Rexam enters lucrative US drug packaging market

The purchase of the US-based company is part of >Rexam's​ strategy to achieve further economies of scale by growing its plastic packaging business, the firm's chief executive Lars Emilson stated in his announcement of the deal.

"Precise Technology provides an excellent entry for Rexam into the growing North American pharmaceutical and healthcare packaging market and will also extend our capability for existing customers in this sector whom we have been supplying mainly in Europe up until now,"​ said Emilson.

"The company's proprietary technology in dispensing closures complements our existing closures business, while its Personal Care and Consumer Products business gives us the opportunity to strengthen our overall packaging offering,"​ he added.

The US market for pharmaceutical packaging will grow by nearly a third between 2004 and 2011, driven by the increasing demands placed on packaging by biologic drugs and novel drug delivery formulations, according to consulting firm Frost & Sullivan (F&S).

A recently-published report from F&S suggests that the market will swell from $2.6 billion (€2.2 billion) in 2004 to just under $3.4 billion in 2011 as the role of pharmaceutical packaging shifts from a passive to an active one, making a contribution to effective drug delivery.

Drug delivery systems such as nasal sprays, inhalers, transdermal patches, and oral ingestion are redefining the market, according to the report. Meanwhile, biologic drugs and quick dissolving tablets are increasing the need for high barrier packages.

Rexam, which recently reported moderate sales growth in its first half, had announced that for the rest of the year it would continue to build on its current position by supplementing organic growth with acquisitions.

The Precise Technology acquisition, set at $257.5m and due to be completed before the end of the year, is expected to be earnings enhancing from the outset, said the company.

Pittsburgh-based Precise Technology, which reported sales last year of $294 million, serves the healthcare, personal care, and food and beverage markets, providing a variety of injection-moulded plastic packaging. These include pharmaceutical and medical components and devices, and dispensing closures and containers.

Rexam, one of the world's top five consumer packaging companies, said the purchase fits well with its plans to expand its plastic packaging business worldwide. The company has made a series of acquisitions over the past two years and says it is looking at other "opportunities" for growth.

In September the company announced it had agreed to purchase US maker of injection-moulded jars and closures Delta Plastics for £83m (€121.3m).

The group has operations in 22 countries and is increasing its focus on emerging markets, which now account for nearly 15 per cent of the groups packaging operations. Currently its core emerging markets are Brazil, Russia and China.