Medical Device Link.

Originally Published PMPN December 2001

SPOTLIGHT

Industry growth continues as pharmaceutical and medical manufacturers turn to contract packagers for specialty packaging that addresses compliance issues and new product challenges.

Kassandra Kania, Managing Editor

Despite the current economic slowdown, the outsourcing of packaging operations, particularly in the pharmaceutical and biotechnology industries, is continuing the growth trend witnessed over the past few years, albeit at a slower rate.

The fourth annual U.S. Packaging Machinery Purchasing Plans Study conducted by the Packaging Machinery Manufacturers Institute shows that 53.4% of companies surveyed used contract packagers for all or part of their packaging requirements in 2000, and 73.4% of them anticipated their use of contract packagers to remain the same as last year. The study revealed that 15.7% expect to increase their use of contract packagers—a decrease of 2.6% compared to last year’s respondents. Those who planned to reduce their use of contract packagers made up 10.9% of the companies surveyed—a slight increase over last year’s 8.2%.

New Products, Special Needs

Although contract packagers cite many different reasons for the increase in business, several factors appear to have more impact than others. One reason companies are contracting out their packaging needs is the introduction of new products that require specialized packaging. "Contract packagers have become more sophisticated in their operations," says Bill Pflaum, executive director of the Contract Manufacturing & Packaging Association. "Larger companies are looking seriously at contract packaging," he says, "and there is an increased interest in what kind of production they do and how they operate."

According to Marjanne Troost Meyer, director of contract packaging for Margo, an Alcan Packaging company (Montreal; Bethlehem, PA), contract packagers may have state-of-the-art equipment that pharmaceutical companies are not willing to invest in. Rather than purchasing equipment that will only be used for a month or two a year, these companies turn to contract packagers to offset their costs. The contract packager will use the machine for a number of products during the year, says Pflaum, and it will use it much more efficiently than if the manufacturer purchased the equipment and packaged the product in-house.

Shawn Reilley, vice president, sales and marketing–pharmaceutical division, Anderson Packaging Inc. (Rockford, IL), has also witnessed an increase in business resulting from the need for specialized packaging, such as cold-form blisters and packaging to achieve low-humidity or low-light environments. "The company has grown 20% a year since 1998," he says, "and we foresee continued growth not only in our business but in the pharmaceutical contract packaging industry in general." To support this growth, the company has expanded its production and testing capacities, installing additional equipment for every processing function, especially blister packaging, bottling, and pouching. A new quality control laboratory offers a full complement of microbiological and analytical testing services.

Reliance on Compliance

Contract packagers are also noticing an increase in demand for specialty packaging that addresses the issue of patient compliance. "The drug noncompliance problem in the United States is about a $100 billion problem," says Don Huggins, senior vice president of sales and marketing for PCI Services (Philadelphia), a Cardinal Health company. "Ten percent of all hospital admissions are because [patients] did not take their medication the way it was prescribed." Huggins believes that compliance packaging plays a major role in addressing this problem.

According to Greg Shaw, director, business development–contract packaging for Margo, one of the first products companies outsource is blister packaging, because it can help encourage patient compliance with drug regimens. "[Margo] is spending a lot of its resources putting together high-speed carded blister lines because of the demand for them. This allows you to have compliance packaging, and it establishes a cost-effective billboard for drug fact information."

Louis Arp, vice president, director of operations for OSG Pharmaceutical Division (Allendale, NJ), has also seen an increase in requests for specialty packaging aimed at compliance, particularly specialized pouch, strip, and blister packaging provided by OSG Ivers-Lee, which, together with Norwich Pharmaceuticals, make up the company’s pharmaceutical division.

Another factor that has encouraged the growth of specialized packaging services is legislation concerning the drug fact requirements, which increases the amount of consumer information necessary on packaging. "Patient inserts are increasing, as is the need to provide that information in the carton and on the unit," says Arp. "We’re seeing a higher level of sophistication and complexity. For example, we’ve had requests for taking a blister card and adding a patient insert, then putting that in a pouch."

The need to have more information on the package but still maintain a certain size is challenging, says Margo’s Troost Meyer. Several of the company’s customers have requested printing on both sides of a blister. "It’s a balancing act," she says. "We need to determine what can be done creatively to meet both needs."

Growth of Partnerships

More and more companies are looking for long-term partnerships with contractors to perform both manufacturing and packaging so that they can focus on other areas such as research and development. PCI’s Huggins says that this is particularly true in the biotechnology industry. "[These companies] typically partner with a larger pharmaceutical company in terms of the marketing and sales of their product, and they outsource the manufacturing and packaging of the product." Earlier this year, PCI signed an agreement with a biotechnology company, Novavax, to provide both manufacturing facilities and packaging services for the company’s estrogen replacement therapy product, Estrasorb. Huggins has also noticed an increase in virtual pharmaceutical companies outsourcing both manufacturing and packaging capabilities. "The virtual pharmaceutical companies have no manufacturing and packaging capabilities themselves," he explains. "They typically buy products from existing pharmaceutical companies because they have no intention of manufacturing packaging."

The Future

To keep up with demand, contract packagers are continuing to build new facilities and expand their capabilities. Many industry experts agree that the economic situation has not had a negative impact on the market.

"The healthcare industry is almost recession proof," says Huggins. "People are going to get sick and want a better quality of life." Many contract packagers share this sentiment and remain optimistic that as long as patients and providers focus on good health, industry itself will remain in good health.

Photo courtesy of PCI Services

Copyright ©2001 Pharmaceutical & Medical Packaging News