The industry nearly made it out of the recession unscathed, but had one year of losses, in 2009
Los Angeles, CA (PRWEB) September 13, 2012
The role of the Pharmaceuticals Packing and Labeling Services industry has expanded substantially over the past five years in response to stringent government regulations and increased outsourcing of these services for pharmaceutical manufacturers. According to IBISWorld industry analyst Anna Son, as pharmaceutical companies introduce new products to market on a regular basis, packing and labeling of each individual product plays a key role for them to gain brand recognition and stand out on store shelves. Despite a 2.6% revenue drop in 2009 when the recession resulted in fewer physician visits and drug purchases, revenue growth resurged as a result of the growing aging population with chronic illnesses and increased use of drug therapies. IBISWorld estimates industry revenue has grown at an annualized rate of 4.6% to $2.5 billion over the past five years, with a boost of 7.8% in 2012.
Faced with pressure to more quickly deliver innovative drugs to market, many pharmaceutical manufacturers are outsourcing their non-central components (e.g. packing and labeling) to third parties to focus on their core competencies. The industry is highly fragmented because the industry's clientele often needs unique packing or labeling services due to the high level of federal regulation and policy surrounding pharmaceutical industries and the desire to stand out among their competitors. Additionally, counterfeiting remains a profound challenge in the industry, forcing industry operators to constantly innovate and stay several steps ahead of counterfeiters. Higher drug costs, consumer health spending, healthcare and prescription drug use will continue to underpin industry performance. IBISWorld forecasts industry revenue will grow during the five years to 2017. As a result of the patent cliff that will have the most pronounced effects in 2013, demand from generic pharmaceutical firms will outpace demand from brand name pharmaceutical manufacturers. Furthermore, industry operators will benefit from various provisions of healthcare reform that is expected to increase the number of insured individuals and drug usage. “Over the next five years, profitability will remain strong with increased process automation that will reduce operating costs for industry participants,” says Son. In addition, companies will search for ways of running leaner and more efficient packing operations by using eco-friendly packages.
The Pharmaceuticals Packing and Labeling Services industry has a low level of market share concentration. According to US Census Bureau data and IBISWorld estimates, the three largest firms in the industry account for about one-fifth of industry revenue in 2012. The industry is highly fragmented and is anticipated to stay that way in the five years to 2017. There was a small amount of consolidation activity in the five years to 2012 as a result of the recession and the subsequent reshuffling of operations among healthcare companies. Nevertheless, the industry is dominated by small firms that specialize in specific packing and labeling functions. One reason the industry is so highly fragmented is that the industry's clientele often need unique packaging or labeling services due to the high level of federal regulation and policy surrounding pharmaceutical industries and the desire to stand out among their competitors. It is sometimes more efficient for industry participants to buy machinery and equipment that is specific to a specific pharmaceutical company. As a result, the industry is largely comprised of small firms consisting of 15 to 30 employees. For more information, visit IBISWorld’s Pharmaceuticals Packing and Labeling Services in the US industry report page.
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IBISWorld industry Report Key Topics
This industry provides packing and labeling services for prescription and over-the-counter pharmaceuticals, biologics, consumer health and veterinary products. Packing and labeling may be provided for finished drug products or active pharmaceutical ingredients. Industry services may include packaging into blisters, bottles, pouches and unit doses, specialty vial or syringe labeling and kitting for injectables.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
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Cost Structure Benchmarks
Barriers to Entry
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