Contract packagers in demand, although the times, they are a changin'

"Over the past decade there has been a significant increase in the number of pharmaceutical companies outsourcing packaging functions,"​ said Rhiaz Chughatta, executive vice president of Equity packaging. According to Chughatta, in a blind study of 500 corporations, many of which were pharmaceutical firms, just under a third of those surveyed are using contractors for their packaging functions, with 65 per cent of these companies bringing the contractors in to work at their on-site facilities. 15 per cent of firms have been using these contractors for five years or more. In addition, the use of contractors was 25 per cent more common than temporary workers and the satisfaction level with contractors was higher, he said. As a result, it is a contractors market: "Contractors are in short supply and therefore do not have to look for jobs. Contract recruitment firms are chasing them for work because they cannot hire enough to meet the high industry demand,"​ said Chughatta. This is a trend he expects will continue for now. Meanwhile, only a handful of firms are currently outsourcing entire packaging functions to packaging outsourced service providers (POSPs). "Currently only a few outsourcing providers are large enough to actually operate and manage an entire packaging function,"​ said Chughatta. However, he predicted a shift in the status quo away from the practice of relying on contractors and towards the more full-service approach offered by POSPs. "Tomorrow's market will see the elimination of contractors who are filling a temporary need. They will slowly be absorbed by POSPs,"​ said Chughatta. "POSPs are beginning to address the biggest challenge currently being faced in packaging - stability - in terms of staff retention and quality control,"​ he said. Stability can be a particular problem for companies capacity-wise, where they are having to continually increase and decrease the amount of staff according to their current capacity needs. This introduces issues over staff workload, training, experience and motivation, and can often lead to an impact on the quality of the product output. The main appeal of a POSP is that they allow companies to outsource whole packaging functions, either on- or off-site, and this way the POSP can take control and responsibility over staff and product quality, removing the headache from the pharma company. Most of these firms are global, adding to the flexibility that they can offer firms. "Product damage and recalls can cost companies hundreds of millions of dollars and so even though it is more expensive to outsource the entire function to a POSP, it can be well worth it for the long-run in terms of money saved through increased stability,"​ said Chughatta. Another advantage is that POSPs typically have between 50 and 100 packaging engineers on hand and pharma firms also know that the price that is agreed upfront for the job will not deviate too much, as if more people are required for the job than originally predicted by the POSP, it is up to them to wear the additional costs. With the current contractor approach being used by the majority of firms who outsource packaging, the contractors being used charge by the hour. Furthermore, using a POSP can provide companies with access to new packaging services and capabilities that they don't have in-house, according to Chughatta, who gave packaging design as an example. "Many companies are now looking to outsource packaging design but it's proving no easy task because most contractors currently don't have their own facilities and have to come and work on-site at the client's premises,"​ he said. "Because POSPs are large, specialised and global packaging organisations, they have their own facilities and this is a bonus for many."​ In this way, firms can also streamline and integrate more parts of the packaging process with the one firm should they choose.