PW: What’s the economic justification for your company’s $50 million investment in plant and equipment expansion during the past five years?
Schroeder: The investment is spread across different facilities and packaging lines. One of the major reasons [customers] come to us is so they don’t have to make a huge investment. We have to balance customer needs and ROI by having specific machinery for a program or job. Yet we have to maintain the flexibility that if for some reason that program doesn’t run the machinery can be used for other applications. When you determine ROI sometimes it isn’t simple accounting because adding a piece of machinery may expand your capability and capacity for other jobs and new opportunities. But there’s always a risk.
PW: What are the biggest packaging challenges you face as a CP in this market?
Schroeder: Staying ahead of the technology curve is a major issue in terms of the packaging equipment such as inspection and vision systems. Vision systems are becoming more sophisticated in what they can detect such as whether a tablet is 25% or 50% broken. We have to verify that we have the correct product in the correct cavity. We run some products that have different strengths or types of drugs within the same package so we have to make sure we fill everything in the right spot.
PW: What is the most challenging issue faced by your customers that also affects your CP efforts?
Schroeder: The Food and Drug Administration approval process has changed the landscape of contract packaging. It’s been harder for our customers to get drugs approved in the past year or so in part due to scrutiny from the media about products like Vioxx. There can be a risk in printing packaging materials ahead of gaining FDA approval which is the traditional approach to facilitate a new product launch. We’re geared up so that as soon as a customer receives FDA approval we go. Every day they don’t have product available it’s costing them money. —Jim Butschli