Gil Y. Roth11.14.11
Branded pharma sales may be in a sluggish growth phase, but contract packagers are still seeing plenty of opportunities as new markets open up, new forms grow in acceptance, and new regulations and drug technologies push package requirements. We spoke to several contract packagers and suppliers to get a feel for the current state of this multi-billion-dollar business.
Justin Schroeder, senior director, Marketing & Development Services at Anderson Packaging Inc., remarked, “I think the overall contract packaging (U.S.) market has been challenged due to the economy. While Anderson just completed a very strong year, we have witnessed significant strain on the market, including several contract providers exiting the business completely.”
Mr. Schroeder noted that restructuring and rationalization at major pharma companies has been a mixed blessing. “In some instances, it means they are pulling business that had traditionally been outsourced and attempting it in-house. While it may not be in the best interests of the long-term strategy, these decisions are being made due to the immediate economic landscape and need to maximize idle capacity and workforce. The opposite side of the coin is pharmaceutical firms opting to close their underutilized facilities and pursue strategic outsourcing, with the entirety of the work being transitioned to a contract provider. We have two top 20 pharmaceutical partners that have done this recently, including relocating their manufacturing lines to our sites.”
Joe Luke, vice president Sales & Marketing at Reed-Lane, Inc., echoed Mr. Schroeder’s views, noting, “It is really a pull between those who outsource and those who are trying to do all their packaging in-house. In the long run we believe the trend of outsourcing will remain strong.”
Tee Noland, director of Business Development at Pharma Tech Industries, a CMO with a focus on powder handling and packaging, remarked, “Our business continues to be relatively stable as many of the products we produce on behalf of our customers have a fairly consistent year over year demand. We also continue to re-invest in infrastructure to prepare for growth in new projects, expanding many of our core powder capabilities. While 2011 will likely be a record year for revenues, we believe that 2012 will be an even bigger year for us.” Mr. Noland noted that PTI has expanded several powder-processing capabilities in the past year and is looking at further expansions as client needs grow.
John Zripko, senior vice president of Pharma Business at Bilcare Research, remarked, “One of the most significant trends today is the continued growth of generic drugs, as innovator drugs are facing significant patent expiry challenges. Generic companies are seeking speed to market opportunities and competition is fierce in the generics sector.”
He added that Bilcare has headquarters in India, in proximity of many of the leading generic companies. “Bilcare is the supplier of choice and specified on the majority of ANDAs for the blister films and foils,” he commented, adding, “The pharmaceutical industry is going through significant changes and now more than ever the industry has truly become a global market with many dynamic parts. A strong emphasis and focus by many companies today is on the emerging markets for both sourcing and supply of products and services. There are inherent challenges in dealing with an evolving global supply chain and, as more products are being exposed to more dramatic climatic conditions, medication compliance challenges, and product compliance issues, packaging plays a critical role to ensure safety and compliance along the supply chain. Our view is that packaging can play a greater role in addressing these challenges and Bilcare views this as an opportunity.”
Angela Roggenhofer, sales and marketing manager of Tekni-Plex, Inc., a globally-integrated developer and manufacturer of innovative packaging materials and precision-crafted tubing solutions, commented, “In terms of clients, the geographic range continues to broaden. Tekni-Plex has always serviced pharmaceutical companies worldwide, but in recent years our customer base has grown to include an even greater number of countries in total, though most are, not surprisingly, still headquartered in the U.S., Europe, and Latin America.” She added that healthcare packaging remains a main focus area within the company, and that Tekni-Plex is making large investments in manufacturing infrastructure for this portion of the business.
In October 2011, Tekni-Plex opened a Global Technology Center in Holland, OH, which will serve as “a coordinated ‘meeting of the minds,’ a facility where professionals from the packaging, chemical, and polymer industries can innovate and share ideas,” according to Ms. Roggenhofer. The center will include an extensive analytical lab and small-scale production equipment. She said, “The Global Technology Center will help maximize and expedite the company’s product development on behalf of its healthcare customers; packaging recommendations and solutions are naturally a large part of this process.”
Market Movers
Most packagers we spoke to consider compliance packaging to be a future market driver, but aren’t sure when it will take off. Several cited WalMart’s recent Shellpak study as a possible tipping point for increased use of compliance-based packaging. In June 2011, a study showed that patients using Walmart’s Shellpak calendar blister packaging, provided by MeadWestVaco Corp., had greater prescription adherence behavior than those using traditional vial pills. The two-year study focused on patients taking ACE inhibitors lisinopril or enalapril and, in Walmart fashion, included more than 325,000 people.
Anderson Packaging’s Mr. Schroeder noted, “While Walmart’s study was specific to calendarized formats for generic drugs, we are seeing strong interest in both branded and generic products in compliance prompting formats. There is also an uptick in trade (saleable) packaging going to compliance prompting formats, whereas it was traditionally most prevalent in physician samples. The ability of compliance packaging to increase medication possession ratios and drive script fills is driving this trend, with pharmaceutical companies really focusing on patient compliance and adherence with integrated strategies that include and leverage packaging.”
Said Mr. Luke of Reed-Lane, “Studies show that compliance packages work and improve adherence but we haven’t seen a strong move other than the Walmart study.” He added, “I do believe that compliance packaging will grow and be more important but this may take some time.” He also noted that he has seen more growth in solid dose bottling than in blister packaging.
At Aphena Pharma Solutions, which was formed from the combination of PrePak Systems, Celeste Contract Packaging, Integrated Pharmaceutical Packaging and TestPak, blister packaging is on the rise. Don Huggins, vice president of sales at Aphena, remarked, “Although bottles still remain the dominant packaging format for drugs, there has been an increase in blister packaging of drugs, especially relating to increasing compliance of the drug therapy.”
Both Mr. Luke and Mr. Huggins noted an increase in private label OTC products, as well as with Rx to OTC switches. Said Mr. Huggins, “The private label sector is also showing dramatic growth. Major drug retailers are significantly increasing the number of SKU’s of their own store brand OTC products, which is more profitable for the retailer and offers the consumer even more savings versus the national brands. Some retailers are targeting to have 30% or more of the OTC products they stock in their own store brand within the next 12 months.”
On a materials level, Ms. Roggenhofer of Tekni-Plex cited strong growth in barrier materialis, for both blister film and closure liner areas. “This reflects the growing share of moisture- and oxygen-sensitive drugs being developed, which has led to a steady increase in demand for PCTFE (Aclar and VapoShield) based film structures, as well as heat-seal and foam closure liners featuring Al foil and PET films as the barrier layers,” she remarked. Ms. Roggenhofer mentioned that her company recently launched 6mil Aclar PCTFE, which offers clients “a range of novel structures for extreme conditions.” She said that packages can achieve as much as 71% barrier improvements over currently available solutions.
Mr. Schroeder also noted that serialization is gaining momentum. California’s 2015 e-pedigree deadline for unit-level serialization of drug appears to be serious this time, after getting bumped from 2007 to 2009 and then 2011 before the new 2015/16 date. Said Mr. Schroeder, “Many companies have taken a wait-and-see approach and looking to industry leaders for direction.
Implementing a trial run or pilot at a contract provider makes a lot of sense for them. It allows them to minimize the investment and gain valuable insight ahead of significant investment in their own lines across multiple sites. We have continued to optimize our system to be flexible, given the needs and requirements of each of our customers and the requirements of their end markets.” He added that Anderson has several serialization programs underway with pharmaceutical partners.
In concert with serialization, some packagers are also developing new and innovative anti-counterfeiting solutions. Mr. Zripko noted, “We have innovative film and foil solutions such as Bilcare Protect, Bilcare Nova, unique designs with specialty printing, and the Bilker nonClonable ID technology for product authentication and establishing e-pedigree at any time.”
Mr. Zripko pointed out that Bilcare acquired Ineos Films a year ago and that the combination of the two organizations provides a “very strong global platform which has resonated well with our customers.”
He remarked, “By offering the broadest range of films, foils and services, Bilcare is well positioned to help companies seek the most optimum packaging choices.”
On one end of the market, generics and OTC goods are driving volume growth for packagers. On the other, high-end potent compounds are driving innovative packaging solutions from providers. Said Mr. Schroeder, “We constructed a brand new stand-alone packaging site in 2010 for handling of SafeBridge-rated products, including oncology therapies and hormonal products.
Demand has been high for these products to warrant opening additional packaging suites and cold chain storage. These products require very special handling and are not compounds you would package in your standard packaging facility. This demand has been evidenced in both clinical/investigational medicines as well as commercial (NDA approved) products.”
Contract packagers, like the other providers that make up the outsourcing ecosystem, are caught up in the larger flux of the pharma and biopharma industry. They’re affected by mega-mergers, patent expirations, regulatory pressures and more, and must prove themselves adept at changing with the times. Whether it be in the form of new offerings, consolidating for scale, accelerating technology or reaching out to new client-bases or new geographies, contract packagers must keep up with the fast-changing industry in order to thrive.
Gil Y. Roth has been the editor of Contract Pharma since its debut in 1999. He can be reached at gil@rodpub.com.
Justin Schroeder, senior director, Marketing & Development Services at Anderson Packaging Inc., remarked, “I think the overall contract packaging (U.S.) market has been challenged due to the economy. While Anderson just completed a very strong year, we have witnessed significant strain on the market, including several contract providers exiting the business completely.”
Mr. Schroeder noted that restructuring and rationalization at major pharma companies has been a mixed blessing. “In some instances, it means they are pulling business that had traditionally been outsourced and attempting it in-house. While it may not be in the best interests of the long-term strategy, these decisions are being made due to the immediate economic landscape and need to maximize idle capacity and workforce. The opposite side of the coin is pharmaceutical firms opting to close their underutilized facilities and pursue strategic outsourcing, with the entirety of the work being transitioned to a contract provider. We have two top 20 pharmaceutical partners that have done this recently, including relocating their manufacturing lines to our sites.”
Joe Luke, vice president Sales & Marketing at Reed-Lane, Inc., echoed Mr. Schroeder’s views, noting, “It is really a pull between those who outsource and those who are trying to do all their packaging in-house. In the long run we believe the trend of outsourcing will remain strong.”
Tee Noland, director of Business Development at Pharma Tech Industries, a CMO with a focus on powder handling and packaging, remarked, “Our business continues to be relatively stable as many of the products we produce on behalf of our customers have a fairly consistent year over year demand. We also continue to re-invest in infrastructure to prepare for growth in new projects, expanding many of our core powder capabilities. While 2011 will likely be a record year for revenues, we believe that 2012 will be an even bigger year for us.” Mr. Noland noted that PTI has expanded several powder-processing capabilities in the past year and is looking at further expansions as client needs grow.
John Zripko, senior vice president of Pharma Business at Bilcare Research, remarked, “One of the most significant trends today is the continued growth of generic drugs, as innovator drugs are facing significant patent expiry challenges. Generic companies are seeking speed to market opportunities and competition is fierce in the generics sector.”
He added that Bilcare has headquarters in India, in proximity of many of the leading generic companies. “Bilcare is the supplier of choice and specified on the majority of ANDAs for the blister films and foils,” he commented, adding, “The pharmaceutical industry is going through significant changes and now more than ever the industry has truly become a global market with many dynamic parts. A strong emphasis and focus by many companies today is on the emerging markets for both sourcing and supply of products and services. There are inherent challenges in dealing with an evolving global supply chain and, as more products are being exposed to more dramatic climatic conditions, medication compliance challenges, and product compliance issues, packaging plays a critical role to ensure safety and compliance along the supply chain. Our view is that packaging can play a greater role in addressing these challenges and Bilcare views this as an opportunity.”
Angela Roggenhofer, sales and marketing manager of Tekni-Plex, Inc., a globally-integrated developer and manufacturer of innovative packaging materials and precision-crafted tubing solutions, commented, “In terms of clients, the geographic range continues to broaden. Tekni-Plex has always serviced pharmaceutical companies worldwide, but in recent years our customer base has grown to include an even greater number of countries in total, though most are, not surprisingly, still headquartered in the U.S., Europe, and Latin America.” She added that healthcare packaging remains a main focus area within the company, and that Tekni-Plex is making large investments in manufacturing infrastructure for this portion of the business.
In October 2011, Tekni-Plex opened a Global Technology Center in Holland, OH, which will serve as “a coordinated ‘meeting of the minds,’ a facility where professionals from the packaging, chemical, and polymer industries can innovate and share ideas,” according to Ms. Roggenhofer. The center will include an extensive analytical lab and small-scale production equipment. She said, “The Global Technology Center will help maximize and expedite the company’s product development on behalf of its healthcare customers; packaging recommendations and solutions are naturally a large part of this process.”
Market Movers
Most packagers we spoke to consider compliance packaging to be a future market driver, but aren’t sure when it will take off. Several cited WalMart’s recent Shellpak study as a possible tipping point for increased use of compliance-based packaging. In June 2011, a study showed that patients using Walmart’s Shellpak calendar blister packaging, provided by MeadWestVaco Corp., had greater prescription adherence behavior than those using traditional vial pills. The two-year study focused on patients taking ACE inhibitors lisinopril or enalapril and, in Walmart fashion, included more than 325,000 people.
Anderson Packaging’s Mr. Schroeder noted, “While Walmart’s study was specific to calendarized formats for generic drugs, we are seeing strong interest in both branded and generic products in compliance prompting formats. There is also an uptick in trade (saleable) packaging going to compliance prompting formats, whereas it was traditionally most prevalent in physician samples. The ability of compliance packaging to increase medication possession ratios and drive script fills is driving this trend, with pharmaceutical companies really focusing on patient compliance and adherence with integrated strategies that include and leverage packaging.”
Said Mr. Luke of Reed-Lane, “Studies show that compliance packages work and improve adherence but we haven’t seen a strong move other than the Walmart study.” He added, “I do believe that compliance packaging will grow and be more important but this may take some time.” He also noted that he has seen more growth in solid dose bottling than in blister packaging.
At Aphena Pharma Solutions, which was formed from the combination of PrePak Systems, Celeste Contract Packaging, Integrated Pharmaceutical Packaging and TestPak, blister packaging is on the rise. Don Huggins, vice president of sales at Aphena, remarked, “Although bottles still remain the dominant packaging format for drugs, there has been an increase in blister packaging of drugs, especially relating to increasing compliance of the drug therapy.”
Both Mr. Luke and Mr. Huggins noted an increase in private label OTC products, as well as with Rx to OTC switches. Said Mr. Huggins, “The private label sector is also showing dramatic growth. Major drug retailers are significantly increasing the number of SKU’s of their own store brand OTC products, which is more profitable for the retailer and offers the consumer even more savings versus the national brands. Some retailers are targeting to have 30% or more of the OTC products they stock in their own store brand within the next 12 months.”
On a materials level, Ms. Roggenhofer of Tekni-Plex cited strong growth in barrier materialis, for both blister film and closure liner areas. “This reflects the growing share of moisture- and oxygen-sensitive drugs being developed, which has led to a steady increase in demand for PCTFE (Aclar and VapoShield) based film structures, as well as heat-seal and foam closure liners featuring Al foil and PET films as the barrier layers,” she remarked. Ms. Roggenhofer mentioned that her company recently launched 6mil Aclar PCTFE, which offers clients “a range of novel structures for extreme conditions.” She said that packages can achieve as much as 71% barrier improvements over currently available solutions.
Mr. Schroeder also noted that serialization is gaining momentum. California’s 2015 e-pedigree deadline for unit-level serialization of drug appears to be serious this time, after getting bumped from 2007 to 2009 and then 2011 before the new 2015/16 date. Said Mr. Schroeder, “Many companies have taken a wait-and-see approach and looking to industry leaders for direction.
Implementing a trial run or pilot at a contract provider makes a lot of sense for them. It allows them to minimize the investment and gain valuable insight ahead of significant investment in their own lines across multiple sites. We have continued to optimize our system to be flexible, given the needs and requirements of each of our customers and the requirements of their end markets.” He added that Anderson has several serialization programs underway with pharmaceutical partners.
In concert with serialization, some packagers are also developing new and innovative anti-counterfeiting solutions. Mr. Zripko noted, “We have innovative film and foil solutions such as Bilcare Protect, Bilcare Nova, unique designs with specialty printing, and the Bilker nonClonable ID technology for product authentication and establishing e-pedigree at any time.”
Mr. Zripko pointed out that Bilcare acquired Ineos Films a year ago and that the combination of the two organizations provides a “very strong global platform which has resonated well with our customers.”
He remarked, “By offering the broadest range of films, foils and services, Bilcare is well positioned to help companies seek the most optimum packaging choices.”
On one end of the market, generics and OTC goods are driving volume growth for packagers. On the other, high-end potent compounds are driving innovative packaging solutions from providers. Said Mr. Schroeder, “We constructed a brand new stand-alone packaging site in 2010 for handling of SafeBridge-rated products, including oncology therapies and hormonal products.
Demand has been high for these products to warrant opening additional packaging suites and cold chain storage. These products require very special handling and are not compounds you would package in your standard packaging facility. This demand has been evidenced in both clinical/investigational medicines as well as commercial (NDA approved) products.”
Contract packagers, like the other providers that make up the outsourcing ecosystem, are caught up in the larger flux of the pharma and biopharma industry. They’re affected by mega-mergers, patent expirations, regulatory pressures and more, and must prove themselves adept at changing with the times. Whether it be in the form of new offerings, consolidating for scale, accelerating technology or reaching out to new client-bases or new geographies, contract packagers must keep up with the fast-changing industry in order to thrive.
Gil Y. Roth has been the editor of Contract Pharma since its debut in 1999. He can be reached at gil@rodpub.com.