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    Features

    Contract Packaging Market Trends

    Contract packagers talk about hot growth areas and the looming 2017 DSCSA deadline

    Contract Packaging Market Trends
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    Tim Wright, Editor06.02.16
    Demand for contract packaging services is strong. All signs point to steady market growth between 5-6% annually for the next 3-4 years. In fact, the pharmaceutical packaging market is expected to exceed $100 billion by 2019. The contract packagers Contract Pharma spoke to for this article all concurred that there is a growing need for their services and discussed ways the market is evolving as well as their businesses along with it.

    Two key drivers are the demand for personalized medicines in developed markets, and access to medicines is an increasing priority for developing countries.  Thus, anticipated future growth will continue to be driven by innovation and geographic expansion.

    “Due to increased merger and acquisition (M&A) activities and economic growth in emerging markets, pharma supply chains today are much more global,” said Damian Gant, manager, clinical packaging services, Xcelience, a division of Capsugel Dosage Form Solutions.

    Mr. Gant also said the rising shift towards development of orphan drugs has pharma companies looking for increased speed-to-market for their products—requiring global distribution—and ways to accommodate the packaging of the various drug delivery mechanisms. “Additionally,” he said, “the increase in personalized medicine and biologics is more often requiring cold chain distribution—or viable alternatives—and specialized handling and packaging.”

    PCI Pharma Services’ Justin Schroeder, executive director, marketing, business development and design, said in the commercial space their business is also increasingly seeing drugs for very select patient populations.

    In fact, in 2015, according to FDA’s website, 36% of NDA approvals, or 16 of the 45 total, were designated as “first-in-class,” and 47%, or 21 approvals, were orphan disease indications. Fourteen approvals utilized Fast Track status; 10 were Breakthrough therapies; 24 approvals utilized Priority Review; and 6 followed Accelerate Approval, designated for drugs for a serious or life threatening illness that offers benefit over existing treatments.

    “All totaled, 60% of the new drug approvals utilized one of the four expediting categories FDA has created to inspire development of therapies for unmet needs,” said Mr. Schroeder. “These types of products translate into smaller production campaigns and decreased lot sizes, which has certainly changed the dynamic of the market. This trend is coupled with growth in emerging markets, with many countries and SKU’s, but again relatively small volumes and complex supply chain requirements.”

    Primary packaging primer
    According to market studies, bottling will remain the largest segment of the primary packaging market at around 22%, followed by blistering at 12%. However, as biologics and biosimilars grow, parenterals and injectables are the hottest growth areas and will account for nearly 17% of the market in the years ahead.

    “The push for items like prefillable syringes came from the payer side and their desire to have more injectables administered at home as opposed to the physician’s office or the hospital,” said Reid Lederer, president, Pharma Packaging Solutions. “These are products that are high-touch in terms of the packaging operations, with complex labeling and kitting operations. They are often cold chain products, which adds another level of complexity and infrastructure demand. This may include vials and ampoules, as well as prefilled syringes or custom autoinjectors.”

    Ease of use and portability seem to be in demand from the consumer, according to Tee Noland, chief executive officer, Pharma Tech. “In most cases they are willing to pay more for these attributes,” he said. “We are also seeing a lot of interest in drug/device combination products.”

    While bottling remains very popular, Patricia Elvin, president, Reed-Lane, said they are seeing a trend of smaller size bottles for the Rx community. “Bottling is the largest primary packaging segment in the U.S. we continue to see strong growth in this area, having just added an additional bottling line to bring our total to 6 bottling lines.”

    While in the U.S. there is still a strong demand for bottles for prescription trade products, there is also a strong demand for blisters for OTC products and physician samples. 

    “Compliance packaging for oral solids is the other area of growth for our business,” said Mr. Schroeder. “With the increase is specialized medicines and high cost therapies, companies have to put their best foot forward in effectively delivering product to patients and engendering better patient health outcomes. Compliance packaging has proven to provide the most effective solution for increased adherence and better patient health.“

    Xceliences’ Mr. Gant agreed that in today’s primary packaging space, blister packaging remains very popular for a number of reasons. “These include increased patient compliance because of the visibility of the product, as well as, drug accountability, and flexibility to accommodate multiple dosing configurations,” he said. “The blister wallet is a highly versatile platform to present information directly and readily to the patient, specifically in the form of graphics illustrating both ‘how to’ and ‘when’ to take the product. Both of these features are critical to successful treatment, and any steps that can be made to empower the patient to correctly maintain and use their medications without referring to text-dense leaflets is helpful.”  

    Another trend, according to Mr. Schroeder, is the continued need for high barrier materials. “Because of the pressure to bring products to market quickly and effectively, less time is spent developing the drug product formulation,” said Mr. Schroeder. “Increasingly barrier packaging materials support the shelf stability of the product to ensure successful commercialization. Material providers have done a wonderful job at continuing to push the envelope and raise the bar for barrier properties, enabling speed-to-market for pharma companies in bringing products to commercialization. 

    “Another major trend we see is in new technologies to support quick changeover/small batch production. In the past, a company would have to sacrifice in technological sophistication to offer a small volume packaging line, whereas now the advanced technologies have been scaled down to fit the need. We have invested in several new small volume blistering and bottling lines to support the increased demand in these types of programs.”

    “Smart” packaging is another technology driver making an impact in today’s market, according to Mr. Gant. “This type of packaging provides enhanced functionality, such as moisture control,” he said. “Technology is constantly evolving and we are in the planning stages of a new packaging line. One of our areas of interest is in the introduction of robotic feeders in conjunction with blister packaging. The intention is to fully automate product feeds, specifically focusing on mixed fill blister strips/cards.”

    Decongesting the supply chain
    Pharma companies today are looking to reduce the number of suppliers in their network and build closer relationships with them. They want flexible, nimble suppliers to assist with their projects from start to finish and to provide cost-efficient solutions and they are turning to contract packaging organizations (CPOs) for just that.

    “Pharmaceutical companies are becoming more strategic about their supply chain, wisely recognizing their core competencies over other partners,” said Mr. Lederer. “Most of our customers are choosing to partner with CPOs to utilize their packaging expertise to support and add value to their global reach. It is easier to control volume fluctuations and packaging and labeling changes and unique demands like serialization using a CPO.”

    With the market under pressure for consolidation, Mr. Noland said many of its large pharma customers are also interested in reducing their supplier network and focusing on placing more business with their best suppliers. “Customer consolidation is creating more demand for scale in our industry from a geographic, services, and technical capabilities standpoint,” he said. “Low interest rates have caused many financial buyers to enter our space and have created more competition for assets and other acquisition opportunities. 

    As big pharma relies more and more upon contract packagers for new product launches and when consolidating their own facilities, the contract packaging market will continue to grow especially with the 2017 serialization mandate on the horizon, as excess capacity is needed for compliance. “While the market has been consistent over the past several years—new drugs and applications seem to be driving volume growth—serialization is a huge factor in the current market,” said Ms. Elvin. “Some contract manufacturing organizations (CMOs) are not prepared for serialization and will depend on contract packagers to be ready.”

    Meeting the serialization challenge
    Within the secondary packaging space, improved supply chain security in the form of serialization is top of mind these days with the 2017 DSCSA deadline looming on the horizon. There are many difficult decisions to be made in the selection of the correct equipment, vision systems and software architecture to name a few. But, according to Mr. Gant, the most striking challenge is building in global market flexibility.

    “The introduction of serialized product around the globe is far from harmonized, with different countries presenting different regulations at different implantation dates,” he said. “Trying to implement a system and equipment that can match as many of these as possible and still be capable of meeting new country demands as they arise is the current conundrum that faces packagers. The implementation of serialization/track and trace capabilities is leading people to explore the latest options in vision systems and high-speed printers. These two elements are just a part of the entire solution, but picking the right combination for both and integrating them will be critical in creating the required association between the packaged unit, the serialized GTIN number and subsequent aggregation of finished packs up to pallet level. Developments in speed, accuracy and the ability to share data with this equipment will be key drivers in the development of automated packaging lines, and will continue to be until packagers are compliant with their specific market regulations. We are preparing to meet future regulatory demands in anticipation of customer commercial packaging needs by proactively designing brand new packaging lines that incorporate necessary vision systems and printers to facilitate track and trace with aggregation capabilities.”

    Along these lines, the industry is experiencing a seismic shift in its use of technology. “Digital printing has become much more prevalent in all aspects of secondary packaging,” said Andrew Vale, senior vice president, corporate strategy and development, Platinum Press. “Also, given current and pending traceability mandates, we’re also offering a variety of serialization-ready printed materials amounting to ideal platforms on which to apply final track and trace data onto packaged pharmaceutical products. Our input primarily involves marking technology and establishing which is most appropriate for the printed component substrate and application. It’s certainly not a case of one-size fits all.”

    Reed-Lane has been preparing for serialization and track and trace regulations for several years. “We have been educating our customers and hosting educational seminars,” said Ms. Elvin. “Most customers feel as though the mandate will be pushed back once again. Even if that does happen we still need to be prepared.”

    PCI has been actively serializing commercial product for a number of years ahead of the 2017 deadline. “We have invested substantially in new lines and new capabilities to support clients, effectively tripling our serialization capacity just in the past 18 months,” said Mr. Schroeder. “We are planning to continue to support that investment activity across our global supply network as the market demand continues to rise for the U.S., EU and ROW markets.”

    According to Mr. Lederer, in order to be successful, a seamless partnership on these regulations requires all stakeholders—the customer, the CPO, the equipment manufacturers and the IT solutions people—to get on the same page quickly and efficiently with common goals and deadlines. “Meeting the federally imposed deadlines in the time available to be compliant is limited,” he said. “To this end, we have added serialization and aggregation equipment and IT solutions as well.”

    Cost of compliance
    On of the major issues with serialization implementation is cost, which is always a big consideration. “However, the whole process, establishing new procedures, investing in new equipment and managing the serialization process to make the November deadline has been very stressful for the whole industry,” said Mr. Vale. “It really has loomed large over everyone’s mindset, and understandably so.”

    Regulations require both product owner and contract packager to make investments in order to keep product in the market, according to Mr. Gant. “Both parties contribute in the form of a service fee, capital expenditure or personnel resources for implementation,” he said. “Cost can be a large consideration, but remaining compliant will always be the most important goal. The implementation of serialization is a large-scale undertaking with huge ramifications if it is not performed correctly. Changing regulatory positions and requirements, in addition to demands made by product distributors, all add increased pressure on both the product owners and packagers to maintain full adherence to regulations.”

    In addition to the considerable cost, its also the evolving language and lack of clarity within the regulations that dauntingly looms over the industry. “Within the market, everyone is hoping that FDA will help clarify what 2017 will bring from a practical supply perspective, specifically what happens if companies have residual unserialized product when the deadline is active,” said Mr. Schroeder. “There is a substantial amount of work to be done at pharma companies to be prepared. We see some early adopters who are well positioned, but also many midsized and virtual companies who still have significant work to be done.” 
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