by Robert Victor Robert Victor
Reading Time: 3 minutes

Healthcare is a rapidly changing industry, thanks to the implementation of legislative regulations such as the Affordable Care Act and the Drug Quality and Security Act. Healthcare and pharmaceutical manufacturers are experiencing increasing pressure to optimize their production, streamline operations, and improve performance in contract packaging for healthcare products.

These changes have a particular impact on the packaging, repackaging, kitting, labeling and distribution of pharmaceutical and healthcare products. There are some growing trends in the approach to future contract packaging for this industry.

Contract Packaging Trends in Healthcare

The outlook for contract packaging and kitting services in healthcare is strongly impacted by some key trends that have developed from the recent legislative and general industry changes.

Affordable Care Act Compliance

Additional pressure has been put on healthcare to improve performance, thanks to the implementation of the Affordable Care Act (ACA). Patients’ performance with drugs is also an area where pharma companies feel pressured to improve, leading them to collaborate with care providers and develop tools to support the drugs. Special packaging is often needed, and the contract packaging industry has increased in its use of compliance prompting packaging in order to adhere to ACA regulations as well as improve health outcomes.

Pharmaceutical Patent Cliff

Last year, Big Pharma experienced a loss of $26.5 billion in annual sales due to patent losses, which was a loss of 1%. According to Forbes and other publications, the pharmaceuticals industry is still expected to grow for years to come. This patent cliff presents some notable opportunities for contract packaging…

Some drugs will become available for generic drug company production and distribution, who will want to launch on the heels of the patent expirations. Drug manufacturing will be first on their list, and since generic drug companies typically operate on tighter budgets, many will be looking to outsource to contract packaging companies.

Other drugs will become candidates for Rx or OTC products. These versions are usually less profitable, so drug manufacturers are more likely to outsource packaging rather than purchase expensive new packaging equipment and lease additional space for expanded operations.

New Product Launches

As brand-name drug companies lose revenue due to expiring patents, they will be launching new products to make up some of the difference. This presents an opportunity, at least temporarily, for contract packaging companies. Since the FDA is unpredictable in approving drugs, pharmaceutical companies often outsource their packaging to logistics service providers, who offer more flexibility. Contract packagers are already equipped with existing packaging lines, can stage products and packaging in anticipation of FDA approval and launch, and can even pre-produce packaging so that they can launch as soon as they receive notice from manufacturers. Contract packaging service providers have several advantages which make outsourcing attractive for new product launches:

  • Since they launch products on a regular basis, they’re more acquainted with this complex process.
  • They are able to train staff in general packaging processes, increasing quality and minimizing errors.
  • Packaging operations are usually more streamlined because of expertise, thus reducing the time required to launch.

Specialized Packaging Solutions

Drug therapies increasingly become more complicated, which means that drug packaging and the literature that accompanies the product are also more involved. Many of these require non-standard packaging and/or packaging processes, such as starter kits, physician samples, or systems for titration. Contract packaging facilities are typically the go-to for this type of service.

Many of these specialized products require manual assembly, and manufacturers often don’t have the flexible workforce that a contract packager does. Brand-name drug manufacturers often find difficulty modifying their operations to create custom or non-standard packaging, where contract packagers do this every day. Additionally, the healthcare industry has been developing kits to facilitate home-based injectable therapies for self-administration to improve the patient experience, requiring more extensive kitting services and detailed packaging with instructions for use.

Ensuring Sterility in the Supply Chain

Of course, sterility is a critical aspect of production for the healthcare and pharmaceutical industries. Contract packagers and kitting and assembly companies who support the distribution of these products are collaborating with sterility assurance groups to ensure sterility. Their efforts are largely focused on the development of improved, reliable kitting solutions and packaging processes to safeguard sterility end-to-end in the supply chain.

User-Friendly, Compliant Design

Although regulatory compliance and sterility are extremely important for healthcare contract packaging, manufacturers are prioritizing user-friendly packaging design as well. For example, while compliant packaging is often difficult to open, emergency situations necessitate the ability to open packaging quickly. Healthcare companies are developing ways to maintain compliance with the strict regulations, while improving the user experience with packaging.

Outsourced Contract Packaging is a Growing Market

These trends and changes in contract packaging and kitting are having a direct impact on the industry’s growth. The market for contract packaging for healthcare and pharma is currently increasing at a rate of 5-8% per year, according to the Healthcare Compliance Packaging Council (HCPC). Related organizations have noticed the growth cycle as well; according to the Contract Packaging Association, “Pharmaceutical outsourcing is experiencing a 9.1% global growth rate to reach $374.8 billion by 2018, according to BCC Research in a recent report.”

Since the outsourcing trends of the pharmaceutical industry are typically a good indicator of overall outsourced contract packaging, we can expect that aspect of fulfillment and distribution to grow as well for logistics companies.

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