Last But Not Least: Contract Packaging
Packaging Firms Are Being Asked to Take on More Responsibility
Coming as it does at the end of the manufacturing cycle, the packaging of medical devices sometimes gets short shrift. Designers, clinicians, engineers, marketers and others put such monumental effort into building the product, testing it and deciding how and to whom to sell it that wrapping or boxing the items prior to shipment may seem trivial in comparison.
Oliver’s proprietary Xhale technology is complemented by flexographic printing capabilities. Photo courtesy of Oliver Medical.
Thus, a constant grumble from experts in this field is that packagers are too often excluded from the early stages of conception and design. “I know of only a handful of companies that truly practice concurrent engineering,” said Curt Larsen, a packaging consultant for Wilmington, DE-based DuPont, who has more than 30 years in the business.
Representatives from the packaging and sterilization team should be members of new product development teams, he said, but they often times they are not—which sometimes ends up costing money farther down the line.
These concerns are heightened by the changing structure of the medical device industry, which is becoming more horizontally and less vertically integrated.
As OEMs look to outsource more overhead, the demand for independent packaging firms increases. Additionally, venture capital is pouring into the industry like never before, creating a groundswell of small, ultra-lean startups so busy with design and marketing worries that packaging—and, in most cases, the entire manufacturing process—is the last operation they want to keep in-house.
Moreover, as the industry becomes comfortable with outsourcing, contract packagers say they are being asked to play a bigger role in complying with regulatory responsibilities—another changing landscape, especially given the influx of drug/device combination products.
As if all these factors were not enough, most adaptable packaging suppliers are struggling to recover from huge price increases in polymers caused by a volatile petroleum market and the devastation wrought by hurricane Katrina.
Here is a look at how some companies are meeting these challenges.
Numbers are difficult to pin down, but some experts estimate that an OEM can save from 10% to 20% in packaging costs by outsourcing to a reliable and experienced contractor.
Outsourcing, as a move to reduce overhead and risk, is gaining popularity among corporate decision makers—and the medical device industry is following suit.
“Outsourcing is definitely a growing trend in the medical device market,” said Ed Haedt, director of marketing at Perfecseal, based in Oshkosh, WI. “Most of our business is still with OEMs of all sizes, but our business with contract manufacturers is growing significantly.”
A major resource his company offers is packaging consultation for procurement and other managers who are already overburdened and seek to partner with a company that can make the transition easy and reduce risk. The role of venture capital firms in the device industry also means that investment dollars often trickle down to packaging suppliers and other contractors.
According to business reports, the industry experienced an influx of $2.1 billion in venture capital last year, the most since the boom year of 2000. And this is occurring at a time when venture capital funding in other industries remains flat. Based on current and projected demand for devices like orthopedic joint replacements and defibrillators, the sector is expected to continue to perform well, according to financial reports. (For more information on this trend, see this month’s “Data Watch” on page 22.)
Competition from overseas is one concern among packagers, though perhaps not as much as in other areas of medical product manufacturing.
If a product is being packaged in a foreign factory, it is probably being manufactured there as well. Unless the product is a low-end, high-volume device, few OEMs are willing to pay to have it shipped overseas for packaging. In addition, overseas counterfeiting remains a concerns. (See sidebar, “Counterfeiting and Overseas Competition,” on page 58).
Materials May Cost More
In the United States (and abroad), most packaging materials used in the device industry are made from petroleum-based polymers. In general, the costs of such polymers track with the costs of natural gas, oil and gasoline.
In accordance with the significant increases in gasoline last year, polyethylene, a key component of many flexible packaging materials, was already rising in price well before Katrina slammed the Gulf Coast. The hurricane’s devastation spurred even larger increases. Some of these increases were passed on to customers and some were not, according to Jeff Murak, director of sales and marketing for Oliver Medical, based in Grand Rapids, MI. “Katrina certainly upset some variances,” he said. “People expected some things to happen. They didn’t necessarily like it, but people expected it.”
Oliver’s high speed pouch equipment enables cost savings and operates in a controlled environment. Photo courtesy of Oliver Medical.
In terms of what’s most popular in packaging materials, medical-grade Tyvek, manufactured by DuPont, remains a gold standard. Introduced in the late 1970s to satisfy the growing need for lidding and pouch materials that could meet the exacting performance characteristics needed for sterile medical packaging, Tyvek quickly became the dominant material and remains a top selection today.
For decades, the next logical alternative, in terms of performance and price, was paper and films. A few years ago, however, engineers at Oliver began research and development on Ovantex, a synthetic, reinforced material with high puncture and tear resistance. Murak explained that this material has been positioned as a middle ground between Tyvek and paper—not as expensive and high-performing as Tyvek, but a more reliable performer than paper.
“We are not trying to position Ovantex as an alternative to Tyvek,” Murak noted. In fact, Oliver uses a great deal of Tyvek in its own products and promotes it to customers as unbeatable in terms of quality, especially for ethylene oxide sterilization applications.
However, not every medical device requires such top-level packaging material. For devices that are high-volume, plastic, without sharp edges or not subject to high sterilization standards, Ovantex may be an option for providing better quality than paper, Murak said.
Companies continue to experiment with new materials. The supplier that discovers a material as effective as Tyvek but cheaper in price will pull off a major coup, because such a discovery would significantly reduce overhead for the entire industry.
“One of the best ways to cut costs is to knock back on materials, especially sterile barrier materials, because they are very expensive,” noted John Spitzley, a consultant with Chicago, IL-based JM Hansen and Associates.
Perfecseal benefits from its parent company, Bemis, which has invested heavily in new technologies for making packaging materials.
Bemis has a large research center staffed with polymer chemists, chemical engineers, packaging engineers and material scientists, according to Haedt. “We take these breakthrough packaging technologies developed for other markets and reengineer them to the requirements of the medical markets,” he said. “We have two new exciting coextruded films that we have recently brought to the market.”
The first is called HPEZ Peel 35742. It is a Web material for thermoform, fill and seal applications that has been designed to provide a high degree of puncture strength, on-line printability and secure but peelable seals. The seven-layer coextruded film contains a resilient layer of nylon, which the company has found makes this film stronger than non-nylon competitive materials. Haedt said the film can be down-gauged by up to 30% compared with competitive materials, while providing more strength at a lower cost.
Perfecseal has also developed a new thermoform, fill and seal top and bottom Web system that it is calling the Paperlock system. The process includes a new structure called Hybrid film, which provides strong, clean peel seals between the forming film and the uncoated, reinforced paper. While most direct-seal film systems of this type have relatively weak seals of around 200 grams/inch, Haedt explained, this newer system provides seal strengths exceeding 450 grams/inch.
Another company that continues to tweak the packaging process to save time and money—as well as to improve performance—is Oliver Medical, which recently introduced its Osurance zone coated lids. These lids use a process for which adhesive is applied only to a controlled area along the package flange, rather than the entire lid surface. The benefit of this technology is that it eliminates the chance of the adhesive material coming into contact with the device and also increases porosity, thereby shortening sterilization cycles.
Combo Market Adds to Needs
As the device industry increasingly develops new technology in partnership with the pharmaceutical and biologics sector, contract packagers are being challenged by unique needs of the combination products market. The FDA is clearly paying a lot of attention to this developing market (it created the Office of Combination Products in 2002 in response to the need for ensuring consistent post-market regulation)—and packagers now have to keep up with regula -tory issues, among other concerns.
Since pharmaceuticals and biologics tend to be more volatile and sensitive than medical devices, the combination product market creates a new set of critical challenges for packagers. “Generally, a drug requires more than just a breathable pouch or substrate to protect it,” said Murak. Adding a drug component to a medical device makes protection and prolongation of the product’s shelf life more challenging, he added.
As such, OEMs expect their contracting partners to fully understand changing regulatory requirements.
Steve Larsen, medical/pharmaceutical business unit manager of West St. Paul, MN-based Tapemark, said regulatory matters for combination products are decided on an almost case-by-case basis. “The FDA is still a little confused as to how to categorize combination products,” he said. “In certain aspects they are treated as devices, and in other aspects they are treated as drugs. There really is no clear path yet.”
Larsen added that his customers are increasingly asking his company to help them achieve compliance by performing stability testing. “There is a great deal of lab science involved in that,” he said. “We do some internally, and we also have lab partners that we can use, because it is sometimes more cost effective for us to outsource this. But our customers are asking us to manage it—that is the theme here.”
Packaging operations and the sterilization process often go hand in hand, and, as such, the packager usually desires as much control as possible. However, many packagers haven’t added in-house sterilization because it requires extremely expensive equipment as well as highly trained personnel to perform the cycle development and process validations.
“So far, the business model we see in the United States points to contract sterilization in all but a few of the big contract packagers,” said consultant Larsen.
It is usually less expensive to outsource sterilization services, he explained, but also noted that this additional step can add time to the total processing of the finished product.
Speed to market continues to be a driving force in contract packaging, as it is in every aspect of medical device manufacturing.
But packagers usually face additional pressure because they perform the final step in the manufacturing process and must compensate for any earlier delays. This is especially true for products that will be sold to consumers through retail outlets, Steve Larsen noted.
A retail giant such as WalMart or Target is not going to reshuffle its shelves to accommodate a device manufacturer’s delayed launch.
Therefore, missing a deadline by even a few days can mean setting back a launch date by as much as six months.
As additional services are expected from contract packagers, the ability to change with a market in flux is held paramount, members of this industry agree. As Doug Wilder, president and CEO of QTS Packaging, based in South Edina, MN, stated: “The tough thing about being a contract house is being all things to numerous clients.”