Pharmaceutical market surges ahead while growing more complex

Pharmaceutical & Medical Packaging News staff

An aging population, new drug-delivery technologies, and the need for security packaging will lead the next wave of growth.

By Ben Van Houten

Pharmaceutical packaging has become more complex than ever. Increasingly, packagers must deal with an aging population that is creating demand for more senior-friendly packaging. Along with the growing pressure to design effective compliance packaging systems focused on decreasing medication errors, there is also a rapidly increasing need for the development of security packaging. That dilemma�how to design an easy-to-use package that simultaneously encompasses complex and detailed security technologies�is at the root of the challenge for pharmaceutical packagers.

Against that backdrop, the market continues to grow at a healthy pace, according to several recently published studies. With new technological advances and emerging trends paving the way, that growth should only increase over the next several years. Industry observers say anticounterfeiting and bar coding initiatives, unit-dose packaging, and new drug-delivery technologies will all play a role in this next wave of growth.

Forecasts Show Increased Demand

Demand for pharmaceutical packaging products in the United States (including Puerto Rico) will increase 4.7% annually, to approximately $6.8 billion in 2008, according to Pharmaceutical Packaging, a 2004 study by The Freedonia Group Inc. (see Table 1).

Table I. Pharmaceutical packaging demand ($ millions) (click to enlarge).

As with Freedonia�s last report in 2002, the new study shows that blister packaging will continue to generate above-average growth and remain the leading type of pharmaceutical package, thanks to newly adopted FDA bar code regulations for institutional drugs. The demand generated by this product group will increase a healthy 6.3% annually to $1.4 billion in 2008, according to the study. Blister packaging will also gain applications in clinical trials and over-the-counter medication.

The study also shows that plastic bottles will continue to account for the second-largest share of the U.S. packaging market, with demand increasing 3.9% each year to approximately $1.1 billion in 2008. This is mostly a reflection of their versatility and cost-effectiveness, say the study�s authors. Plastic bottle growth will also reflect an increase by manufacturers of bottling oral drugs that are sold to retail pharmacies and drug distributors.

Pharmaceutical pouches and strip packs will continue to fare well in the marketplace as lower-cost alternatives to blister packaging, the study says. In addition, pouches will show higher sales momentum from the increasing use of unit-dose packaging of powder and topical medicines. Strip packs are expected to generate the most growth opportunities from travel and sample sizes of solid oral drugs.

Reflecting the new focus on drug-delivery technologies, prefillable inhalers will generate the strongest demand gains among all pharmaceutical packaging products, the report says. This will come as new asthma and allergy medicines with specialized delivery requirements reach the market over the next few years. The study also predicts that prefilled syringes will fare the best in the marketplace among parenteral containers, based on infection prevention and response-time advantages in the delivery of critical and emergency care medication.

As FDA imposes increasingly stricter standards on child resistance, tamper evidence, and information content of drug containers, more growth will result for such pharmaceutical packaging accessories as caps and closures, package inserts, and labels. However, the demand for secondary pharmaceutical containers will expand at a below-average pace, according to the report. This will occur because downward profit pressures will prompt drug makers and pharmacies to become much more selective in their use of high value-added, high material content packaging systems. Likewise, vials, ampules, and IV containers will generate below-average demand gains in the coming years, with competition from prefillable syringes causing moderate growth opportunities for vials and ampules.

In terms of packaging materials, plastics are expected to remain the leading material based on cost-effectiveness, breadth of applications, and favorable barrier and aesthetic properties. The study predicts an increase in value of consumption generated by plastics in pharmaceutical packaging applications due to several factors. These include strong growth opportunities in blister packaging and moderately increasing demand in plastic bottles, high value-added parenteral containers, caps and closures, labels, and tamper-evident accessories.

Industry use of foil materials will expand at a much faster pace in the coming years, due to their adaptability to the FDA mandated bar coding of blister packs and other unit-dose containers, says the report. Other packaging materials will experience only moderate growth based on competition from plastics and foils. Finally, paper and paperboard will experience widespread usage in secondary containers, package inserts, and labeling due to their cost advantages.

The outlook is also positive for purchases of packaging machinery, according to a study published last fall by the Packaging Machinery Manufacturers Institute (PMMI; Arlington, VA). The Ninth Annual PMMI Shipments and Outlook Study revealed that U.S. domestic demand for packaging machinery amounted to an estimated $5.429 billion in 2002, up 1.3% from the year before.

End-users continued to focus heavily on improving packaging productivity in 2002 by installing new packaging machinery featuring advanced technology, says the report. This ongoing trend has also included the replacement of older, less-efficient machines and systems with new models, as well as the installation of new machinery and automated systems.

Figure I. 2002 forecast of U.S. packaging machinery shipments, 2003�2005 (click to enlarge).

The study forecasts U.S. shipments of packaging machinery to grow at a cumulative annual rate of 3.9% through 2005, to an estimated $5.358 billion from an estimated $4.8 billion in 2002 (see Figure 1).

Technology Will Drive Demand

Industry experts agree that new technology is sure to be the impetus for the next phase of pharmaceutical packaging growth. “Security packaging is front and center right now, with anticounterfeiting driving that interest,” says Scott Denley, marketing manager for Alcan Packaging (Shelbyville, KY).

Walter Berghahn, director of sales and marketing for Uhlmann Packaging Systems Inc. (Towaco, NJ), agrees that security packaging is increasing in priority. “Packaging will continue to get more detailed, particularly in terms of anticounterfeiting applications for drug packaging,” he says. “Within that, radio-frequency identification (RFID) will probably continue to receive the most focus.�

�Every pharmaceutical company is investigating RFID in 2004�2005,” adds Denley. “Some companies that manufacture Class II drugs are required to have it implemented by the end of the year. Even though we�re in a learning period with this technology, I see it being installed much more at the unit and pallet levels in 2005.�

However, Berghahn notes, RFID is very costly and challenging to implement for many companies. “It�s a great technology in terms of tracking and tracing and is a useful tool, but it�s not the only solution,” he says. In addition to RFID, packaging companies are also investigating other anticounterfeiting technologies. Other overt technologies, such as line embossing and microtext, can be combined with covert technologies, like taggants and security inks. Alcan, for example, recently launched N�Crypt, a line of market-ready overt and covert technologies for blister packaging. Denley says the company continues to explore new encryption technologies.

�In addition, there are holographics and other applications being used more and more,” says Berghahn. “Temperature-shifting inks that are not detectable to the naked eye is another trend that will likely grow.�

Bar coding and scanning of packaged drugs will also play a major part in packaging growth, again led by new technology. “The government is recognizing that errors can be reduced by bedside scanning and bar coding,” says Kent Sides, business manager for pharmaceutical films, Kl�ckner Pentaplast (Gordonsville, VA). “The demand for individual bar-coded unit-dose packaging will become huge over the next few years.”

Technology will also likely play a part in the growth of both compliance and child-resistant/senior-friendly (CR/SF) packaging. “In addition to anticounterfeiting and bar coding, those will be the other big areas of growth in packaging,” says Berghahn. “CR/SF is always in the undercurrent of packaging plans for every company. Who will pay for it? Who can effect change? Those are the questions we�ll be hoping to answer regarding these packaging technologies.�

Regulatory Issues

An ongoing factor in the growth of pharmaceutical packaging will be the influence of FDA and other regulatory agencies. FDA took center stage in 2004, issuing important, far-reaching initiatives on both anticounterfeiting and bar coding. Its rule requiring bar coding on most pharmaceutical packages used in hospitals will have implications that last well into the future. “However, it�s a little early to gauge the impact on packagers,” says Douglas Stockdale, president of Stockdale Associates Inc. (Rancho Santa Margarita, CA). “There�s still some ambiguity with the rule.�

But such ambiguity was welcome with regard to the agency�s anticounterfeiting initiative. “They�re really pushing the issue, but they were smart not to define it,” says Berghahn. “They�re basically saying that there�s a lot of technology out there, and it�s up to the industry to find the best uses for it.�

Adds Alcan�s Denley: “FDA will continue to be an active partner on RFID, but it won�t mandate anything. The only way the agency would get more involved is if the industry fails. Otherwise, I think FDA will continue to facilitate progress on this and many other areas.�

Another area of regulatory interest is CR/SF testing. In particular, the Healthcare Compliance Packaging Council (HCPC; Falls Church, VA) is still waiting for the results of its urging the U.S. Consumer Product Safety Commission (CPSC; Washington, DC) to change its testing protocol. HCPC petitioned the organization last year to change its nonreclosable packaging protocol, calling it too subjective. Such a change could further increase the growth of blister packaging. “We�re really eager to hear back from them,” says Peter Mayberry, HCPC�s executive director. “We really hope something fruitful comes out of that.” On that front, Denley notes new developments in Europe. “In the UK, they�re looking at mandating new initiatives on grade and level of difficulty in CR/SF testing. We�ll all be watching that,” he says.

Denley also thinks FDA will continue to focus on speeding up new drug approval time. “One of the major criticisms of this industry is the lack of new drugs on the market,” he says. “FDA really wants to change that, and they�ll continue to look at reducing the cycle time for new drug approval.�

Labeling is another area destined to impact packagers in the coming years. One thing many in the industry are following is the Pharmaceutical Research and Manufacturers of America�s (PhRMA; Washington, DC) full-scale trail of its paperless labeling initiative.

In addition, multilingual labeling will be a difficult task overseas, in part because of the entrance of 10 new members to the European Union. “Obviously, printing all these languages on one package becomes a very cumbersome labeling task,” says Hal Miller, president of PACE Solutions (Warren, NJ). “The use of symbols will help but is not the panacea. Country- or region-specific labeling, on demand, becomes the new challenge.�

He adds that package labels are not the only problem. “Package inserts are already voluminous, and with even more languages the inserts will be larger. The use of electronic inserts, either on-line or in CD form, may become more utilized.�

Mayberry of HCPC also says that many in the industry are awaiting the results of the ASTM International (West Conshohocken, PA) Task Force on PACPAC change tables with testing standards. “We want to find out if there�s anything there, and we�re keeping a close eye on it,” he says.

Mayberry also says that, following the November elections, there will be much more discussion on drug reimportation. “The big issue is making sure they�re not counterfeit drugs,” he says. “I expect there to be a huge push for reimportation, and everyone in packaging will want to watch that closely.” He�s also eager to see who the next FDA commissioner will be. “We all want to know what that person�s big issues will be,” he says.

More Trends To Watch

Many other emerging trends will influence pharmaceutical packaging over the course of the next several years. “One thing customers are seeking from their suppliers is an increase in cleanliness and controls in packaging materials,” says Kl�ckner�s Sides. “That whole issue of control of environment will become more important. People want to make sure there are no foreign materials in the package.” Also, Sides expects more demand for high-barrier films. “They have a lower cost and have the best outcome,” he says. “Customers want to be assured of stability in their packaging, and that demand will grow.�

The market for contract packagers is also anticipated to grow. “In addition to that, I think you�ll see inventory being reduced and products being packaged “just in time,” or closer to the consumer,” says Berghahn. “It will result in less warehouse time and lower costs.�

Stockdale also sees a much bigger emphasis on cold-chain management. “Companies will continue to try to develop unified methodologies to validate the cold-chain process,” he says. “That's an emerging trend. How far do you extend validation, for example. Some companies extend it all the way to the doctors or pharmacists. I expect more of that."

Stockdale also expects more companies to look at closed filling systems to reduce microbial risk. “Aseptic processing and barrier isolation will only become bigger factors in packaging,” he predicts. He also sees an emphasis on “lean” manufacturing and more vendor-managed inventory programs. In addition, the relatively new concept of Process Analytical Technology (PAT) will attract more interest.

No matter which trends ultimately transpire, and how much pharmaceutical packaging grows in the near future, the same general concept will likely continue to appear. “Reducing costs and gaining efficiency are what packagers care most about,” says Stockdale. “Those are the two things that they’re always going to focus on.”