Phillips-Medisize forecast 8-15% global market growth for medical contract manufacturing and announced a major expansion at its Kontiolahti, Finland manufacturing site at a press conference held today at MD&M West in Anaheim, CA.
CEO Matt Jennings gave a sweeping overview of the major changes affecting medical contract manufacturing, which he estimated as a more than $20 billion global market that is growing faster than demand for medical devices because of more outsourcing by medical device manufacturers. Medical outsourcing is increasing from 23% in 2010 to 30% by 2013 “as OEMs increasingly focus on core competencies,” Jennings said.
“They are resource constrained and are looking for partners who can help them in manufacturing and other areas,” he said. As a result, the global medical CMO market is receiving increasing investment from venture capitalists and major corporations, a trend highlighted by the planned acquisition of Nypro for $665 million, which was announced last week by Jabil Circuit.
Phillips Plastics was purchased in 2010 by Kohlberg & Co., a private equity firm, which later added Medisize to build the company’s European plastics manufacturing capabilities. Current sales of the company are around $500 million. About 89% of that is now in medical, up from 75% a year ago. That reflects new medical business, and not any decline in other business.
Phillips-Medisize is actively scouting for an acquisition in China. At the press conference, Jennings said that he and Chief Technology Officer Bill Welch have visited some 30 companies in China as part of the search process for a partner that matches up with Phillips-Medisize culturally and has a reasonably deep technical bench. “We expect to get something done this year,” Jennings told reporters.
China is an important growth market because it is increasing its medical services and has a 350 million-strong middle class.
The company’s Finnish expansion comes on the heels of expansions in Wisconsin, the Czech Republic and the Netherlands.
A 60,000-sq-ft capacity expansion in Finland will allow increased molding and assembly at the site for production of complex drug delivery devices such as inhalers, injection pens and safety syringes. Jennings and Welch described the project as a high-speed automation production process featuring line outputs of 40 to 60 million devices a year. Highly automated processes featuring in-press, besides-the-press, and downstream automation, are a hallmark of the high-throughput Medisize operation.
The capacity addition will be complete by August. Staff will grow 15% over the next two years from the current level of 336.