Boxes At BMS: Impact Of New Drugs On Packaging Sponsors And Providers
By Louis Garguilo, Chief Editor, Outsourced Pharma
Dan Marasco, head of Packaging Materials & Device Sourcing at Bristol-Myers Squibb, says that while the conversation below isn’t exact, it went something like this:
“Mom, Dad, I’ve been accepted at Rochester Institute of Technology to study packaging.”
“RIT? Wonderful, son! Did you say you’re majoring in marketing?”
“No, Packaging … Packaging Science.”
“You’re going to study how to make boxes?”
Some 20 years later the parents are much prouder. They know the pharmaceutical industry relies on packaging experts like their son to safely and reliably deliver drugs to customers and patients around the world. Marasco, in turn, increasingly relies on other packaging professionals at external service providers, in this new era of “high-value, low-volume drugs.”
A Journal of Pharmacy and BioAllied Sciences report estimates that pharmaceutical packaging as a separate market is worth well over $20 billion a year. Nonetheless, I admit to having less insight into this part of the pharmaceutical industry. “Believe me, there’s a lot more to packaging than even most industry experts understand,” Marasco says, kindly providing me some cover. And as the report notes succinctly, packaging is transparent to the end-user when done well, and open to criticism from all quarters when done poorly.
We can expect an increasing amount of attention all the time. “There are more diverse packaging needs than ever before,” says Marasco. Is there then a corresponding increase in the number of educated professionals like Marasco filling industry positions? “Actually,” he replies, “there are two major packaging-science programs in the U.S., at RIT and Michigan State. This despite all major companies and industries employing some level of packaging experts. Of course when it comes to the pharmaceutical industry, it’s a very precise science.”
What’s imprecise for the industry overall is a new calculus being worked out between Big Pharma, and CMOs and packaging component suppliers. It includes solutions for an industry moving towards less individual product but more (high-value) products; faster regulatory approvals but more regulations; and the need for localization as companies continue to globalize. This same calculus may also open the door to smaller or new providers who can fill some of the changing requirements that the larger, established companies might not be willing – or economically able – to address.
Big Pharma As Smaller Customer
Marasco started his career in the pharmaceutical industry at Merck & Co., in 1996. He was Sourcing Manager, External Manufacturing Procurement, when he left to join BMS in 2012. For six months during his studies at RIT, he interned with Kraft Foods (Mondelez International). Ironically, he’s now competing for the attention of the packaging service providers with the much larger food industry.
“Even compared to when Pharma had more blockbusters like Lipitor, the food industry always has more volume and bigger contracts for packaging service companies,” explains Marasco. “Food also has leverage because their procurement departments can more easily move contracts from provider to provider. In our world of prescription pharmaceuticals – or OTC for that matter – we are highly regulated. The ability to switch suppliers is restricted, for example, by the needs for stringent testing and stability data that must be filed with regulatory agencies.”
And with a changing new-drug environment, Pharma may simply look less like the ideal customer to packaging service companies. “For the major packaging component suppliers that also deal with the food industry, the business model is driven by volume and sales growth,” says Marasco. “I look at our future, which is very positive, and exciting for patients especially, but based on the trend towards high-value, low-volume products. You have to ask: ‘Is Big Pharma still a desirable customer?’”
While working out this new market dynamic with the major packaging component makers and CMOs, Marasco also sees an alternative. “We may need to better line up projections for future volumes with companies that are hungry for that work and our relationships,” he says. “Is linking up with smaller companies the answer?”
New Entrants and Innovation?
Perhaps an unintended consequence of the move to more precision medicines, orphan-drug markets, and even new serialization and other regulatory requirements, is the opportunity for new companies – and more innovation – in the packaging industry.
Marasco likes the idea, but knows there are hurdles. First is simply the nature of the pharmaceutical industry. Many packaging providers have grown accustomed to their customers being change averse, and so are less concerned with innovation. You can’t fault providers for that. “We’ve created an environment of less supplier-to-customer innovation sharing,” says Marasco.
Nonetheless, he says, “You almost have to pull innovation out of suppliers at times. We do need ideas and solutions. If we don’t know about new technologies or ideas, we cannot effect change. Instead of us trying to pull innovation out, they need to push it on us a little more.”
Push or pull, Marasco says more innovation and “a continuous improvement mindset” are becoming key in pharma packaging. This can come from the bigger players if they are willing to work with Pharma, but it does seem to open doors for new entrants, or existing smaller providers. Currently, though, Marasco doesn’t see many new entrants in the various packaging material categories. Without more companies to introduce innovation and options, to help meet dual sourcing requirements, and to assist in protecting the integrity of supply chains, “My job is more difficult,” says Marasco.
But again, he sees both sides of the equation. “With some exaggeration, you and I could start a specialty packaging company with a conveyor line and trained operators. We’d need to pass government inspections, meet all regulations, and have the proper controls in place, but it’s not a huge barrier.” However, would we have customers? Professionals at the manufacturers – like Marasco himself at BMS – with strong reputations for patient and consumer safety, are not just going to “roll the dice with small, newly established companies.” Supply integrity has to come first in pharmaceutical packaging. “This is a challenge on all sides,” says Marasco.
Missing Parts In The Package?
In this, my initial dive into the specifics of the pharmaceutical packaging industry for Outsourced Pharma readers, we come away with as many open questions as knowledge gained.
First, are there enough educated and trained packaging science professionals like Marasco in (and entering) the pharmaceutical industry, including on the side of CMOs and packaging service providers?
Second, is there a vibrant service provider industry for this era of new drugs? Are there start-ups and/or new divisions providing Pharma options to meet new supply-chain challenges?
And finally, where does innovation fit in? How does it become a built-in component of this segment of the pharmaceutical outsourcing world?
Stay tuned; much more to come in following articles …