Pharma Packaging Report

A new study explores five-year trends in drug packaging

By Bill Martineau

The Freedonia Group

Pharmaceutical Packaging, the new study by The Freedonia Group, analyzes the $14.3 billion U.S. pharmaceutical packaging industry. The study explores historical demand data for the years 1999, 2004 and 2009, and forecasts for 2014 and 2018 by material, type and market.

The study also examines market environment factors, details industry structure, evaluates company market share and profiles 33 industry players. Freedonia Group analyst Bill Martineau presents some of his findings here.

Demand for pharmaceutical packaging in the U.S. (including Puerto Rico) is forecast to increase 5.3% annually to $18.5 billion in 2014. Recently upgraded regulations and standards that address such issues as barrier protection, infection control, patient drug compliance, drug dispensing errors, and drug diversion and counterfeiting will underlie growth. An increased focus on these issues will boost demand for high value-added containers and accessories, including enhanced barrier plastic bottles, calendar and wallet blister packaging, prefillable syringes and inhalers, track-and-trace and authentication labels, and unit dose pouches.

Primary Pharmaceutical Containers Demand by Product Group, 2009($8.7 billion)

Demand for primary pharmaceutical containers will increase 5.2% annually to $11.3 billion in 2014. The fastest growth is anticipated for prefillable syringes, which will expand applications as advances in biotechnology lead to the introduction of new therapies that must be injected. Plastic bottles will remain the most widely used package for oral drugs distributed in bulk and prescription dose volumes to retail and mail order pharmacies. They will also continue to dominate applications in OTC medicines sold in tablet and capsule quantities of 50 or more. Pharmaceutical blister packaging will derive growth based on its adaptability to unit dose formats with expanded label content, high visibility, and built-in track-and-trace features.

The market for pharmaceutical pouches will expand at a fast pace, spurred by increasing applications in the unit dose packaging of transdermal patches, powders for reconstitution, and topical creams and ointments. Prefillable inhalers will command strong growth opportunities as the number of chronic asthma, allergy and migraine patients treated with inhalation drugs rises. Ongoing improvements in aesthetic and barrier properties will keep tubes a leading primary container for topical medication.

Pharmaceutical Packaging Accessories Demand by Product Group, 2009 ($5.5 billion)

Pharmaceutical closures will comprise a $3 billion U.S. market in 2014, up 5.5% annually from 2009. Vial stoppers, syringe tips and plastic flip-top vial closures will command strong growth as injectable bioengineered drugs broaden emergency care and chronic disease indications. Push-and-turn child-resistant caps will remain the top closures for oral and liquid drug containers, but will lose growth momentum as blister packs and pouches penetrate unit dose applications. Plastic dispensing closures will fare much better among drug makers, based on ease of use and convenience in the delivery of liquid medicines and lotions. Due to marketing and security benefits, paperboard boxes will continue to lead sales of secondary pharmaceutical containers. Demand for prescription vials will increase slowly as ethical medicines are adapted to prescription dose bottles and blister packs for direct dispensing.

Due to trends toward smaller-sized pharmaceutical shipments, folding cartons will post faster growth in demand among drug makers than corrugated shipping boxes. Overall demand value recorded by pharmaceutical labels will advance rapidly as drug makers change to higher value-added types to meet existing and forthcoming pedigree regulations for combating drug counterfeiting. Demand for other packaging accessories, including shrink wrap and bands, tamper-evident seals, desiccants and packaging materials, will expand with increases in pharmaceutical shipments. Based on cost, versatility and adaptability advantages, plastic resins will remain the most widely used materials in U.S. pharmaceutical packaging applications, accounting for 1.5 billion pounds of consumption in 2014.

Pharmaceutical Packaging Demand by Market, 2009($14.3 billion)

One primary market comprised of drug producers, along with a number of smaller, niche and secondary markets, will combine to boost U.S. (including Puerto Rico) pharmaceutical packaging demand 5.3% annually to $18.5 billion in 2014. The drug-producing segment will provide approximately 85% of demand over the long term based on the high volume and wide diversity of requirements for containers, closures and accessories. The contract packaging segment will continue to form the largest and most attractive niche market as drug makers broaden the use of outside services to expand product lines, meet needs for new and specialized packaging formats, and supplement or replace internal packaging systems.

Other markets for pharmaceutical packaging consist of retail, mail order and institutional pharmacies, drug repackaging firms, drug distributors, and home healthcare organizations. Among these markets, drug repackaging firms and drug distributors hold the best growth prospects as they use a wide variety of containers, closures and related accessories in the packaging of store brand and private label medicines for sale in drug stores and other retail establishments as well as by online firms. Retail, mail order and institutional pharmacies and home healthcare organizations will continue to provide limited demand for pharmaceutical packaging products. Secondary containers and closures for dispensing ethical medication to patients will account for most sales to retail and mail order pharmacies. Demand for pharmaceutical packaging in institutional pharmacies and home health care organizations will remain comparatively small due to the widespread availability of unit dose and premixed medicines packaged directly by drug manufacturers.

Contract Packaging

The expanding use of outsourcing by drug makers will create favorable growth opportunities for pharmaceutical containers, closures and related accessories among contract packaging firms. Total product demand in this segment is projected to expand 6.8% annually to $1.9 billion in 2014. High value-added unit dose packaging — including blister packs, prefillable syringes and parenteral vials — will realize the strongest growth opportunities. However, standard containers, closures and accessories will also build demand among contract pharmaceutical packaging firms as they capture increasing applications in generic and private label medicines.

The use of contract packaging offers four principal advantages to drug makers. First, it enables medicines to be adapted quickly to new packaging formats without investing in new equipment or implementing often costly modifications in existing packaging processes. Second, contract packaging services allow drug companies with limited production capacity to expand or round out product lines. Third, it provides a source for packaging clinical trial, sample and other medicines expected to generate usage only in the short term. Lastly, contract packaging services can be used by drug makers to meet unexpected surges in demand beyond the capabilities of internal manufacturing capabilities.

Contract packaging firms typically pursue long-term business relationships with drug makers and retail private label clients. Some firms set up dedicated lines that exclusively serve a single customer. In this type of arrangement, pharmaceutical packaging products are often purchased and supplied directly by the client and are not reflected in demand realized from the contract packaging segment. Additionally, a significant portion of pharmaceutical packaging demand among contract firms is met through captive production.

Bill Martineau is an industry analyst for The Freedonia Group. For more information on this study, Pharmaceutical Packaging,published September 2010, contact [email protected], call 440-684-9600 or visit www.freedoniagroup.com.