EXTON, Pa.—The past few years have served as a reminder to manufacturers in the health care elastomer space that the world is not static.
There are shifting treatment options from hospitals to homes, and companies like West Pharmaceutical Services saw a year-over-year drop in sales coming out of the fourth quarter of 2022 precisely because of that changing landscape.
"I am pleased to report that we had a solid finish to 2022 and that we enter 2023 with a strong order book and continued demand for our core business," Eric Green, president and CEO of West Pharmaceutical, said during a Feb. 16 earnings call. "I am extremely proud of the many accomplishments by our global team members, as our company has supplied critical components, solutions and systems to our base and COVID-19-related customers."
For the year, West Pharma saw net sales of $2.89 billion, a 2-percent increase over 2021 sales. Annual sales for 2023 were dampened, however, by a sluggish fourth quarter that saw $708.7 million in sales, a 3-percent drop over the final quarter of 2021.
"There was a reduction in COVID-related net revenue," said Bernard Bickett, senior vice president and chief financial officer for West.
While the generics segment saw double-digit growth (led by Envision components and administration systems) and the pharmaceutical division saw high-single-digit growth (due in part to its NovaPure stoppers) during the fourth quarter of 2022, the biologics division saw a mid-single-digit decline "due to a reduction in sales related to the COVID-19 vaccine," Bickett said.
The contract manufacturing division saw mid-single-digit growth, led by organic sales growth of 7 percent.
As pandemic-related demand abated in the second half of 2022, lower volumes affected West Pharmaceutical.
Within the biologics business segment, COVID-related net revenue came in at $55 million for the quarter, a $69 million reduction against the final quarter of 2021.
"These are components associated with vaccines, treatments and the diagnosis COVID, offset by lower volumes due to the pandemic," Bickett said.
Excluding COVID-19-related products, West saw low-double-digit growth, Green said, driven by demand for high-value product offerings. These include both legacy and recently launched drug delivery systems, Green said.
Highlights for the year included the production and shipment of more than 47 billion parts, the establishment of a landmark collaboration with Corning in injectable drug delivery components and expanded capacity at 13 different international sites.
More recently, West Pharma members donated (through Unicef) a significant amount of monetary and product aid to Turkey and Syria following the devastating earthquakes there.
In the past year, West Pharma added 600 employees.
"We will continue to be a market leader who defines the evolution of our industry," Green said. "We will address the changing needs of today and in the future."
West Pharma executives estimate between $2.93 billion and $2.96 billion in net sales in 2023, with estimated foreign currency headwinds of about $30 million.
Organic growth is expected to be between 3 and 4 percent in the coming year, Green said.
"Looking ahead, we are well-positioned around innovation and growth," he said. "We continue to deploy capital investments to support increases driven by end markets. We see continued base momentum in this regard in 2023."
Bickett said West Pharma expects capital expenditures of about $350 million for the entirety of 2023. Capital expenditures were $284.6 million and $253.4 million for the fourth quarters of 2022 and 2021, respectively.
Further organic growth in 2023 is expected to come from "customers planning expanded success of their drug portfolios."
"Because of this, we continue to drive forward with expansion plans," Green said. "When I was in Kinston (N.C.), it was impressive to see additional space added to accommodate the new installation of equipment, as we respond to demand of HPVs and plungers.
"This expansion will support future demand across our global manufacturing network."
Green added that the company will continue to leverage its capital spending at production sites in Germany, Ireland and Singapore in the coming year.
"We realize our production and pursuit of scientific innovation is crucial to health care across the globe," Green said. "And this, in turn, is a result of relentless dedication by team members across the globe."
Rubber News wants to hear from its readers. If you want to express your opinion on a story or issue, email your letter to Editor Bruce Meyer at [email protected].