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How a Chinese drone delivery startup is capitalizing on COVID-19

Antwork swerved from food to medical supply deliveries months before outbreak

A Chinese startup's drones are helping to solve the last-mile problem in expediting medical supply deliveries to hospitals. (Photo courtesy of Antwork)

BEIJING -- China's Antwork drone delivery startup entered the medical supplies niche in time to help some hospitals respond to the developing coronavirus emergency.

What began as a suburban postal service has been around since 2015. A year later and along with China Post it became the country's first drone delivery service, carrying parcels to suburbanites at home.

Back then, it was a food delivery service. In 2018, Antwork built five drone docking stations in Future Sci-Tech City, in Hangzhou, Zhejiang Province, where Chinese e-commerce giant Alibaba Group Holding has its head office. It also made nearly 10,000 food deliveries via a Tencent Holdings WeChat mini program account.

Last year, Antwork made medical supply deliveries its core business. According to data from Qianzhan Industry Research Institute, China's pharmaceutical market was worth more than 2 trillion yuan ($287.3 billion) in 2018, about 10% of which was medical supply delivery costs.

Besides going after what looks like a 200 billion-yuan market, Antwork CEO Lei Zhang cited two reasons for swerving into the medical supply delivery business. The first is his diagnosis that the business is suffering from three factors that hinder timely deliveries -- supply shortages, poor road conditions and widely dispersed medical facilities. The second is his confidence that he has the right prescription to cure two of these maladies. He says drones are more suitable than ground transportation to deliver emergency medical supplies. He also likes their ability to move small packages fast.

Wheeled vehicles, he said, are more suitable for carrying big packages but have drawbacks -- high costs and unpredictable road conditions among them.

But moving into drone deliveries has its own set of problems. The vehicles require a lot of technical expertise to operate, and there are a host of entry requirements that must be met. In addition, flight safety and stability standards have to be cleared before carrying out drug deliveries in urban areas.

Antwork's drones have flown 60,000 km; they have a maximum flight range of 15 km in urban areas and a maximum load capacity of 5 kg.

In October, Antwork obtained the world's first drone delivery license, granted by the Civil Aviation Administration of China. It also obtained approvals to fly through certain stretches of airspace and a medical hygiene certificate.

For compliance reasons, Antwork's drones send flight data to air traffic controllers.

In early 2019, Antwork started handling and testing products based on hospital need. This year, as the global coronavirus pandemic was first catching fire in China, the company made its first relay delivery of medical supplies based on a request from the People's Hospital of Xingchang, in Shaoxing, Zhejiang Province.

Antwork is also in talks with authorities in other areas in Hangzhou and in Wuhan, Hubei Province, to extend its coverage area from Shaoxing.

Antwork now has four drones and as many docking stations that it uses to ship lightweight, small-lot supplies to hospitals.

They have a lot of territory to cover. As of February 2018, China had nearly 1 million medical facilities, 936,000 for primary care, according to data from the National Health Commission.

The company says its fleet helps to curb the use of emergency vehicles and human resources. Antwork's primary revenue sources are selling drones and other hardware to hospitals, and charging annual flight and service fees.

The pandemic has prompted investors to focus on the growth potential of aerial delivery systems. Last May, U.S. startup Zipline, which has delivered blood supplies, vaccines and drugs in Rwanda, raised $190 million in Series C funding.

Matternet of the U.S., which has supported food and drug deliveries as well as international rescue operations in developing countries, in June 2018 raised $16 million for drone research and development.

36Kr, a Chinese tech news portal founded in Beijing in 2010, has more than 150 million readers worldwide. Nikkei announced a partnership with 36Kr on May 22, 2019.

For the Japanese version of this story, click here.

For the Chinese version, click here.

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