Medical Device Link.

FLEXIBLE PACKAGING

Oliver Medical offers Ovantex for sterile barrier systems.

For the past few years, Kevin Zacharias has seen both medical device manufacturers and healthcare providers wrestle with materials and production costs that keep rising like bad blood pressure readings.

“Now it’s filtering down to the packaging engineers at the device and pharmaceutical companies,” says Zacharias, who has dealt with the issue both on the device side with Baxter Healthcare and now as engineering program manager with Oliver Medical (Grand Rapids, MI).

“Cost is at the top of my list” of trends affecting the medical device packaging industry, Zacharias emphasizes.

Holding the line on costs is at the top of any business agenda, of course. In medical device packaging, however, packaging providers and their customers are looking for ways to juggle the cost pressures while meeting ISO 11607. The issue arises amidst other trends such as the continued growth of combined devices and tentative steps toward environmentally friendly
manufacturing.

“All the raw materials that go into the products have escalated in price—rapidly,” says Bret Melton, marketing manager, medical device packaging, Alcan Packaging, Medical Flexibles Americas (Chicago). “And to a point where I’m not even sure if our customers can really believe it. That trend is [making] the loudest noise in the business right now.”

Melton says the industry used to expect typically predictable fluctuations in the costs of raw materials. Not any more. “They’d go up for a while; they’d go down for a while. Well, in the past few years, it seems to be nothing but up. We hope the markets will start to settle down,” he says.

As a result, Alcan’s raw materials suppliers have been consolidating “more grades of all different types of materials—papers, resins, films—forcing us to adjust” how the firm does business. Some paper suppliers that have sold Alcan “more than a million pounds of specified grades . . . have decided they no longer want to be in that business.” Some consolidations have even forced Alcan to use secondary suppliers.

“Obviously, [materials] prices have been extremely volatile,” says Dhuanne Dodrill, president, Rollprint Packaging Products (Addison, IL). In fact, they’ve been rising “at alarming rates,” she says.

Converters report that foils are up 31.6% through June 2008, wet chemicals are up 11.8%, and some grades of nylon are up 7.3%. In addition, the price of polyester has risen 29.2%, while polyethylene resin has increased 28.6%.

Dodrill says the increases present a delicate challenge for converters: “Converters are squeezed in the middle.” She points out that packagers have little influence on the price of some materials, such as aluminum foil, which is traded on the London Metal Exchange, for example. “We have large resin manufacturers on one side driving price increases,” Dodrill notes. “On the other side, we have large medical device companies looking to reduce cost.”

To help medical device manufacturers consolidate packaging, Perfecseal is using a polymeric insert that eliminates the need for protective foam or poly bags, allowing the tray to accommodate multiple devices.

Add to that dilemma the fact that hospitals are demanding lower costs because of competitive pressures. “While we work to mitigate their impact, some increases have had to go through,” Dodrill says. “You just can’t absorb these types of increases.”

Brian Rosenburg, vice president of sales and marketing for Technipaq (Crystal Lake, IL), says that in the last one to two years, increases in materials costs have been a constant “definitely across the board. We’ve tried to hold off as many as we can, but we’re at the point where we just have to pass them along.”

Depending on the product, since the beginning of 2008 prices have risen an average of 7%, Rosenburg says.

Bill Sieck, chairman of Peelmaster (Niles, IL), says the pressure to drive down costs depends on the customer and the nature of the device. “If a customer is putting a 2-cent piece of gauze into a 5-cent package, then there’s a lot of focus on reducing the cost of the packaging. If the device is worth several thousand dollars, then the total percentage that packaging plays in cost is not as relevant,” he says.

Device companies are exerting pressure on packagers to reduce packaging costs by 20 to 30% or more, according to Zacharias. It’s becoming increasingly difficult to completely qualify new material and comply with ISO 11607-1:2006, he points out. The pressures to decrease costs come as ISO 11607 has “raised the bar” for converters and their customers. “The standard has heightened awareness of what is required in order to validate new materials,” he says.

“Often, when they’re looking at less-expensive materials, performance characteristics may drop off as well,” Zacharias says. Trying to maintain material performance requirements while simultaneously lowering packaging costs is difficult, he says. Medical device customers are asking converters “to supply more and more data” on biocompatibility and aging stability, for example. At the same time, they’re looking for more technical support because they’ve reduced staff in order to shave operating costs, he says.

“I come across companies that don’t have packaging engineers and look to us to help them with their validations,” Zacharias says.

In a related trend, device manufacturers are showing a small but growing interest in environmentally friendly and sustainable packaging, according to Zacharias and others. Oliver Medical has received “a few inquiries,” he says. Sieck says most of the concern focuses on package bulk or the amount of space that a rigid tray takes up in the trash, for instance. He adds that packaging “is a small percentage of the total hospital waste stream, so we don’t see it as a huge issue.”

Dodrill says medical device customers have been “relatively quiet” on the issue in comparison with consumer products manufacturers. However, a few of the larger medical device manufacturers, noting “the volatility we’ve seen in prices this year” and the high level of general interest in environmental awareness, are asking more about green products and production practices.

As a result, Dodrill says in the next three to five years, device manufacturers will focus more on sustainability and recycling, particularly as they relate to cutting costs. Manufacturers have approached Rollprint about increasing recyclability of their waste in order to lessen landfill waste, she says. Toward that end, Rollprint has worked with several customers on recycling and handling commingled plastics and plastics with aluminum foil in order to reduce waste. “That’s been a big initiative here at Rollprint,” she says.

Some new product rollouts address aspects of cost containment and waste reduction. Perfecseal’s (Oshkosh, WI) new abrasion-resistant tray features a polymeric insert to protect heavy medical devices during shipping and distribution, says Ed Haedt, vice president of marketing.

The insert also eliminates the need for protective foam or poly bags, allowing the tray to accommodate multiple devices. This capability can save shelf space and consolidate packaging, thus decreasing costs and reducing carbon footprint, Haedt says.

Certain green solutions are off limits, Dodrill points out, particularly as they pertain to post-consumer recycled (PCR) materials. “Medical device manufacturers want to have virgin material used in their products, not PCR,” she says. “When you use recycled material, you are increasing the number of materials that are present, and it can vary from one lot to another. That’s something that the medical device manufacturer would have to test and be aware of. The logistics are technically challenging, and the risks are really high.”

Like a chronic medical condition, the cost headache will continue for the foreseeable future. “These are situations that three to four years ago you would never have predicted,” Melton of Alcan Packaging notes. “We just have to be prepared and help to prepare our customers because raw materials suppliers will try to squeeze the most out of the assets that they have and avoid areas of business that do not create value.”