Contract Pharma: Congratulations on the anniversary! Ninety years is quite an accomplishment!
Donald Morel: Thank you!
CP: What's been the key to the company's longevity?
DM: It really goes back to Herman West. Herman laid down the culture of the company with its very intense focus on the customer. He had an understanding of where the markets were going and how West could serve those markets. He was also a little lucky, stepping into a niche that not many people were paying attention to.
CP: How so?
DM: He developed the first rubber septum and overseal for a parenteral package. When he got his first contracts, he grew the company to serve the unique requirements of those parenteral markets. When we had the explosion of new drugs coming to the market from the 1940s to the 1970s, West was really the only company in this marketplace.
Then the regulatory framework sprang up around it. They required that packaging materials be tested and that the stability of the materials in contact with the drug be inert (for all intents and purposes) so that the drug wouldn't be compromised.
Then he expanded internationally and grew with our customer base. His son took over in 1965 and followed that trend, keeping the same customer-focused culture within the company. It stayed a family-owned and -orientated business, even though all of the large multi-nationals were its customers by then.
I think it's really the combination of the company culture and Herman's ability to identify and enter an area of the pharmaceutical market that no one was serving. We can't forget that he was also a very clever chemist, when you look at the rubber formulations he developed. So there are a combination of factors behind the growth and long life of West.
CP: If there's a sort of regulatory "barrier to entry" for meaningful competition, how does West keep from developing a sense of complacency about its market position? How do you keep from resting on your laurels?
DM: The key is the one big challenge in front of the company: the regulatory bar is always getting higher. As production techniques and analytical metrics get better and better, and ever more sensitive molecules require cleaner and cleaner packaging, there will always be another rung to climb.
For example, what we developed and were able to mass produce at very high quality in the '80s and '90s, really is not sufficient for today's market needs. The requirements of the market have shifted dramatically and a large part of that is due to two things:
- The increasing prevalence of biologic therapeutics over small molecule drugs. Proteins are different animals to handle and package and get into the body in a way that's therapeutically effective. Through our Daikyo partners and some innovations of our own, we've been able to advance the cleanliness bar to a very high point, as we've done with our combination of FluroTec® and Westar®.
- There's also been a subtle shift in the mode of packaging and delivery. Traditionally, you had vial-based medicines that would then be withdrawn in a syringe and then delivered either through the syringe or an IV bag. With biologics, there's a trend toward pre-filled syringes, where the delivery vehicle effectively becomes the primary package. One of the nice things about our technology in the rubber space with our packaging components is that that technology translates very nicely from a vial into a syringe, so the materials and the coatings that we use to keep the drug pure, stable and safe in a vial can be done in a different geometry and configuration but offer the same benefits in a pre-filled syringe. From the late '90s on, with the increasing presence of biologics, those technologies have really helped drive us.
It's easy to rest on your laurels, but I hope that we won't do that. The challenges will always be there: keeping the cleanliness levels as high as they can be and keeping the dimensional tolerances as tight as they can be, while producing more than 35 billion components a year.
CP: The company has made some expansions in the past decade. Would you say those evolved out of the company's core mission, or have you had to look somewhat outside of West's comfort zone?
DM: It's a little bit of both. We've tried to look for natural extensions of our product lines that fit in the injectable space.
If you look at our acquisition of MediMop back in 2005, that is a good example of what we look for. They had developed some very simple yet technically sophisticated systems for reconstituting freeze-dried drugs. That enabled patients to reconstitute their medicines and deliver them effectively. That business has grown from around $10-12 million in 2005 to around $50 million this year. It's a technology that involves drug handling, drug contact, a regulatory element in the 510(k), for example.
Growth has been driven partly by acquisitions that fit in the injectable space. The other part has been due to paying attention to what we call the core packaging business. This can mean incremental advances on post-processing of stoppers, going from a simple Westar process -- where we would wash with WFI and bag components as per customer request -- to today where the components can come out in a port bag that will go directly to a barrier isolator. Those components may have a sophisticated coating, they may be 100% vision-inspected to make sure we've got as low a particulate level as possible, and in the future, the Westar® Ready-to-Sterilize line will become the Ready-to-Use line. There are other advances we can pursue, working with Quality by Design, and really tightening specifications. So there's a lot of room left in our core business.
Organically, we've grown by not only improving quality but also through international opportunities. We don't enjoy large market shares in the Asia Pacific region, but we're growing very nicely in both India and China now. So it's a combination of serving the developed western markets, meeting changing regulatory needs, and growing with new customers in emerging markets.
CP: Are the company's developments and advances driven more by regulatory requirements or specific customer needs that are sometimes non-regulatory-driven?
DM: You keep your ear to the railroad track, in terms of what your customers are hearing. Our business is somewhat circular in that regard; we all hear the regulatory requirements, and those requirements are first and foremost in the minds of our customers. We end up working hand in hand with customers when requirements come out, to make sure we can satisfy them. It's a symbiotic relationship, inasmuch as neither side can be successful without understanding those needs and meeting them in a fashion that will satisfy the regulatory authorities.
CP: What's the biggest change you've seen at West since you began working there 20-plus years ago?
DM: I think it's on the shop floor. If you looked at a West operation -- or any other device operation -- 20 years ago, you'd have seen a manufacturing floor that was kind of dirty. Back then, you weren't required to have clean rooms, you could process and bag components out in the open. Now, many of the processes are computer controlled and you've got very tight statistical process control in the manufacturing operations. When you go to processing after the components are trimmed from their webs, you're in cleanrooms, where individuals are washed and gowned before going in there. Air particulate loads are so low, it looks more akin to semiconductor manufacturing than anything else. That's a very dramatic change from 20 years ago. It's driven by regulatory requirements, of course.
The other big change has been the entry of generics into the pharma space (as well as biologics). Twenty years ago, there was a small but growing generic presence, as small molecules came off patent. Now, I read that seven of eight prescriptions in the U.S. are for generics. The next wave we'll see is in biosimilars. We've seen the first monoclonal antibody biosimilar recommended for approval in the EU recently.
So the big changes have been cleanliness requirements and the dynamics of the market, with regards to generics and biologics.
CP: Where do you think West is going to be in the next five to 10 years?
DM: We've got some very good things ahead for us. Our goal is to focus on the core business and make sure we deliver what our customers need. It's going to involve gaining a degree of flexibility geographically. If you look at how our manufacturing footprint evolved, we're producing some components in the U.S. for a customer in Europe that's going to ship those products to customers in the Middle East and North Africa. So we need to be flexible enough to serve the demands of very sophisticated, multinational pharmaceutical customers.
The other big change for us is going to be a migration from manufacturing and selling individual components to delivery systems and devices. That's been driven by the market need for systems that can be used by the patient to eliminate cost from the drug administration chain. The idea is to have systems that are essentially foolproof, that eliminate needlesticks, are very accurate in terms of dosing and are easy for the patient to use. This is particularly critical for biologics to treat diseases like rheumatoid arthritis. Our moves into platforms for those sorts of products will be a real key.
That was the reason for forming our second division, Pharmaceutical Delivery Systems, a few years ago. That comprises the assembled systems that are used in drug packaging and delivery.
The one thing that ties both of those trends together is the emerging need for combination devices, where the primary container of the pharmaceutical is actually integrated into the delivery system. That's the big trend for us to capitalize on in that timeframe.
CP: What was your biggest challenge during your tenure as chief executive officer?
DM: The biggest one was the Kinston accident in 2003 [in which a West facility exploded, killing six people and injuring 36 more]. I'd only been CEO for eight months, and West was faced with a situation no one should ever have to face.
It was a terrible accident that took place, but to the credit of West, we were able to meet all of our orders for the year despite losing that factory. That was a credit to our people executing our recovery plan and our crisis management plan. But rebuilding Kinston, without a doubt, was the biggest challenge I have faced at the company.
Also key to West’s recovery was the outstanding support of the Kinston community, Lenoir County and the North Carolina state government. An enormous contribution was made by our Kinston employees, more than 100 of whom relocated to Nebraska and Florida for 12 months to maintain pre-accident production levels.
CP: What have you learned during your time in the top spot at West?
DM: I learned that I don't have all the answers. You need to keep a very open mind. The most important attribute for this job is the ability to listen. The one thing that happens -- and it's unfortunate -- is that there are so many demands on your time, trying to meet the needs of your shareholders, your board, your employees, that you almost have to force yourself to get out and pay attention to the most important aspect of the business, which is the customer.
So it's about being able to listen, being able to take in multiple points of view, being able to be honest about when you're wrong.
I've been fortunate enough to work with some very talented people here. We've had a very stable management team; most of us have been together for more than a decade. The gentleman who heads up the Pharmaceutical Packaging group is probably the rookie, since he's only been here three years. It's a very collegial working atmosphere, one where everybody's opinions are respected, and where we're able to have a little fun as a management team, along with the very important work we're doing for healthcare markets globally.
CP: I shudder to say this, but I hope we can do a follow-up for the centennial in 2023!
DM: That'd be great! West will be here!
Gil Roth has been the editor of Contract Pharma since its debut in 1999.
Dr. Morel has served as chief executive officer of West Pharmaceutical Services, Inc. since April 2002 and chairman of the board since March 2003. He joined West in 1992 as director of R&D and was promoted to vice president R&D in 1993. In this role, Dr. Morel spearheaded West’s efforts to develop novel and propriety drug delivery technologies. In 1998 he was promoted to group president, heading sales, marketing and operations of West’s medical device and pharmaceutical components business globally. In October 1999, Dr. Morel became president of the new Drug Delivery Division, and in April 2001, president and chief operating officer.
Prior to joining West, Dr. Morel developed and managed a broad range of programs involving advanced materials for aerospace, biomedical and pharmaceutical applications for Harris Corporation, PneumoAbex, and Applied Research Laboratories. His aerospace work in the 1980s resulted in his selection as a finalist for assignment as a NASA Mission Specialist in the Astronaut Office in 1989.
Dr. Morel holds a BS degree in Engineering from Lafayette College, an MS in Materials Science and a Ph.D. in Materials Science and Veterinary Medicine from Cornell University. He completed The Executive Program at the University of Virginia Darden School of Business.