Surge in demand keeping packaging industry fragmented say ACHEMA vendors

Consolidation is a constant talking point across the virtual news pages of the pharma world, whether it is in the increasingly oligopolistic bioprocessing​ sector, the contract manufacturing industry​, or even among the top drugmakers themselves (GSK about to be bought by either Roche or J&J​, anyone?).

But one area that is quietly immune to the barrage of ‘big fish eating the little fish’ metaphors is the pharma packaging industry, evident from the mass of such companies showcasing their primary and secondary offerings this week at the world’s largest processing show, Achema, in Frankfurt, Germany.

“About 50% of the market is represented by around 15 companies,”​ Luca Casarini, Marketing Analyst at Marchesini Group told in-Pharmatechnologist.com. “The other half comprises of many smaller, niche packaging firms.”​

He added his company is in the top five in the sector and growing organically at a low double-digit rate annually. While Marchesini does dabble with the odd bolt-on – just this week it acquired its partner of nearly 30 years, Multipack – Casarini told us it has no desire to grow fast through mergers.

Packaging Valley​

In Europe, much of the packaging industry is located in two clusters known as ‘Packaging Valley’ which helps feed the world’s demands.

One is located in Italy - Marchesini is a member - and the other in Germany and while a friendly rivalry between the two has emerged, Kurt Engel, the Managing Director of the industry body representing the German hub, told us the idea of consolidation is far from anyone’s mind.

“In Germany, there are perhaps 50 packaging machine companies [for pharma and other industries] employing over 9,000 people in an area between Munich and Frankfurt which has only 180,000 inhabitants.​

“The first packaging manufacturers began producing over 150 years ago, and as a new technology or need came about they split out,”​ in what he described as “the opposite of consolidation,”​ and now each company continues to challenge each other through new technological advances.

Generics and complex manufacturing​

According to Felix Henning from German-based ‘Packaging Valley’ member Optima, packagers are opting to expand organically “as there is so much demand out there globally that isn’t being fulfilled.”​

He told this publication the patent cliff has led to a new and growing wave of generic makers needing packaging lines especially in emerging markets, and Optima will invest in its facilities to benefit from this opportunity.

This huge growth opportunity is being further enhanced by the increasing demand in developed markets for oncology, diabetes and autoimmune drugs.

“These drugs require very complex manufacturing including the need to have very technical and expensive packaging machinery,”​ Marchesini’s Casarini added. “Pharma is growing in complexity and so is the machinery used to make it.”​

Specialised Strategies​

So in a fragmented industry where companies are showing no desire for takeovers how do packaging line suppliers stand out and attain their share of this high-growth market?

“Every company needs its own strategy,”​ said Romaco spokesperson Suzanne Silva, with her own firm opting for a “strategic partnership” ​strategy to win deals with drugmakers such as Aenova and Hermes.

“Romaco has only 500 staff but we compete with the bigger firms by offering a ‘beyond technology’ service, maintaining very close operations to our customers.”​ ​

However, like the other companies vying to demonstrate their unique blister pack and bottling lines at Achema this year the Karlsruhe, Germany-based firm is preferring to innovate within rather than look to scoop up the competition.