Karin von Kienlin, Senior Partner, and Verena Ahnert, Partner at L.E.K. Consulting discuss the role that Contract Packaging Organisations (CPOs) play in the healthcare sector.
L.E.K. Consulting
Karin von Kienlin (left) Verena Ahnert (right)
Contract Packaging Organisations (CPOs) play an integral role in the healthcare sector, as they offer essential services that are critical to the success of pharmaceutical and medical product companies. This includes the assembly of products for packaging, creating packaging solutions, and distributing healthcare products.
Notably, there has been a growing emphasis on sustainability within the healthcare sector. This year, the Circularity in Primary Pharmaceutical Packaging Accelerator (CiPPPA) initiative was launched in the UK to develop and implement strategies for the end-of-use recycling of primary medicinal devices and pharmaceutical packaging. The focus is on blisters, inhalers and injectables.
In light of this, the role of CPOs proves to be even more essential, as they have a responsibility to assist pharmaceutical companies in minimising their negative impact on the environment. This can be achieved by implementing innovative and sustainable packaging solutions. By adopting greener practices, CPOs can not only help the industry to achieve sustainability goals but can also create additional value for pharmaceutical products.
To stay competitive and drive this transformation, CPOs should concentrate on these three primary growth strategies:
- Streamlining packaging manufacturing processes
- Integrating services across the value chain
- Venturing into new, innovative services
Streamlining packaging manufacturing processes
Aligning the dual objectives of promoting sustainability and ensuring cost-effectiveness is a key role that CPOs can play in support of their customers. A balanced approach necessitates that CPOs should primarily target streamlining their production methods. To balance the priorities of increasing efficiency, reducing costs, and meeting customer demands, while addressing environmental concerns, CPOs can implement the following initiatives:
- Recyclable packaging: The European Union's recent mandate that all packaging should be wholly recyclable by 2038 is propelling CPOs to shift towards recyclable packaging solutions. Essentially this is about identifiable mono-materials rather than multimaterial designs. In flexibles, barrier properties of monomaterials can still be strengthened by multiple layers of that monomaterial. It is worth noting though that regulation does not stipulate recycled content in primary pharma packaging; rather the recycled material is used in secondary packaging or in non-pharma and non-food applications.
- Lighter packaging and downgauging: In their journey towards sustainability, CPOs are also redirecting their efforts towards reducing the weight and dimensions of packaging materials. Though lighter packaging options occasionally sacrifice durability, they offer substantial advantages such as cut-back on raw material expenditures, decreased emissions in production and logistics, and an overall boost in efficiency.
- Small batch production: This method enhances efficiency by providing greater flexibility, reducing lead times, and enabling faster response to market demands. It also reduces costs by reducing inventory and limiting waste (given faster quality control).
- Ready-to-use solutions: Ready-to-use (RTU) solutions considerably lessen the time it takes for drug filling and packaging. With the ability to accommodate various container formats on one production line, these solutions cut down labour expenses.
- Re-use: An example of design thinking to improve useful life of autoinjectors and saving costs is to design them as reloadable, i.e. replacing the filled vials / cartridges rather than the whole pen
Integrating services across the value chain
To stand out in a highly competitive market, some large CPOs have taken to broadening their services to cover all aspects of the pharmaceutical manufacturing value chain. By increasing the range of services offered, CPOs are tapping into a desire from clients to deal with fewer vendors and drive greater efficiencies.
There are three primary models CPOs adopt when pursuing an integration strategy. One of these is to branch out into the production of drug products or Active Pharmaceutical Ingredients (API). This allows CPOs to leverage their existing strengths in tight regulatory compliance and applies them to biology, chemistry and waste management. Whilst a more comprehensive service offering drives value creation for the CPO, it also supports clients who are looking to rationalise the number of vendors they work with.
Another strategy that CPOs may consider, and which often acts as a foundation for the previous two, is to provide fill-finish services. Integrating the production of high-value pharmaceuticals and specialised packaging services at a single manufacturing site not only enhances operational synergies but also significantly reduces overhead costs. It is also particularly advantageous for businesses requiring bespoke packaging solutions, helping them improve product quality and speed to market, leading to a stronger market position and better profitability.
Venturing into new, innovative services
In their quest for innovation, CPOs are also looking beyond traditional boundaries to venture into fresh new growth opportunities. By expanding into adjacent services, CPOs can differentiate themselves in the marketplace and offer more value to their clients.
One such example is connected packaging. Technologies such as QR codes or RFID tags are enabling pharmaceutical companies to drive greater engagement with their products. These concepts are often still at clinical trial stage, where there is particular value in confirming compliance with drug administration as an example, but connected devices are also seen to enable more outpatient treatments in due course. Not only does connected packaging drive better customer experience, it can also improve product tracking throughout the supply chain and prevent counterfeiting, improving the operations of the pharmaceutical company.
In a similar vein, active packaging - which incorporates materials that change when exposed to control factors such as light, oxygen or moisture - can help improve product preservation, extend the shelf life of a product, and enhance product quality. Such packaging is especially beneficial for high-value pharmaceutical products that require strict storage conditions.
A third innovation CPOs are adopting in this space is intelligent packaging. This involves the integration of indicators and sensors to the packaging that provide real-time information on the product’s status. This technology ensures that the product remains in optimal condition throughout its lifecycle, reducing the risk of damage or contamination.
Moving towards a greener future
The measures noted above not only improve manufacturing operations, but also play a role in making the entire pharmaceutical value chain more sustainable, with CPOs leading the way. The shift to recyclable materials and smart packaging solutions that preserve product quality reflects an industry-wide transition towards processes that prioritise both cost efficiency and environmental responsibility.
