West Pharmaceutical Bolster Capabilities with Tech Group Purchase

As one of the largest global suppliers of drug delivery products, West Pharmaceutical Services of Lionville, PA is well known for its reconstitution systems, components and analytical lab services in addition to dispensing systems for consumer products. So when the company decided to expand its healthcare presence, making greater inroads into the medical device sector seemed a logical step.

It was no surprise, then, that West announced in late April it would acquire Scottsdale, AZ-based The Tech Group, a global contract medical device manufacturer. The $140 million sale, expected to close late last month, helps West become one of the largest contract service providers to the medical device, pharmaceutical and consumer product sectors. It also furthered the company’s eventual goal of establishing itself as a technology provider for developers of drug-device products, according to CEO Donald E. Morel, Jr.

West, which said a portion of the proceeds is being deferred and contingent on Tech Group’s performance in 2005 and 2006, said the combined plastic molding business will have sales of about $180 million. Morel pointed out that West alone is expected to have sales of about $585 million this year and that Tech Group will add another $70 million to revenues.

Morel said while the driver behind the deal-initiated by West last fall-is to ensure sales and earnings growth, the market’s increasing focus on combination products calls for companies to invest in convergent technologies. Those with a comprehensive knowledge of drug interaction with various materials, for instance, are better positioned to offer value-added devices to drug and device companies. And as the number of combination device and drug delivery products grows, demand for the type of contract services needed will shift as well.

“Ten years down the road, it points to a different skill set that’s needed in the marketplace,” he said.