens aims to free up time for pharmacy staff, reducing their routine tasks and eliminating inventory waste. Fewer prescription fills would allow employees to interact directly with patients and perform more clinical services such as vaccinations and testing.

Walgreens first rolled out the robot-powered centers in 2021, but paused expansion in 2023 to focus on gathering feedback and improving performance at existing sites. After more than a year of making upgrades, including new internal tools, the company said it is ready to expand the reach of that technology again.

Walgreens told CNBC it hopes to have its 11 micro-fulfillment centers serve more than 5,000 stores by the end of the year, up from 4,800 in February and 4,300 in October 2023. As of February, the centers handled 40% of the prescription volume on average at supported pharmacies, according to Walgreens. 

That translates to around 16 million prescriptions filled each month across the different sites, the company said. 

The renewed automation push comes as Walgreens prepares to go private in a roughly $10 billion deal with Sycamore Partners, expected to close by the end of the year. 

The deal would cap a turbulent chapter for Walgreens as a public company, marked by a rocky transition out of the pandemic, declining pharmacy reimbursement rates, weaker consumer spending and fierce competition from CVS Health, Amazon and other retail giants.

Like CVS, Walgreens has shifted from opening new stores to closing hundreds of underperforming locations to shore up profits. Both companies are racing to stay relevant as online retailers lure away customers and patients increasingly opt for fast home delivery over traditional pharmacy visits.

The changes also follow mounting discontent among pharmacy staff: In 2023, nationwide walkouts spotlighted burnout and chronic understaffing, forcing chains to reexamine their operational models.

Walgreens said the investment in robotic pharmacy fills is already paying off.

To date, micro-fulfillment centers have generated approximately $500 million in savings by cutting excess inventory and boosting efficiency, said Kayla Heffington, Walgreens’ pharmacy operating model vice president. Heffington added that stores using the facilities are administering 40% more vaccines than those that aren’t. 

“Right now, they’re the backbone to really help us offset some of the workload in our stores, to obviously allow more time for our pharmacists and technicians to spend time with patients,” said Rick Gates, Walgreens’ chief pharmacy officer.

“It gives us a lot more flexibility to bring down costs, to increase the care and increase speed to therapy – all those things,” he said. 

Gates added that the centers give Walgreens a competitive advantage because independent pharmacies and some rivals don’t have centralized support for their stores. Still, Walmart, Albertsons and Kroger have similarly tested or are currently using their own micro-fulfillment facilities to dispense grocery items and other prescriptions. 

Micro-fulfillment centers come with their own risks, such as a heavy reliance on sophisticated robotics that can cause disruptions if errors occur. But the facilities are becoming a permanent fixture in retail due to the cost savings they offer and their ability to streamline workflows, reduce the burden on employees and deliver goods to customers faster.