West Pharmaceutical Services, Inc. is a manufacturer of components and systems for injectable drug delivery and plastic packaging, as well as delivery system components for the pharmaceutical, healthcare and consumer products industries. Our products include stoppers and seals for vials, closures and components used in syringe, intravenous and blood collection systems, prefillable syringe components, and safety and administration systems. Our customers include the leading global producers and distributors of pharmaceuticals, biologics, medical devices and personal care products. The Company was incorporated under the laws of the Commonwealth of Pennsylvania on July 27, 1923.
All trademarks and registered trademarks used in this report are the property of West Pharmaceutical Services, Inc., unless noted otherwise. Exubera® is a registered trademark of Pfizer, Inc. Teflon® is a registered trademark of E.I. DuPont de Nemours and Company. Crystal Zenith® is a registered trademark of Daikyo Seiko, Ltd.
On July 6, 2009, we acquired certain business assets of Plastef Investissements SA (“Plastef”), a France-based developer and manufacturer of drug delivery devices. For additional details regarding this acquisition, see Note 2, Acquisition, to our consolidated financial statements.
During the years presented, our business was conducted through two reportable segments: Pharmaceutical Systems and Tech Group. Comparative segment revenues and related financial information for 2009, 2008 and 2007 are presented in a table contained in Note 6, Segment Information, to our consolidated financial statements and are discussed within Results of Operations in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this 2009 Form 10-K. Intersegment sales are eliminated in consolidation.
Pharmaceutical Systems Segment
Our Pharmaceutical Systems segment designs, manufactures and sells a variety of packaging components and systems used in parenteral drug delivery for the pharmaceutical, biopharmaceutical and generic industries. The primary components we manufacture are subject to regulatory oversight within our customers’ manufacturing facilities. We have manufacturing facilities in North and South America, Europe and Asia Pacific, with affiliated companies in Mexico and Japan. See Item 2, Properties, for additional information on our manufacturing sites.
Our Pharmaceutical Systems segment consists of two operating segments — Americas and Europe/Asia Pacific — which are aggregated for reporting purposes because they have similar economic characteristics, as well as similar products, manufacturing processes, customer objectives, distribution procedures and regulatory requirements.
Our Pharmaceutical Systems business is composed of the following product lines:
Elastomeric stoppers and discs, which serve as primary closures for pharmaceutical vials.
Secondary closures for pharmaceutical vials called Flip-Off® aluminum seals, consisting of an aluminum seal and a removable plastic button, and in some applications, just an aluminum seal.
Elastomeric plungers, needle shields and tip caps to fit most standard prefilled syringes and combination seals for dental cartridges and pen delivery systems.
Pharmaceutical containers, closures and dispensers, including the West Ready Pack™ system.
Enhanced component processing: NovaPure™, Envision™, VeriSure™, Westar® RS (ready-to-sterilize) and Westar® RU (ready-to-use).
Daikyo Crystal Zenith® RU prefillable syringe system.
Disposable medical components
Elastomeric components for blood collection systems, as well as flashback bulbs and sleeve stoppers for intravenous dispensing systems.
Elastomer and co-molded elastomer/plastic components for infusion and intravenous systems.
Non-filled syringe components.
Dropper bulbs for applications such as eye, ear and nasal drops, diagnostic products and dispensing systems.
Safety and administration systems
Sterile devices for the reconstitution, transfer and administration of drug products, including patented products such as the Mixject™, Mix2Vial™ and vial adapters.
NovaGuard™ passive safety needle system.
Laboratory and other services
Extractables and leachables testing, package/container testing, method development/validation, stability testing, process development and problem resolution.
Sales of pharmaceutical packaging components represented approximately 60%, 59% and 57% of consolidated net sales for 2009, 2008 and 2007, respectively. Disposable medical components sales, as a percent of consolidated net sales, were 10%, 10% and 12% for 2009, 2008 and 2007, respectively.
Products and services recently brought to market are the Daikyo Crystal Zenith luer lock syringe, Envisionand the West Ready Pack system. The Daikyo Crystal Zenith syringe is the market’s first silicone-free, ready-to-use prefillable syringe that offers pharmaceutical and biopharmaceutical companies a total system solution that can mitigate the risks associated with glass syringes. Crystal Zenith technology is licensed from Daikyo Seiko, Ltd. West’s Envision components (plungers and stoppers) are inspected by an automated vision inspection system to ensure they meet enhanced quality specifications for visible and subvisible particulate and contamination. The West Ready Pack system is a one-source solution ideal for pharmaceutical research and development and clinical work. Each system comes with West stoppers, Flip-Off seals and vials conveniently packaged in small volumes. Because the components are delivered ready-to-use, component preparation is eliminated from the customer’s processing, saving them time and money.
Our tamper-evident Flip-Off seals consist of a metal overseal and a molded plastic cap that is removed in order to permit needle access to the drug-vial contents. These are sold in a wide range of sizes and colors to meet customers’ needs for product identification and differentiation. The seals can be provided using proprietary printing and embossing technology for multiple layers of protection, such as point-of-use instructions, item-level information such as vial contents, drug dosage and strength, and cautionary statements that can serve as counterfeiting deterrence.
Elastomeric components are offered in a variety of standard and customer-specific configurations and formulations and are available with advanced barrier films and coatings to enhance their performance. West FluroTec® coating is a film that is applied using a patented molding process to reduce the risk of product loss by contamination, enhance seal integrity and protect the shelf life of packaged drugs. We also apply a Teflon® coating to the surface of stoppers and plungers to improve compatibility between the closure and the drug. B2-Coating is a coating applied to the surface of stoppers and plungers using a patented process that eliminates the need for conventional silicone application. It helps manufacturers reduce product rejections due to trace levels of silicone molecules found in non-coated packaged drug compounds. FluroTec and B2-Coating technologies are licensed from Daikyo Seiko, Ltd.
Our VeriSure components are an example of how laboratory services can be combined with a product offering. These components allow pharmaceutical and biopharmaceutical companies to navigate the complex task of extractables identification and the related analysis for qualifying a drug product’s container/closure system more efficiently. The customer will receive a Certificate of Analysis with each shipment of components. Also, with a known extractables profile, customers can begin the design of leachables studies on a quicker basis, a process which our analytical laboratory services can support.
In addition, our post-manufacturing processes, Westar RS and Westar RU, are documented and fully validated procedures for washing and siliconizing stoppers and syringe components to remove biological materials and endotoxins. Westar RS prepares components for introduction into the customer’s sterilizer and Westar RU provides sterilized components. The Westar processes increase the overall efficiency of injectable drug production by outsourcing component processing, thereby eliminating steps otherwise required in each of our customers’ manufacturing processes, and assure compliance with the latest regulatory requirements for component preparation.
Medimop Medical Projects, Ltd. (“Medimop”), one of our wholly owned subsidiaries, is a leader in the world market for transfer, mixing and administration systems for injectable pharmaceuticals. Many injectable drug products are produced as freeze-dried powders in order to preserve product efficacy during shipment and storage. These products must be reconstituted, typically by diluting the powder with sterile water or other diluent at the point of use. All Medimop products marketed in the United States are cleared by the U.S. Food and Drug Administration (FDA). In addition, many Medimop products are protected by patents.
As an adjunct to our Pharmaceutical Systems products, we offer contract analytical laboratory services for testing and evaluating primary drug packaging components and their compatibility with the contained drug formulation. West Analytical Services provides us and our customers with in-depth knowledge and analysis of the interaction and compatibility of drug products with elastomer, glass and plastic packaging components. Our analytical laboratories also provide specialized testing for complete drug delivery systems.
Tech Group Segment
Our Tech Group segment is a global custom injection molder with over 40 years of experience, offering contract manufacturing solutions for the healthcare and consumer industries. This segment has manufacturing operations in the U.S., Puerto Rico and Ireland. See Item 2, Properties, for additional information on our manufacturing sites.
Our Tech Group segment consists of two operating segments — Americas and Europe — which are aggregated for reporting purposes because they have similar economic characteristics, as well as similar products, manufacturing processes, customer objectives, distribution procedures and regulatory requirements.
The Tech Group is committed to producing the highest quality injection molded components and devices, which include unique components for surgical, ophthalmic, diagnostic and drug delivery systems, such as contact lens storage kits, pill dispensers and disposable blood collection systems, as well as various personal care and consumer products. The Tech Group’s record of success includes manufacturing and assembly of systems and devices used for nasal, oral, pulmonary and injectable delivery of drugs used to treat diseases affecting people around the world.
Sales of healthcare devices represent approximately 17%, 16% and 18% of consolidated net sales for 2009, 2008 and 2007, respectively.
The Tech Group segment also has expertise in product design and development, including in-house mold design and construction, an engineering center for developmental and prototype tooling, process design and validation and high-speed automated assemblies. Technologies include multi-component molding, in-mold labeling, ultrasonic welding and clean room molding and device assembly.
Our ConfiDose® auto-injector system enhances patient compliance and safety. With ConfiDose, the needle remains shielded at all times and retracts automatically after the injection. The system eliminates preparation steps and automates the injection of drugs, providing patients with a sterile, single-use disposable system that can be readily used at home. The Tech Group segment is responsible for manufacturing and assembling commercial quantities of this system.
2010 Business Operations Realignment
On December 15, 2009, our Board of Directors approved a realignment of our business operations into two new divisions, “Pharmaceutical Packaging Systems” and “Pharmaceutical Delivery Systems,” effective January 1, 2010. Pharmaceutical Packaging Systems will focus on primary container solutions, including components for drug packaging and prefillable syringe systems. The division will consist of our core pharmaceutical packaging products, disposable medical components, and laboratory and other services. The growth strategy for the Pharmaceutical Packaging Systems division includes organic growth through market segmentation, new-product innovation, strategic acquisitions and geographic expansion.