Charles Goulding and Greer Veon of R&D Tax Savers look at the use of 3D printing to promote the use of drones for retail delivery.
The development of drone technology for commercial use is growing at rapid rates as observed though the recent innovations of delivery service companies. Pharmaceutical companies and retailers are now collaborating with these delivery services to drive new drug delivery methods.
These partnerships tackle the need for remote rural areas to have easier access to drug prescriptions and other medical aids, while also saving time and costs for retailers and companies. The innovative business initiatives described below will change how we approach supplying medicine, which will simultaneously advance 3D printed drone manufacturing opportunities.
On October 19th, Walgreens, the second-largest pharmacy store chain in the United States, announced a pilot drone delivery program through a collaboration with FedEx, the American multinational courier delivery with $2 billion in sales, and Alphabet’s Project Wing drone airline.
The pilot delivery launched in Christiansburg, Virginia, where the three companies worked to delivery over 100 products for consumers using Project Wing’s mobile app. “Wings” recently became the first drone delivery company to receive U.S. federal approval for testing services on U.S. grounds, which seeks to change how we think of the delivery service industry.
The first drone-delivered package carried a “cough and cold” pack from Walgreens, including Tylenol, cough drops, Emergen-C, and bottled water. Though prescription drugs are not included in the pilot program’s first test deliveries, their addition is highly likely and could be very soon. With FedEx, Wings hopes to execute an e-commerce drone delivery operation.
Through the initial delivery service test, Walgreens is the first US retailer to ship a package to a customer’s doorstep through a drone. The pilot program was made possible by the Federal Aviation Administration who provided Wings with an Air Courier Certificate that permits extended service. The certificate also clears Wing’s pilots to control multiple drones at the same time while still serving the public, which can increase the speed and efficiency of the delivery services.
CVS, Amerisource, and UPS
Last month, United Parcel Services Inc. (UPS) said that its commercial drone unit executed its first revenue deliveries of prescriptions from a CVS Corp. pharmacy to residents in Cary, North Carolina. The deliveries came from the pharmacy to two customer volunteers, one who lived in a private residence and another in a nearby retirement home. UPS used an M2 Drone system that was developed in-house with drone systems developer Matternet. The drones carried the packages a short distance and remained in the line of sight for a drone operator at the CVS location.
UPS recently gained approval from the FAA to operate commercial drone usage in their Flight Forward subsidiary and soon after announced its partnerships with CVS and drug distributor Amerisource Bergen Corp. UPS and Matternet first began medical drone deliveries across the WakeMed medical campus in Raleigh, North Carolina and have since operated 1,500 flights. UPS hopes that the partnership with CVS and Amerisource will push for more drug deliveries across the United States within the next year.
The Promise of Drone Deliveries
Drone delivery services serve as a major commercial benefit for the pharmaceutical industry. Not only do these initiatives move medications faster, but drones can perform remote deliveries to multiple rural areas. As more areas gain access to prescriptions or drugs at a faster rate, simultaneously the drone industry sees commercial growth. While some companies and retailers are quite about possible drone plans, leading online delivery service Amazon is developing and testing their Air Prime program, which includes plans to take part in pharmaceutical delivery partnerships soon. The push for using drones in the pharmaceutical industry also pushes for mainstream adoption for drone delivery in other commercial areas which, in turn, increases 3D printing manufacturing opportunities.
Companies invested in drone delivery and 3D printing technology for multiple drone parts and designs likely qualify for the federal R&D tax credit, which is outlined below.
The Research & Development Tax Credit
Enacted in 1981, the now permanent Federal Research and Development (R&D) Tax Credit allows a credit that typically ranges from 4%-7% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:
Must be technological in nature
Must be a component of the taxpayer’s business
Must represent R&D in the experimental sense and generally includes all such costs related to the development or improvement of a product or process
Must eliminate uncertainty through a process of experimentation that considers one or more alternatives
Eligible costs include US employee wages, cost of supplies consumed in the R&D process, cost of pre-production testing, US contract research expenses, and certain costs associated with developing a patent.
On December 18, 2015, President Obama signed the PATH Act, making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax for companies with revenue below $50MM and, startup businesses can obtain up to $250,000 per year in payroll tax cash rebates.
As pharmaceutical retailers and companies turn to drone technology, manufacturers should looker deeper into the 3D printing industry to produce stronger, faster, and better devices for delivery services.