Manufacturers Rely Increasingly on Contract Packagers

Drug and device manufacturers count on contract packagers to handle increased production, special requirements, and clinical trials packaging.

by Annie Gorton, Associate Editor


In the pharmaceutical and medical device manufacturing industry, there is a "[high] rate of reliance on contract packagers," reports the Packaging Machinery Manufacturers Institute (PMMI) in its 1998 Customer Purchasing Plans Study. The study shows that these manufacturers will continue to keep contract packagers busy over the next two years.

Eight of the 38 respondents were located at corporate headquarters and answered for all of their companies' plant operations. The data provided in the survey covered the packaging decisions relative to 149 U.S. establishments. Of the pharmaceutical and medical device manufacturers surveyed, 69% currently use contract packagers, and 36% will increase their use of or begin to use contract packagers over the next two years. A small number, 11%, will decrease or stop use over the next two years. Those manufacturers who will not change their use of contract packagers over the next two years make up 53% of those surveyed.

"The contract packaging field is growing significantly," says Greg Erickson, manager of education for the Contract Packaging Association (Herndon, VA). "Many companies are looking for ways to outsource some parts of their packaging process. In turn, contract packaging businesses are always on the lookout for ways to expand their services."

According to the PMMI study, the companies that "projected greater reliance on contract packagers" said that the introduction of new products would be the main reason. "Rather than installing new machinery to package products whose ultimate success may be uncertain, manufacturers are tending to farm out the work initially until the capital investment proves justified," says the PMMI study.

Erickson adds, "If a manufacturer wants to test a new product with a small run, it wouldn't always pay for the company to dedicate an existing line to do a run of that type."

A manufacturer may require the expertise of a contract packager for a new product. "For example," says Erickson, "a company that produces a pharmaceutical in a liquid form may know everything about handling and packaging the liquid. But when they introduce a new version of the same pharmaceutical in a tablet form, they many not understand how to package the tablets. In that case, they could rely on a contract packager."

Other reasons manufacturers turn to contract packagers include a sudden surge in demand for a particular product that the manufacturer cannot meet alone. "Demand for some products increases seasonally," says Erickson.

When expanding distribution into a new area, a contract packager in that area may be able to package the product more economically than the manufacturer could. "Also, some products are time and temperature sensitive," says Erickson, "so shipping the product to a contract packager, where it can be packaged and distributed on a regional basis, might be better for the product."

While contract packagers often handle sensitive, time-consuming, or low-volume runs, they are also capable of packaging products at high volumes and speeds. Often, says Erickson, a manufacturer will intend to use a contract packager temporarily. After realizing how economical such outsourcing can be, the manufacturer then uses the contract packager on a permanent basis. This may explain why 36% of pharmaceutical and medical device manufacturers plan to increase or begin using contract packagers, according to the PMMI study.

Contract packagers know how useful their businesses are to manufacturers. Many are purchasing new equipment and adding services that allow them to meet their current customers' evolving needs as well as generate new business. Pharmaceutical and medical device manufacturers can be certain that as their companies change and grow, contract packagers will be adapting right along with them.

Companies that offer contract packaging services are profiled on the following pages. Some offer a broad range of services, while others specialize in clinical trials packaging. Several companies can package products for overseas markets. Whatever your challenge, there is a contract packager who can help you achieve your goals.

Use of Contract Packagers by the Pharmaceutical and Medical Device Market and the Trend over the Next Two Years

Companies that currently use contract packagers 69%
Companies that will increase use of or begin to use contract
packagers over the next two years
Companies that will decrease or stop use of contract
packagers over the next two years
Companies whose use or nonuse of contract
packagers will remain the same over the next two years
Source: 1998 PMMI Customer Purchasing Plans Study



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