E-Purchasing Available, but Not Likely in the Near Future

 

Purchasers of packaging materials now have the resources to point and click their way to procuring almost any item on their shopping lists. Several new Web sites make it convenient for packagers to research new suppliers, negotiate prices, and track orders of materials. However, it may be a while before healthcare product packagers actually make material purchases via the Internet.

When used as a research tool, the Internet can certainly save time. Many sites, including PMP News's own pmpnews.com, offer extensive lists of suppliers in easy-to-search formats, giving browsers the opportunity to consider several suppliers at the same time. "The Internet makes it easier for packagers to make an informed choice about their materials," says Ed Bauer, vice president of industry relations at Packexpo.com, a neutral business-to-business Web marketplace for packagers. "They have an excellent opportunity to shop and compare offerings and prices on the Internet." At packexpo.com, for instance, packagers can view more than 3000 material and container listings from several hundred suppliers.

Another site, webpackaging.com, also boasts an impressive database of hundreds of suppliers of primary containers and closures for many industries, including pharmaceutical. Visitors can search for suppliers by name, product, or category and also work with suppliers.

Transacting business over the Internet can help to expedite product order fulfillment. "The days of placing orders with packaging representatives and waiting for them to go back to the office, estimate the cost, and then fax you a quote in a day or two are over," says Willard Nye, president of PackagingPrice.com, a Web-based supplier of secondary packaging materials. "That's a two-day process that packaging buyers can now complete in a matter of minutes."

Internet shopping may also save packagers money. "Through reduced margins and lower overhead, our products are typically 15% to 20% cheaper than our closest competitor serving the small to midrange business," says Nye. Packexpo.com's Bauer adds that the Internet allows purchasers to stay on top of price changes, which can occur every day.

Making Internet purchases, however, may be a sticking point for healthcare product packagers. The decisions behind purchases of packaging components and materials used for medical devices and pharmaceuticals are complicated, often taking several months in research, material performance evaluations, stability and shelf life studies, and other considerations. And in many cases, the packaging material most appropriate for a particular drug or device is a custom formulation or design. "If materials are primary packaging materials that come into contact with a drug, for instance, a packager cannot quickly purchase alternate materials without an evaluation and formal approval," explains Ed Smith, a drug-packaging consultant who currently serves as the leader of PDA's packaging science interest group. "Once an approval process is completed, it may be possible to purchase certain thermoplastics or other materials where equivalents are recognized without further evaluation and to buy on price alone. But buying on price alone quickly over the Internet doesn't seem plausible for many materials."

Bauer agrees that material evaluations take time, but he feels that packaging engineers, and even their counterparts in drug discovery, can use the Internet successfully to find suppliers and request samples necessary for performing a packaging line validation. "It's a good way to request samples in order to qualify more than one supplier," he says. "Then, if your current supplier discontinues a resin, for example, you can look to another."

One major drug company has already used the Internet to procure packaging materials. Earlier this year, SmithKline Beecham (SB) purchased corrugated packaging through the on-line marketplace FreeMarkets.com. At FreeMarkets.com, buyers select the suppliers, or bidders, who will be competing for their business. Since 1999, SB has bid out more than $38.2 million worth of goods and services (not all of them packaging related) and identified an average annual savings of nearly 10%. "Electronic commerce is the way of the future and to not embrace it is just putting off the inevitable," says Willie Deese, senior vice president of worldwide purchasing at SB.

Bauer says that secondary material purchases like SB's are currently the most common Internet packaging purchases. "Pharmaceutical companies are starting to bid out projects for noncontact, noncritical materials, like cartons and inserts. But the process is new, and everyone is still feeling their way along."

Purchasers, however, may be reluctant to buy primary packaging materials through such a forum, and for good reason. Finding the right material for packaging healthcare products takes significant time and effort, so many engineers may question the need to participate in on-line auctions with other suppliers, especially if they have found something that works and has withstood FDA's scrutiny. But Bauer, whose most recent industry position was that of senior director of packaging services at Wyeth-Ayerst Laboratories, says that finding alternative suppliers via the Internet can "potentially save a company millions, all for an investment of $50,000 to $100,000 in validation costs."

For Internet purchasing to truly serve medical device and pharmaceutical packagers, Web sites must offer more than an auction or real-time order tracking. They must supply purchasers with all the technical specifications and regulatory guidance needed for such decisions. They must make it easy for browsers to compare equivalent materials, request samples, and interact with suppliers during validation. Until the Internet can facilitate the lengthy process of selecting primary packaging materials for healthcare products, purchasers will use the Internet primarily for research, not purchases.

Daphne Allen, Editor
daphne.allen@cancom.com

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