The North American pharma market is going through a period of change. New opportunities are emerging, and not just from the burgeoning biotech sector with near-shored manufacturing an option debated from pharma boardrooms to the White House.¹ In addition, packaging and drug delivery innovation rebounded very strong in the last year. Ahead of CPHI North America (April 25-27, Philadelphia), the CPHI content team reviewed the recently released Pharmapack Report,² which shows that 2023 is going to be a breakthrough year for the pharma packaging industry’s growth globally.

Most significantly, the Pharmapack Index reached an all-time high score, which suggests the industry has significant confidence in its business outlook for 2023. Further evidence of the resurgence now running through the industry, CPHI North America has been sold out for several months—thousands of executives are expected along with more than 300 exhibitors. Ahead of the event, we look at some of the most striking findings of the report and the packaging trends that are shaping the pharmaceutical industry in 2023.

According to the Pharmapack Report 2023, the Pharmapack Drug Delivery Innovation Index, which measures the innovation performance of the major pharma nations out of ten, has rebounded to a record high average score of 7.4—following a dip in confidence in mid 2022. This rapid recovery bodes well for the industry’s outlook and confidence, suggesting a strong global recovery as the world moves into a post-COVID era.

Industry executives are feeling more confident, as the pressures of the last 12 months are easing. Analysts predict a global drug devices market value of $394 billion by 2027 with a packaging market value of $229 billion, and compound annual growth rate of 7.4%.^3-4 The pandemic has also accelerated trends in patient-centric packaging, with self-administration and homecare trends combined with increasingly connected delivery and packaging solutions. Additionally, the sustainability question continues to weigh heavily, with many innovations coming at the expense of environmental costs. The report evaluated the improved perception of innovation and explores how far along each country is in terms of achieving optimal sustainability of pharma devices and medicines.

Refocusing on post pandemic drug packaging industry

Interestingly, the first half of 2022 saw a decline in the perceived strength of innovation in the pharmaceutical device and packaging industry, perhaps triggered by reduced investor confidence and inflation concerns. However, fears about macro-economic risks had eased in the latter half of the year, with the pent-up demand now expected to be unleashed in 2023, according to the survey results.

Overall, the industry remained largely ambivalent on whether 2022 had helped accelerate device and packaging innovation, with a slightly negative impact the most favored response (see Figure 1).

Sustainability in pharma packaging

Sustainability is another trend that really permeates throughout the industry. What started as a trend in packaging is now having a wider impact on the entire lifecycle of the drug. But what 2023 offers is a potential convergence of other packaging trends with sustainability—i.e. can we both improve patient centricity while making greener packaging and devices.

But times are changing quickly, and Bob Girton, Partner, Edgewater Capital believes that everything will align properly within 5-years. “ESG (Environmental, Social, Governance) and centricity will be so much a part of the whole system that we won’t be hosting panel discussions on how it’s supposed to be built and implemented,” he said. “I strongly believe that if companies adopt measures to be more environmentally and socially responsible, in a way that also impacts and improves its business and operations in a positive manner, others will follow. It will not only be the right thing to do but will also make a lot of sense.”

The potential for connectivity to yield further clinical benefits is significant. However, the challenges this presents to industry sustainability goals cannot be ignored. Complex packaging and devices with electronic components may represent steps forward, but the potential for wastage, particularly in limited duration use products, is a step backward.

According to the Pharmapack Market Survey, over 90% of respondents cited sustainability as the most significant factor that would have an impact on product development over the next three years. However, most respondents (50%) within this group believed that a balance is now becoming possible. Drug delivery innovators are increasingly seeking solutions that prioritize greater patient centricity, connectivity, and sustainability through better recycling and improvements to product lifespan, including modularization.

To take just one example, Aptar Pharma launched a novel digital respiratory health solution, HeroTracker Sense, which transforms a standard pressurized metered dose inhaler (pMDI) into a connected device for chronic respiratory diseases such as asthma, COPD, and Cystic Fibrosis, thereby making it reusable. This solution does not directly impact device design and can be brought to market quickly, in line with the electronic tech development cycles of year-to-year improvements, rather than 10-year cycles for traditional device innovation.

Although 70% of respondents believe that the pandemic has slowed sustainability goals in the pharmaceutical industry, longer-term growth potential is evident. In five years’ time, for example, respondents expect investment in eco-packaging to have increased markedly, with 38% believing it will increase by up to half, 15% double, and a further 23% expecting a tripling of investments (see Figure 2).


Biodegradable packaging is very likely to be one key component of the effort to meet the industry’s sustainability challenges, with around half of the respondents agreeing. A further 29% “agreed in part” but placed greater emphasis on the need for a complex web of initiatives to make the industry greener.

Pharmapack’s Sustainability Index—pharma’s key metric to gauge the perception of how much each country is doing in terms of plastic use, waste reduction, device recycling, and the most progressive approach to sustainability—has also risen by a further 3.5% with many nations improving their index scores.

For example, Canada slotted in just behind the leading European nations and ahead of the U.S. in its inaugural year. Germany saw a notable improvement, overtaking Switzerland to lead the Sustainability Index. The UK and France both saw marginal improvements consolidating their positions just behind the global leaders. Japan was the only nation to experience a decline in sustainability reputation, while the U.S., India, and China remained in line with their 2021 scores (see Figure 3).


The top five European nations all remain above other regions, including the U.S., which trails behind the EU in this aspect of pharma supply. Sustainability is, in fact, the only area in all the CPHI/Pharmapack survey metrics where the U.S. is not the industry’s leading force.

Looking more prescriptively at the big nations of Europe, Spain and Italy are perceived to lag the other leading economies in terms of green initiative adoption, and in spite of ongoing centralization of regulations from the EU.

Overall, the industry’s reputation has held up well and improved narrowly as we enter 2023, which is particularly encouraging for the future, considering the industry’s focus on other priorities during the pandemic. Consequently, the global push towards net-zero goals is likely to take center stage in the coming few years, and the pharmaceutical industry needs to focus on sustainability to meet these goals.

The most recent Pharmapack Europe industry survey—conducted in late November 2022 through to January 2023—shows a more positive outlook for the medical device, delivery, and packaging industry. In contrast to the May 2022 survey, which reflected the uncertainty and challenges posed by the global pandemic and geopolitical events, the latest survey reveals the resilience, flexibility, and robustness of the industry. The U.S., the UK, and Germany have recorded record results, indicating a more prosperous 2023 for the majority of major markets.

The findings also highlight the importance of accelerating the drivers of innovation to ensure growth and progress in the industry. Supply chains are also perceived to have become more robust, with 86% of respondents indicating a prolonged acceleration of regionalized/localized supply chains for drug delivery and packaging over the next two to three years.

The consolidation of the pharma packaging industry

In the report, Gregor Nischer, managing partner at MP Corporate Finance points to the recent trend for many pharma companies to increasingly look to only work with larger companies and the effects this is likely to have on the shape of the market over the next few years. In particular, he explored how smaller and medium packaging companies are going to need to grow towards or beyond €100 million turnover per year mark to continue to remain independent and successful, with those of €20 million or less particularly exposed to potential acquisitions.

The challenge is that many large sponsor companies are looking to sell products globally, and the regulatory burden becomes unmanageable for smaller packaging suppliers, making it difficult for them to compete in two divergent regions. This is also why we see such a trend for acquisitions, notably of larger U.S. manufacturers buying European-based manufacturers to gain a foothold in two major markets.

Alternatively, strategic alliances could also be a potential solution, but smaller companies are more likely to want to keep their contracts and make unique specification adjustments. Not to mention the difficulty in establishing who owns the liability in the case of any issues. Therefore, it’s almost certain that the future of the industry will see a methodical and steady change with fewer smaller and more medium-sized groups built through acquisition. If we simplify the challenge into just numbers, companies with a turnover more than €80 million or above are broadly safe, those with less than €20 million are highly vulnerable, and those between €20 and €70 million should be looking at how they can acquire and build towards the €100 goal. Investors, of course, will also be looking for opportunities to provide capital for these companies to grow out and acquire complementary assets. CPHI North America is therefore potentially a very big shop window for U.S. contract packagers looking to grow their network.

Pharma companies increasing focus on user-based design

Paul Greenhalgh, director of design for Team Consulting suggested one final trend to grow in 2023 will be the increased focus on user experiences and human factors and how that augments outcome not just in terms of devices but also packaging.

“Having a device that not only functions effectively but that provides a positive user experience can play a significant role in improving patient adherence and clinical outcomes,” he said. “A human factors program is much more than a regulatory tick box exercise. Adopting a truly user centric design process is essential to develop products that meet the practical and emotional needs of our users. In line with this, pharma companies are placing increasing importance on the need to understand their patient’s behaviors, beliefs, and wants.”

Moving forward, this may well even affect drug payment models, with a shift from a focus on volume to a focus on value for the patient so that we have outcome-based contracts, whereby treatment payments are linked to positive patient outcomes.

Conclusion

With two industry surveys conducted inside a year, Informa was able to track much more closely the changing sentiment in a year of great global turbulence. The results from the May 2022 survey presented a clear picture of uncertainty from the war in Ukraine, a lack of capital resources globally for investment, and of course, surging inflation in most nations.

But the year-end survey, released at Pharmapack 2023 in February, has shown how quickly sentiment can change and how resilient, flexible, and robust the overall market is. In fact, the U.S., the UK, and impressively, considering its energy issues, Germany all recorded record breaking results. Pharma packaging companies from the U.S. targeting European sites is also likely to be the defining trend of 2023 through to 2025.

References

1. https://www.fiercepharma.com/pharma/biden-looks-beef-us-biomanufacturing-china-rivalry-heats
2. https://www.cphi.com/content/dam/Informa/pharmapackeurope/en/2023/pdf/Pharmapack-Annual-Report-2023.pdf
3. https://www.globenewswire.com/news-release/2022/04/22/2427173/0/en/Drug-Delivery-Devices-Market-Growth-Trends-COVID-19-
4. https://www.marketsandmarkets.com/Market-Reports/pharmaceutical-packaging-market-890.html#:~:text=Pharmaceutical%20Packaging%20Market%20was%20valued,consumer%20awareness%20regarding%20healthier%20lifestyle