West Pharmaceutical Services To Streamline Manufacturing Plant Network

West Pharmaceutical Services, a manufacturer of packaging and delivery systems for injectable drugs and healthcare products, has approved a restructuring program to streamline its manufacturing plant network. The restructuring is in conjunction with the company’s ongoing global operations strategy. The company made the announcement of part of 2017 results announced on February 15, 2018.

The changes are expected to be implemented over the next 12 to 24 months. The company says the plan will require restructuring expense in the range of $8.0 million to $13.0 million. Once fully completed, the company expects that the plan will provide it with annualized savings in the range of $17.0 million to $22.0 million.

West has manufacturing facilities across the US, South America, European Union, and Asia Pacific.The company’s products include a variety of primary packaging, containment services, reconstitution and transfer systems, and drug-delivery systems, as well as contract manufacturing and analytical laboratory services.

The company reported full-year 2017 net sales of $1.599 billion, a 6.0% gain over the prior year. At constant currency, organic sales growth was 5.2%.  The company’s Proprietary Products segment organic sales growth was 3.2%. By market unit, 2017 Proprietary Products segment sales growth was led by high-single digit growth in biologics and mid-single digit growth in pharma with flat performance in generics. The company’s Contract-Manufactured Products segment organic sales growth was 12.0%. Gross profit margin in the full-year 2017 declined by 110 basis points, mainly due to higher sales of lower-margin contract-manufactured products and unabsorbed overhead from newly commissioned facilities. Gross profit margin in fourth-quarter 2017 was 30.9%, a decline of 140 basis points from the same period last year, mainly due to higher unabsorbed overhead from new capacity at the company’s sites in Waterford and Dublin, Ireland and Kinston, North Carolina.

The company expects to expand both gross and operating profit margins in 2018. Excluding items from 2017 that will not recur in 2018 (e.g., the company does not expect any 2018 income from the sale of a technology license that occurred in 2017), operating profit margin is expected to increase in excess of 100 basis points, which includes investments the company is making for future growth such as required validation testing at its Waterford facility in advance of commercial production later this year.

In October 2014, the company announced plans to expand its global manufacturing operations to include a new facility in Waterford, Ireland, which will produce packaging components for insulin injector cartridges and other high-value packaging components. The Waterford facility will continue to undergo validation procedures during 2018, with commercial production expected to begin in the second half of 2018, according to the company’s 2017 annual filing.

Source: West Pharmaceutical Services

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