Unpacking the Pharma Packaging Market with Andrea Lodetti (DCAT Week 2023)

Andrea Lodetti, CEO of Bormioli Pharma, an Italian pharma primary packaging manufacturer, spoke with Grant Playter, associate editor, at this year's DCAT week. Topics of discussion include the company's approach to the US market, supply chain instabilities, sustainability, and more. A full transcript can be found below.

One of the big headlines Bormioli is coming into DCAT with is its 40% increase in North America sales year over year. Can you discuss some of the reasons behind the strong increase in terms of new strategy, certain investments, market forces, et cetera?

Andrea Lodetti: Thank you for the question. I would say it's not the new strategy, we started the approach to the US market back in 2019 when we set up our commercial entity. The timing to get things done in pharma is quite long so you have to invest, especially in time, with money. And so what we did we started our commercial activities and our interaction with customer, showing them what were the benefits from our product, how good we were performing. Also, in some places of the same global pharma company in Europe, we're saying, "Hey, we serve this plant in Europe, why can’t we also serve your plant in the US." So, it all came with the longer work.

Of course, there were a couple of things in the last three years that made things a little bit not so easy as in the past. But we did work a lot in that; we set up our logistic platform here in the US, we have a very well-streamlined supply chain from Europe to US, especially for molded glass. And that is making us more and more credible, and customers that start working with us have immediately increased their volumes and ask, "Okay, you can do more?" And this is why we now are benefiting from this acceleration that is overall in the market, because after COVID, after the crisis we saw in the Russia and Ukraine war, all the pharma companies are nearshoring their supply chain a little bit more than in the past. I would say pharma has been always a risk adverse sector, but in terms of organizing its global supply chain, it was more looking for efficiency, cost efficiency, rather than risk protection.

And what happened during COVID, and also in the in the last 12 months, everybody realized that you cannot afford any more to have your things supply there from the other part of the world. You can do it, but then when things become difficult, then you're immediately in trouble. So we're trying to follow up with this. So I think we will also invest a little bit more in US now and get possibly also an industrial footprint on site. But again, this is a long, long activity that is now paying back and we're quite happy about that. I think there's more to come later on.

You touched on this a little bit. But regarding the extended half-life of the COVID-19, disrupted the supply chain, do you think this basically spells the end for the just-in-time supply model? Or do you think we're going to look towards more onshoring production or whatnot?

Lodetti: I mentioned the nearshoring or reshoring of some of the activity. I'm not saying that this is the end of the just-in-time, but definitely has to be redesigned along different concepts. I would say that, for instance, for glass production it was never a just-in-time because normally pharma companies they do buy at the very beginning of the year of what they need, and then they use it all over the year. So, it was never like a pure made to order.

But anyway, as I said before, what is now important is to make sure that you have a backup plan for any of the possible risk of disruption that you are facing. This is staying, because it's not like COVID-19 is now over — no, this is staying. It has hit us strong, and also following it up with the macro-economic crisis that we are living nowadays, it really has made everybody rethink that things are not that easy as we thought before. And we have to be sure that things are working perfectly, because in our segment in our industry we have a social responsibility. I mean, if people is left without health care, it is a big issue. And the risk was there during COVID-19 and I can tell you, we had a number of customers scared to death that suppliers were not able to provide the continuous API or whatever. And this lesson is being learned quite well.

So our audience is largely composed of biopharma industry members, but they might not know this between molded and tubular glass. Can you just talk a little bit about this in the biopharma context?

Lodetti: It's a different process, because molded glass is a process that we dominate from the beginning to the end, where you really start from raw material like sand cullet and you come out with the finished container afterwards. With a little bit of different technology, but basically what you do is you melt all of these stuff in a 1600 degrees container and after that, you pull out a small portion of melted material that is then formed into different processes. And that is normally used for container that go from 30 ml up, so with the bottles.

When you go down, you move towards the vials, then you have the converting a glass, tubular converting technology that comes in. This is a technology you start from a pipe of glass that is made only by four companies in the world: Nipro, Schott, Corning. Three companies, actually, the good ones. And you buy these pipes, and then they run a cutting, heating, and forming process afterwards.

So, what is the benefit? The benefit is that you come out with a smaller container, because with the mold, you can go down to a limited capacity. And then, if you do things properly, the container is lighter, is less heavy, and has a better aesthetic look.

However, there are things that are good for the tubular technology, things that are much better with the molded technology, so it's always a trade off around capacity application and mechanical characteristics that you want. We demonstrated with a dedicated activity, as we mastered both technologies, that there is a huge, on some properties, you can really choose depending on the size and the aesthetic of the vial, but there are things for which molded is much better than tubular; for instance, stability over time, internal uniformity of the chemical aspect inside of the container, and also molded glass has not the issue of delamination, which is an issue that affects the tubular vials.

So, I would say different technologies, different processes, Bormioli can master both of them. We can also provide consulting to small companies, you mentioned the biotech; of course, these are company that totally focused on the drug, on the content. We are good at designing and developing their containers. So whenever we see that whenever we work together in the development phase, things are coming out much, much better.

Talk to me about the 50-in-5 program. Just, what are its goals, how you went about this, because everyone wants talk to me about sustainability. It's the new hot topic at DCAT this week.

Lodetti: But we need to discriminate from greenwashing and real sustainability. Today, everybody's talking about that.

I watched this segment the other day talking about carbon offsetting. How a lot of companies who are carbon offsetting aren't really actually doing that.

Lodetti: I want to be carbon-free. Okay, then there's a lot of work to do. And we came with this project that we call the 50-in-5, because when we launched, that was like two years ago, we said, "In five years, we want to get at least 50% of our raw material coming from recycling or sustainable sources by 2025." This means for molded glass to work a lot around the loop of collecting the cullet and using it back into the furnace.

And we are quite advanced with that on the plastic side, in the means to use any type of recycled material that comes from all sorts of industries and use it and convince customer that this can be used and has the same properties as the building material. We are on track for that; we have reached 39% in 2022. And we think we can get up to 50% in 2025. Also, because many of our customers are now in the rush of achieving a sustainable result. So, that will add quite a lot.

The last bit would be a little bit more help from regulatory bodies, that they have to allow a wider usage of recycled material. For instance, nowadays, there is a minor portion of whatever is used in hospital that you can put back into the recycling loop. So, we are also working on that, trying to make activities that basically demonstrate that you can collect material from the hospital with no harm for the people and put it back into the recycling loop.

Can you talk about that a little more in detail? Like say I have a vial and I put like, say COVID vaccine in it, and I use it and how would I go about recycling that while maintaining absolute sterility? Because that is what you need for things are going to be reused.

Lodetti: So in order to ensure sterility, there's only one way, that is heating. And if you think that in the end of the cullet goes into a furnace at 1600 degrees, you are sure that whatever enters there, doesn't come out. Not alive, at least. So the real issue is the collection from the hospital up to the place where you fragmented it and then to the melting furnace. This is the area in which we have to work.

So our idea is that there is a first step of, I would say, sterilization or cleaning that can happen at the hospital level. So the hospital with a, not a huge facility, like imagine a container that is heated at a certain temperature can ensure that what gets in there is then free of virus, of contamination, and so on. And after that, the whole recycling loop is already defined for water, for food. And so just this step that has to be handled, because unfortunately, today, whatever goes into the hospital then goes to the burn on-site. And then that's not good for being sustainable.

Not great.

Lodetti: No, not great. Not great at all.

We're in a weird state with the greater global economy. There's obviously a lot of geopolitical events going on in Europe at the moment and we also have the SVP collapse affecting the global market — Dow Jones is down, that sort of thing. So can you give me your perspective on how this is going to impact the biopharma space?

Lodetti: For the pharma environment? This is an industry that requires a lot of investment, a lot of capital, a lot of money, but is pretty much backed up also by healthcare institution — it is a very much protected system. So it's difficult to make very, very, very wrong financial disasters like it is in some other industry. So, you don't have so many startups that are happening and needing a lot of money like in the high tech business, so, I do not expect any of the pharma player to be [affected] so much. There is only so much contagion that can get into our industry.

But on the other side, we have to be aware that not all the financial sources are any more as reliable as we thought in the past. And this is something that I think in our space is less affecting the business than in other space. We must be more aware of what is happening in the public healthcare system. That is really driving the performance of the pharma chain. If broad initiatives are taken by government in this space that you haven't, you are affected in the industry.

However, what is good, if we have to find something good about COVID-19, is that it has brought back into the agenda of the government and public institution. How important is it to ensure a solid and reliable healthcare system for these events that we understood, that can happen at any time, and they are quite fast in spreading around. And so I am confident that our industry will not be affected that much by this crisis.

And about the crisis in Europe, ongoing in Europe, unfortunately, this is very bad. But both Russia and Ukraine are not such a big player of the pharma industry. What I can see there is that, of course, there is a drawback in terms of reliance of government into each other, but not really a disruption that is relevant for our business.

Very fair take. It's an inelastic demand for this. The only concerns I really think people are highlighting are like with the startups, because investors might be a bit skittish for high-risk, high-reward startups, specifically in the biopharma space, but on the supplier end, which is where you're coming from, I don't think you're going to see much change.

Lodetti: No, no. In this space, where we are coming from we don't see things much affected. The R&D investment will stay, we are keep on investing into that space. So at least for packaging industry, I don’t see that as a big issue.

I'm asking everyone this question, going to ask you it as well. You have any bold takes about the biopharma industry? Where are we going to be five years from now? Ten years from now?

Lodetti: I like the space, is very much interesting, and is going to be supported a lot by the advance in other areas, like artificial intelligence, or high-speed computing — everything that is, you know, growing in the high tech environment, is bringing to biotech a lift. And this is where we have to go, right?

If, when we talk about personalized application, or very specific drugs for the so-called orphan disease, I mean, there is where we have to go. I mean, the standard was a classical pharma industry, works a lot on chemicals, on things that are good for everybody, don't care that much about the drawbacks effect, because what you are curing is the main thing. With biotech, you can go into really the DNA of people and try to assist it and to come fix it, if there is anything wrong. We saw it in the vaccine, which are the vaccines that work very well, they were the one that acting on the mRNA, rather than the one acting on the death virus and creating the antibody and so on. So that's the future.

And probably, we will see more and more big pharma companies acquiring small, high-performing biotech. So we'll have this increase in this kind of network of different developing hubs that when they get to a point where thing is found, then it is acquired by Big Pharma. So I see Big Pharma going into more being the hub that acquires whatever is developed by single companies, and going out more and more from the bottling and taking care of the distribution is not their topic. So that is where, what I think. Recently I have seen, I think Pfizer made-

Like 54 billion?

Lodetti: Wow. Credit Suisse was just acquired by three million from UBS, three million for a bank. And yeah, 53 billion is more. But if you think about it, if you get things done in that space, you're good forever.

One other question, before we get to final thoughts. I was just curious. If you would give one piece of advice when talking with biopharma companies who are making decisions about their packaging choices —

Lodetti: This would be advice for everybody. Remember, people that use your drug will now be people with the disease, will be people maybe needing support from other people to get the medication. So the packaging cannot be like, I buy a vial that is there since many years and I just use it. No. Remember, people will have to use it in a time where it's not in good shape, where he would have limitation possibly in what he can do, or she can do, would have maybe cognitive limitation. So it will be difficult.

So remember, remember, remember, there is a patient at the end. There is a patient at the end. So of course you are saving his life, he's happy, he will take whatever, do whatever to get this drug. But if you can make his life or her life a little bit easier, then you've done a good thing. So I mean, I see treatments that go in drops for blind people. I mean, how a blind, but they're very good, so they can maybe hear it and, but why don't you make something that they can use it? Or a lot of drugs that are used for people that gets amputations that you need two hands to open? I mean, why do you do that? It's something that you have to take care of.

Accessibility.

Lodetti: Accessibility is a very important thing. Plus, nowadays, also self-medication is increasing. And COVID has made a huge step forward in that because people was not able to go to the hospital or to the doctor. So self-medication is important. But of course, the more that you allow people to self-medicate, and the more you have to have the packaging that helps them in the adherence to the administration of the drug. Because if they do wrong things, then they don't get good treatment.

I'm aware we're low on time, but do you have a concrete example of how you can make like glassware accessible?

Lodetti: Glassware, more accessible? I mean, the total packaging you have to look into to make it more accessible. I may give you an example.

We are selling quite a lot of oral liquid application, especially for the antipyretics for children. Small children, when they are on fever, they cry. And you have to feed them with the oral liquid. So the standard application is a bottle with a syringe to have this, open the bottle, put the syringe, then make the right sizing, and then put it in the mouth of the baby, and then having him sucking it.

So we made this ethnographic with some moms. You see, you have to be, all of this operation. You have to check it and then put it in. And we did it, and we were explaining this to some mothers, you have to do this, very simple, easy, and they say it's very easy, but you have a baby, you're holding a baby that is crying. And you know, you cannot put them in, so how do you do it?

So we came up with this other solution, where we have put a kind of dosing system on top of the bottle and is like, I don't know if we have a sample here. But basically, what you have to do is just turn the bottle around with an end, push on the container, here you have the indication on where the content that you have applying goes, then you turn it up, you open it, and then there is this kind of biberon, like kind of bottle for babies, shape, and then you feed it like this, so you want it, you just put it there and do this, instead of doing this. But also from the look, you see this is very, you know, hospital things. The syringe, the thing-

If I'm a little kid and I see that, I'm running.

Lodetti: You're scared already. You say, "What is happening?" Whereas if you see like a normal bottle, you just push it and you get it done. And then you feed your baby. I think that is one solution that can help.

Fantastic. Do you have any final thoughts you'd like to share with our audience?

Lodetti: I will touch most of the things regarding today, is very much keen in the making health a positive practice available to everybody and kind to the planet. And in this sentence there is all what I spoke about.

For more of our coverage on DCAT in 2023, viewers can visit this page.