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    Features

    Contract Packaging Trends Roundtable

    Thoughts on trends from some of today's contact packaging leaders.

    Contract Packaging Trends Roundtable
    Related CONTENT
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    Tim Wright, Contract Pharma11.07.17
    The demand for contract packaging services continues to grow. By 2019 the market is expected to exceed $100 billion. The contract packagers Contract Pharma spoke to for this roundtable all concurred that there is a growing need for their services and discussed the trends that are driving the market, as well as their businesses, forward. 

    Contract Pharma: How has the contract packaging market evolved over the last ten years?
    Tee Noland
    , chief executive officer, Pharma Tech Industries: Contract packaging has become more and more strategic as the requirements and scope of work from its customers has expanded. Instead of just charging a toll fee for production, contract packagers are now more involved in strategic supply chain decisions such as vendor selection and qualification, as well as product development, formulation, project management and quality assurance. The market has also seen a great deal of consolidation over the years as scale has become more and more critical. Contract packagers that offer a narrow range of capabilities are under more and more pressure by their customers to expand into other areas to remain The demand for contract packaging services continues to grow. By 2019 the market is expected to exceed $100 billion. The contract packagers Contract Pharma spoke to for this roundtable all concurred that there is a growing need for their services and discussed the trends that are driving the market, as well as their businesses, forward. .

    Reid Lederer, president, Pharma Packaging Solutions: We could not have predicted the number of injectable drugs that would be on the market today. The glass vials and ampoules that accompany them all require protective packaging. We also could not have predicted the requirements of a serialized lot number on each unit and how to accommodate 2D barcodes in miniature printing areas, as well as the subsequent IT demands of aggregation, data collection and data sharing.

    Eric Tjoa, chief executive officer, Tjoapack: In the past, packaging was viewed very much as an extension of manufacturing and logistics operations, with contract manufacturing organizations (CMOs) assuming responsibility for primary packaging and third-party logistics (3PL) companies handling secondary packaging . Over the last decade specialist contract packaging organizations (CPOs) have steadily become more important as the complexity of packaging requirements has increased because of more complex products, different market legislation and, more recently, serialization regulations.

    Packaging is the area of the pharmaceutical supply chain where the chance of mix-ups is significant and can lead to costly recalls. It’s important for pharmaceutical companies that packaging be done correct the first time.

    Larry Hotz, marketing manager, WDPrx – Woodfield Pharmaceutical, LLC: A significant milestone was the rescheduling of hydrocodone from a CIII to a CII requiring storage in a DEA-approved vault. We added vault storage in anticipation of the change and modified our SOPs to meet cGMP guidelines to maintain production schedules. More recently, serialization for prescription drug products has impacted the contract packaging market including the investments in training, hardware, software and technology to manage production, labeling, warehousing, aggregation and data exchange in compliance with DSCSA requirements.


    CP: What are the greatest challenges currently faced by CPOs?
    Noland:
    Given the desire for scale and expanded services by the customer, contract packagers are in a challenging situation to meet this expectation while at the same time holding or improving their cost structure and level of investment. Additionally, the contract packaging business has become more complex to manage than before as contract packagers take on more value-added activities for their customers.

    Lederer: To stay on the cutting edge, we are frequently asked to accommodate new drug requirements such as low humidity primary rooms for drugs which require packaging in very low humidity, new capabilities such as cold storage for temperature sensitive products, and new processes for compliance such as serialization and aggregation equipment to meet the DSCSA requirements. These investments are sometimes made without a full understanding of what the future will hold—CPOs frequently have to be a step ahead of their customers’ needs.

    Tjoa: The most obvious short-term challenge for contract packagers at the moment is ensuring they can meet customers’ serialization requirements. Implementing serialization across packaging lines is a complex process and an expensive one. Smaller CPOs in particular are struggling with the upfront investment required to implement a Solution , meaning many specialist providers will need to withdraw from certain markets temporarily or even permanently. In addition, there’s the added concern surrounding how to build the cost of serialization into existing supply agreements without losing customers. These cost concerns are also leading a lot of manufacturers to consider consolidating their supply chains and use fewer supply chain partners. This kind of consolidation has been an industry-wide trend for a while. CPOs are now facing more competition than ever before and need to invest in upgrading their service level to face off their competitors.

    Innovation is also a challenge for CPOs. Packaging is an increasingly complex process and it’s important that contract packagers are continuously developing new solutions to package difficult products and manage the complexities in order to remain competitive. I firmly believe that it is also important to have a clear vision of how the market will evolve over the next decade and for all parts of the pharmaceutical supply chain to be as proactive as possible.

    Hotz: The three primary factors affecting CPOs are continuing operations despite regulatory delays, managing production schedules due to longer lead times required to acquire specialized equipment components for specialized projects, and the issues surrounding the installation, testing, validation and operation of serialization equipment on production lines.

    CP: What do you believe are the factors driving demand for contract packaging services?
    Noland:
    Cost continues to be a significant driver for contract packaging. Brand owners are realizing there are significant costs—both direct and indirect—of managing their own supply chain and development organizations.  There is a strong value proposition in allowing someone else to manage those complexities at a relatively fixed cost. Additionally, speed to market is critical for development-based pharmaceutical companies. Contract packagers that already have the GMP infrastructure investment in place offer a big advantage in speed to market than internal alternatives.

    Lederer: Pharmaceutical companies want to specialize in what they do well—drug development and marketing. They want to outsource what others can do well—packaging and logistics. For our risk-averse client base, we need to be agile, compliant and an innovative packaging partner making the needed investments so they don’t have to.

    Tjoa: The key driver behind the growth in demand for contract packagers is the increased complexity of packaging requirements. Changes in regulations, such as the new serialization requirements, mean that a huge amount of expertise is required to efficiently and correctly package pharmaceutical products. This expertise, combined with the need for capabilities they do not have internally, is driving pharmaceutical companies to approach specialist packaging companies. Moving forward it is likely governance will become even more stringent and companies will continue to outsource requirements that are too expensive to fulfill in-house and for which staying on top of changing regulations is too complex.

    Changes to the way packaging is being delivered is also driving demand. For example, postponement packaging and late-stage customization are becoming more popular, particularly for small volumes. However, packaging in this way can be expensive when carried out internally and it requires a certain level of expertise.  

    Hotz: The increase in our business is due in part to the growth in the virtual manufacturer business model that relies on CMO and CPO firms for success. There is increased demand in the market for customized solutions that utilize specialized equipment and require technical expertise. Our DSCSA-compliant packaging lines are experiencing additional volume from manufacturers requiring product serialization.

    CP: What are the latest packaging trends and what opportunities do they bring to the industry?
    Noland:
    The trends are a move to more scale, more specialization and innovation, and more value-added services. These trends point to the fact that the industry is healthy and growing and that contract packagers are arguably more important and strategic today than they were in the past. In some cases, contract packagers are becoming incubators for new therapies and delivery systems and are starting to look more and more like a product-based pharmaceutical organization when it comes to valuation. Some of the recent transactions in our space from Patheon, Catalent and DPT underscore the strategic value of development.

    Lederer: We will see more biologics in injectable form, serialization and aggregation will march forward with all of the global deadlines eventually coming to pass, there will be new and creative approaches to more patient compliant packaging, and there will be new manufacturing and processing challenges. CPOs need to be capable and ready for what customers expect and demand of us. This can mean everything from new capacity to new capabilities.

    Tjoa: The pharmaceutical industry is still very conservative and the market is historically slow to adopt new technologies, which will disrupt the supply chain. Moving forward the increased visibility of the supply chain following traceability initiatives will inevitably lead to improvements beyond patient safety. In addition to adding security to the supply chain, full track-and-trace can help companies to streamline their order forecasting and reduce stock levels and wastage, improve warehouse management and offer greater shipment visibility and accountability. As such, end-to-end visibility of the supply chain is incredibly important in terms of reducing costs and improving efficiencies and should be the industry’s end goal.

    The use of smart packaging to monitor temperature and storage conditions is an example of evolving sophistication, and long-term, as sensor technology advances, we can expect to see this and other types of monitoring become more prominent. There is a huge amount of conversation surrounding the Internet of Things (IoT) and how packaging companies can utilize this trend to integrate smart packaging via cloud platforms. This could potentially also be used for the benefit of the end user, for example, in aiding therapy compliance and monitoring the efficacy of the medication.

    The way that pharmaceutical products are reaching patients is evolving as well, with more online channels for direct to patient distribution. This will impact the regulatory landscape as we strive to make the delivery of pharmaceuticals as safe as possible, which will in turn effect pharmaceutical packaging requirements.

    Hotz: We work together with clients to create innovative packaging solutions that distinguish their products. For example, our packaging team creates custom-designed shrink sleeves for over-the-counter ( OTC ) products. Smaller form factors and unique delivery mechanisms are a hallmark of our business in unit dose products. A growing number of clients want to test different packaging options in smaller quantities before approving commercial production. 

    Vetter Expands Secondary Packaging Capacities
    Approximately 32,000-sq.-ft. expansion will include new packaging lines and assembly equipment

    Vetter, a provider of prefilled drug-delivery systems and packaging, is expanding its secondary packaging capacities. The company’s new filling lines and new lyophilizers are driving the need for increased downstream secondary packaging capacity. The expansion is currently underway at Vetter’s existing secondary packaging facility in Ravensburg, Germany and will increase packaging capacity by approximately 32,000 square feet.

    The expansion will include new fully-automated packaging lines, space for manual and semi-automated packaging processes and assembly equipment for a variety of formats. The Vetter serialization and aggregation service will also be expanded. A flexible, syringe blister line will include safety device assembly and equipment for packaging Japan quality. The addition of new assembly machines for pens and autoinjectors will help to meet growth in this market for these systems.

    “We often hear from customers that a high level of expertise in the assembly and packaging of pens, autoinjectors and safety devices is critical for their success,” said Bernd Stauss, senior vice president, production/engineering, Vetter. “Vetter has this experience and can offer a one-stop solution, from development to filling to secondary packaging including serialization of products; a service that is greatly appreciated by our customers.”
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