Packaging systems provide strong Q3 sales growth for West
For Q3 2013, West Pharmaceutical Services reported operating income up 51% on last year to $39.7m (€29.4m) on total sales of $341.8m (€253m). Whilst Pharmaceutical Delivery Systems (PDS) rose marginally, it was PPS that produced $251.5m worth of revenue for the quarter, up 16.5%.
“Management has executed its Packaging Systems strategy very well,” noted Jeffries’ analyst David Windley, “and the company continues to benefit from its dominant injectibles packaging market share and high barriers to entry.”
He continued to add sales have been continuing to creep up thanks to changes that include drug development shifts toward biologics, and transient inventory stocking, whilst the “record margin” was due to the mix of high-value products and a pricing drive.
The company also attributed high sales of its Westar and FluroTec products to the results, especially in markets outside the US with CEO Don Morel speaking of “strong Asia-Pacific demand” in a conference call discussing results.
In September the firm began construction on a second Chinese manufacturing facility in Shanghai, citing the growing injectables market in the region.
German contract filler Vetter recently added a second filling line at a site in Chicago, US, to support a partnership with West going back to 2011 for its Crystal Zenith (CZ) drug delivery system.
The prefillable syringe system - developed by Japanese firm Daikyo Seiko - is currently in clinical trials but the company and analysts alike are awaiting for a sales boom once approved.
“Management continues to expect a late 2015, early 2016 time frame for commercial volumes of CZ,” Windley said.
On top of significant revenue increase, this would also help West drive commercial manufacturing and reduce the capital expenditure intensity of the firm’s production capacity, he added.