With advances in manufacturing processes and technology innovation and integration, the global pharmaceutical industry is currently registering rapid expansion. This will propel the growth of the pharmaceutical packaging industry globally. This growth is expected to be highest in the emerging economies of India and China, primarily on account of increasing generics and contract manufacturing activities in these countries , according to a study by GBI Research.
The global pharmaceutical packaging market which was valued at $47.8 billion in 2010 is forecast to grow at a compound annual growth rate (CAGR) of 7.3 per cent from 2010–2017, to reach a value of $78 billion by 2017.
The pharmaceutical packaging industry will continue to grow as drugs worth $142 billion go off-patent in the next five years, expanding the generic market and the entire pharmaceutical packaging industry. The fastest growth in the pharmaceutical packaging market is expected to come from prefillable syringes and parenteral vials, which will continue to expand as advances in biotechnology lead to the introduction of new therapies that must be injected. The increasing demand for biologics will strengthen demand for innovative product packaging solutions in the global pharmaceutical packaging market, the study adds.
All of these factors, along with the growing pharmaceutical industry, will continue to drive demand for packaging. However, the packaging industry will have to overcome challenges, such as the availability and price volatility of raw materials and changing health regulations, in order to meet increasing demand from the growing pharmaceutical industry.
Plastic bottles emerged as the largest revenue generating segment for the pharmaceutical packaging industry in 2010, recording annual revenues of approximately $9.5 billion. This was closely followed by blister packaging and drug delivery devices, which generated revenues of $8.1 billion and $6.6 billion, respectively, in 2010. Other important segments in the pharmaceutical packaging industry were labels, accessories and other containers.
The market size of drug delivery devices and blister packaging is expected to grow at a faster rate than other segments in the pharmaceutical packaging industry. Increasing demand for improved drug delivery mechanisms and more complex biologic molecules will have to be complimented with better drug delivery devices. Products such as inhalers, nasal sprays, transdermal patches and oral ingestion containers have redefined the market and become as important as the drug itself. Also, blister packaging will record growth because of increasing usage of unit dose packaging. Some industry segments such as plastic bottles will register average growth, while others, such as glass bottles and containers, may record a decline in demand as they will be replaced by lightweight and cheap plastic products.
The global pharmaceutical packaging market is dominated by the US, with a market share of 37 per cent in 2010. This was followed by Western Europe and Asia Pacific, with market shares of 33 per cent and 30 per cent , respectively, in 2010. However, this trend is likely to change in the future as Asia Pacific is poised to grow faster than Europe and the US. Over the next five years, the Asia Pacific market is expected to grow by more than 10 per cent, while Western European and the US markets will grow at six per cent and four per cent, respectively.
Increasing drug manufacturing activities in emerging nations is driving demand for packaging in countries such as India and China. These countries have emerged as favourite destinations for packaging companies, primarily due to lower wages, a skilled and plentiful workforce and the increasing availability of state-of-the-art technology. Also, demand for pharmaceutical packaging in these countries has increased, particularly in the wake of patent expiries, which allow these countries to emerge as centres for generic drug manufacturing.
In the meanwhile at an email interaction with Pharmabiz last year , Haf Cennydd, Global Brand Director of Innopack events for UBM Live, a division of UBM Plc, had pointed out that the global pharmaceutical packaging market is likely to continue the growth rate of around 5.5 per cent annually to reach US $18.5billion by 2014. This growth pattern has effectively become comprehensive with certain areas experiencing steady growth and other areas absolutely booming. For example, the demand for primary pharmaceutical containers is expected to increase 5.2 per cent annually to US $11.3 billion in 2014, with plastic bottles remaining the most widely used type of packaging for oral drugs distributed in bulk and prescription dose volumes.
Another factor for growth according to her has been packaging for transportation which will continue to grow across all facets, including end-users, storage and transportation. Demand for pouches for dose packaging of transdermal patches, powders for reconstitution, and topical creams and ointments will continue to rise as will bags for ingredient transportation and materials to make the pharmaceuticals. The market has been encouraging innovation and development which has an exceptional stream of new products which need to be packaged.
According to her the Indian pharmaceutical packaging market will most likely mirror the aggressive growth pattern of the global market. As India is moving to the forefront of the pharmaceutical market, the growth will further support the ability to reduce cost while still providing innovative and effective solutions to end users. Additionally, the market is heavily geared towards low-priced generics that will compete against high-priced blockbuster drugs with the same results. The anticipated high volume generics output in India will have a ripple effect and no doubt spike the growth of pharmaceutical packaging market .
In the meanwhile "Global Packaging Industry CEO Business Outlook Survey 2012–2013" by Canadean , the global packaging industry expect increased levels of consolidation, with 61 per cent of respondents anticipating that there will be either a 'significant increase' or an 'increase' in merger and acquisition (M&A) activities .
Large packaging companies are seeking small and specialized companies to strengthen their core competencies, reduce costs, and resist competition with their enriched product mix. The higher expected levels of consolidation in the global packaging industry is also due to new cost or demand pressures, repayment of debts, the potential need to meet new compliance procedures, or gain quick access to new markets, business expansion, and attempts to increase market share.
Global packaging industry C-level respondents identified China to be the most important region for growth among emerging markets, along with India and the Middle East. Strong growth of semiconductor wafer fabrication and domestic electronics markets is further aiding growth expectations in China. There has been significant growth in the aseptic packaging sector in the country, driven by a rise in technological sophistication.
According to the survey, 56 per cent of C-level respondents rate 'raw material prices' as the most important business concern in 2012, while 54 per cent and 46 per cent highlight 'responding to pricing pressure' and 'cost containment' respectively.
The average size of the global annual procurement budget among packaging industry C-level respondents is forecast at US$85 million for 2012. In addition, the Canadean industry survey reveals that C-level respondents' procurement expenditure is projected to rise by 11.5 per cent over the next 12 months.
'Quality', 'level of service', and 'price' are considered very important factors for C-level respondents while selecting a supplier, whereas 'supplier's environmental record', 'supplier's CSR reputation', and 'proximity of supplier operations' are considered the least important factors.
The main reasons for an expected increase in the level of consolidation in the global packaging industry have changed to new equipment acquisition, increase operational efficiency, and to acquire growth opportunities.
An analysis of responses by packaging C-level respondents revealed that 'new product development', 'IT infrastructure development', and 'machinery and equipment purchase' will record a significant increase in capital expenditure over the next 12 months.
As global packaging demand is projected to increase in the next 12 months, packaging C-level respondents plan to significantly increase their capital expenditure on 'new product development'.
According to the survey, 67 per cent of C-level respondents projected an increase in investment toward 'IT infrastructure development'. For example, in November 2011, Omni Systems, a private label converter based in the US, announced that it will invest in new MIS and ERP software.
Global packaging industry C-level respondents plan to increase capital expenditure on 'machinery and equipment purchase' over the next 12 months. For example, in March 2012, Beatson Clark, a glass packaging manufacturer based in the UK, decided to invest US$15.6 million in furnace improvements and new equipment at its Rotherham plant, and plans a complete reconstruction of its white flint furnace soon.