When Caraustar Industries (Ashland, OH), a large manufacturer of paperboard and paperboard packaging products, purchased Garber Co. in 1995, the firm immediately entered into the world of contract packaging and contract manufacturing for the pharmaceutical and healthcare industry, explains Tony Petrelli, vice president, marketing and business development for Caraustar. "With the resources of a large, integrated packaging company behind them, the newly named Specialty Packaging Division had a solid foundation to rapidly grow its business during the past seven years," he explains.

Numerous acquisitions occurred during this period to add additional capacity of primary contract packaging, such as the acquisition of General Packaging and Milpak, which instantly added a collective 70-plus years of pharmaceutical packaging pouching and blister packaging experience. Laura Gustin, vice president of sales and marketing for Caraustar's Specialty Packaging Division, says that such expansions benefit customers. "The existing Caraustar customer relationships obtain the benefit of expanded services, and the new customers who come on board as a result of the acquisition find that a larger pool of talent, capital, technical, and developmental resources enhance the facility that is acquired. The result is more than 100 facilities that offer customers a broad base of goods and services."

ADDING SERVICES

Unicep Packaging Inc. (Sandpoint, ID) is another firm that has expanded from offering just packaging services into other functions.

"We were originally devoted to forming, filling, and sealing our MicroDose vials with the customer's product, but we found that more and more of our customers were interested in turnkey packaging," says Steve Dilts, director of sales and marketing. "So we expanded our capabilities in terms of secondary packaging and decorating options, and we have gone further up the line into mixing. We're doing what we can from a manufacturing standpoint to stretch [customer] dollars to allow them to remain competitive in price."

In addition, he says, the company has forged a partnership with a firm that distributes to the dental industry, for better coordination between manufacturing, packaging, and distribution.

Ropack Inc. (Montreal), while not part of a large alliance or conglomerate, has branched out to provide distribution and warehousing in addition to contract packaging for its customers.

"We offer an extended service that enables our U.S. and European customers to distribute in Canada so they don't need their own warehouses in Canada. It saves them a lot of money," says Luc Vaugeois, Ropack's director of sales and marketing. "We are able to handle inventory and recalls for them as well."

The important thing to keep in mind when providing a variety of services, Vaugeois says, is to consider the contract operations to be "an extension of the production of the clients. Distance has no importance now, because the Internet helps accelerate the information that must be exchanged. It also helps to have a systematic way to get feedback annually from the client, where you can revisit what went well and what went wrong and apply it to the future."

Margo (Baie d'Urfe, QC, Canada), an Alcan Packaging company, has been able to draw on the Alcan organization to procure packaging materials and components, which reduces costs for customers, says Rick Sury, director of strategic partnerships. Margo manufactures its own folding cartons and can easily procure bottles, caps, and other materials from other Alcan divisions.

"It used to be that the drug companies would often supply their own components such as inserts and booklets, but now we are seeing a lot of customers looking for a supplier that can follow through and buy all the items," Sury says. "They are looking for a true one-stop shop."

There is room for those who want to buck the trend, however. Not all pharmaceutical firms are looking for turnkey operations. So some contract packagers, such as Sharp Corp. (Conshohocken, PA, and West Caldwell, NJ), are carving out a niche to serve those who want only contract packaging and customized printing.

"We see plenty of opportunity for just contract packaging," says Bill Walker, Sharp's vice president of sales and marketing. "It is becoming more and more difficult to meet the high level of quality and service necessary in the pharmaceutical industry, so we are focusing all our resources on that objective. Some people have even told us that they hope we don't get too big and lose our focus." Sharp is interested in packaging for companies that just manufacture or mix product, however, and have participated in the growing trend to provide turnkey services through them.

Anderson Packaging Inc. (Rockford, IL) has provided full-service manufacturing and packaging services to pharmaceutical and consumer health customers for more than 15 years. Currently, the firm maintains six manufacturing facilities in operation, three of which are dedicated facilities providing full-service operations for particular customer partners. It provides everything including package design, process design and implementation, and on-going supply-chain management. "Anderson's full-service operations manage the supply-chain, including packaging components," explains Shawn Reilley, vice president. "We do not manufacture any components, so we create a competitive situation in which we ensure that at all times we are obtaining world-class technology, competitive pricing, and strong inventory management. We are not beholden to a sister company that could affect costs and quality. The benefits to our customers are clear and convincing: quality, innovation, and cost control."

The key, Sury says, is to take on what fits into a firm's core competencies. "If a customer says they have an opportunity for us, we are open to looking at things," he says. "But you have to try to focus on the core business to remain competitive and to optimize services for customers."