Tuesday, February 28, 2012

Germany's Gerresheimer targets major US plastics growth

Gerresheimer, a $1.5 billion/yr processor of glass and plastic packaging and other devices for the global pharmaceutical and medical market, is targeting major growth in the United States.

"We have established a leading position in the US market for pharmaceutical glass packaging products and we also operate in other business sections here," the company states in its 2011 financial report. "We especially aim to achieve growth in the plastic packaging sector."

Gerresheimer has been quietly ramping up a production and product development center near Atlanta, GA, and may be exploring a significant US acquisition. Officials declined to comment to Plastics Today on its American plans.

The company established a facility in Peachtree City, GA  in 1993 and now operates 28 injection molding machines there in a 1,900 square meter (sqm) site with 800 sqm for ISO class 8 clean-room production and 800 sqm of controlled areas. The facility has been beefed up significantly in the past two years.

Customized inhalers, cuvettes, test cards for microbiological test systems and disposables for invasive systems are produced there.  The facility is certified to DIN EN ISO 9001:2008 and DIN EN ISO 13485:2003 and has its own moldmaking department, a mold trial area with injection molding machines, and multi-functional laboratories. The facility includes state-of-the-art systems such as turning stack mold technology for inhaler production.

Gerresheimer already is a dominant player in North America for medical glassware products, operating 11 plants in the United States and Mexico. "An attractive market with good prospects: North America is where we can effectively build on our leading position," the company states in its annual report.

Specific factors making the United States an attractive market include the presence of many leading pharmaceutical companies, significant GDP, an aging population and healthcare reform that will provide access to health insurance to 32 million people who were previously uninsured.

Gerresheimer has 10,200 employees in 42 global locations, and is growing rapidly in part because of a strong cash flow and high earnings.  It was reported in the German financial press last year that the company was scouting a US acquisition, but was not willing to pay high earnings multiples that are the norm in the United States. The company was seeking to acquire a processor in the U.S. with sales of between $100 million to $250 million.

Its leading competitors in plastics include Nypro, Becton Dickinson and West Pharma. Gerresheimer positions itself as number one in Europe in plastic for inhalation (dry powder inhaler)  systems and packaging for drug delivery systems in Europe, and number two in plastics for diabetes diagnostics. It's just starting in the injector pen business in Europe. Its position in North America is much weaker, with a number three position in plastics systems for inhalation. Gerresheimer ranks number one in two key medical glass markets in North America.

International expansion continues to be the heart of the company's strategy, with a focus on emerging markets. In March 2011, Geresheimer acquired Brazilian pharmaceutical plastic closure molder Védat to strengthen its pharmaceutical plastic packaging business in South America.  Its Medical Plastic Systems business unit is expanding  rapidly in Germany and the Czech Republic. Plastics represent 23% of the company's profits. Plastics revenues are about $500 million.

On Feb. 1, Gerresheimer took over item GmbH, medical device design . The acquired company will operate as an independent subsidiary under the name of Gerresheimer item GmbH. This acquisition augments the pharmaceutical and medical product design and development capability of Gerresheimer AG's Medical Plastic Systems Division.

 "We apply our concept of combining product development and manufacturing competencies at an early stage of the value chain," said Andreas Schütte, member of the Gerresheimer AG Management Board responsible for the Plastic Systems Division. "We aim to be involved in customer projects right from the initial product concept onwards."

At the beginning of 2011 Gerresheimer established the Medical Innovation Group, a team of specialists with interdisciplinary product development design and engineering competencies. A team of around 20 designers and product developers work there.

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