Pharmaceutical as a prime target
With nearly €5 billion turnover in 2016, the British group DS Smith, which is present in 37 countries and is a European leader in corrugated packaging, has developed a business unit dedicated the pharmaceutical market.
Emmanuel Pascart, Head of this Business Unit, discusses the challenges of this project. Very often presented as a leader in corrugated packaging and recycled paper, your group is actually involved in other activities as well...
Emmanuel Pascart: As of 2000 our group has conducted several buyouts, including some companies well known in France, such as Otor, which was acquired in 2011. This external growth policy is continued and 3 to 4 buyouts are conducted every year, in particular in the Eastern countries, Turkey, Portugal and the most recent one across the Atlantic, in the United States.
Last year, partly to answer the needs of the pharmaceutical market, we also set up a subsidiary in China. In terms of products and solutions, the activity of our group goes well beyond corrugated cardboard. It is structured around three main categories of products:
- corrugated packaging, cardboard packaging, and plastic packaging.
- Without forgetting our business dedicated to end-offline packaging machines.
You are currently planning to develop your activity in the pharmaceutical market. Why?
E. P.: The pharmaceutical market is a very specific one and we are at a turning point in a changing environment, like for instance the development of the self-care market, the opening to new markets that are questioning the quality approaches or the regulations that require new technological tools, all this within a complex supply chain made up of different players: laboratories, wholesalers or logistics companies.
We are witnessing major acquisitions as each stakeholder wants to be present in strong growth markets such as the OTC, generic drugs, biotech products... This context results in reorganizations and, besides a new marketing approach, a global willingness to optimize and streamline.
On the other hand, the product (molecule or medical device) inside the pack has a high added value, which increases the importance attached to quality, security and anti-counterfeiting issues. The quality of the pack is therefore of prime concern as well as the continual improvement methods deployed on our sites.
All this leads to a unique approach to the market. How do you proceed?
E. P.: Our approach consists of identifying to the smallest detail all the needs of the medical and pharmaceutical market throughout the supply chain while taking into account all the players: laboratories, medical equipment manufacturers, wholesalers, and users.
We are aware of the importance attached to quality and traceability, to on-site audits, hygiene, the need for technical assistance with regard to subjects such as anti-tampering or serialization. We are also aware of the need to streamline and optimize while maintaining the required quality levels.
Considering all these needs, we have identified DS Smith’s know-how. We are not a simple cardboard producer. It is important to let the other ones know that we provide value to any packaging constraint, whether in terms of marketing or in any stage of the supply chain, up to designing case packers.
Two years ago, I decided to create a business unit dedicated to this pharmaceutical market together with a team of experts, by dedicating full time and means to the clients coming from this market. This team relies on assets specific to our group, acting as a performance driver. All these assets make the strength of our group, which consists of several divisions, and allows us to benefit from a wide range of products and solutions.
We have therefore built an offering specific to the pharmaceutical universe. This offering consists both of plastic packaging to be used during the manufacturing process (Akilux boxes, reusable boxes, containers, polypropylene...), corrugated packaging suitable for transportation (patented folding box, cardboard boxes for wholesalers, P.O.S. Displays...), optimized packaging solutions for gamma ray sterilization balances, cardboard and micro-flute packaging for health & beauty products and for hospital use (pharmaceutical packs, specific cases with tamper evident solutions, shipping cases...), multi-material innovative packaging solutions for transfusion machines or controlled-temperature solutions and finally, our end-of-line case packers.
This offer covers all the needs of the supply chain for the pharmaceutical industry - starting from the container accommodating the raw materials up to the display delivered in pharmacies to present the products. We also use those tools of the group that have been tried and tested in the consumer goods and automotive industries.
We make available innovation centers where we reproduce shops and warehouses with possible usage scenarios. These places allow us to dedicate our days to our clients and project managers so as to reflect on the packaging of tomorrow and improve current packaging solutions.
Our area of action is a global one, with over 250 plants, which maximizes our chances of being close to our clients, of delivering certain specific services (stock management), of reducing the distances and therefore the cost of transport. We provide packaging manufacturing services all over the world.
Finally, our know-how, closely related to lean management, allows us to bring a method to a market which is looking for this kind of efficacy both for primary, secondary and tertiary packaging solutions.
Currently, what does this market represent for your group?
E. P.: First of all, a beautiful challenge to take up in order to become visible, known and acknowledged as a key player in the pharmaceutical industry. Some of our plants in Eastern Europe are specialized in cardboard boxes and generate a large part of their turnover by working with pharmaceutical companies.
We have plants with extensive experience in the transport of hazardous substances, others are specialized in the manufacture of multi-material packaging for the hospital market. Globally, the pharmaceutical market accounts for 13% of DS Smith, but we believe this could be more. We are actually noticing a change in the level of the acquisition services of laboratories or in the sector of medical equipment. They want to concentrate and streamline their number of suppliers and are reflecting about how to select global and not regional players. We are already working with many of them due to the structure of our group, which is made up of various companies that already were their suppliers.
But, most of them, do not know the extent of our offering. They are clients for one product or for a family of products. Hence the idea of creating this business unit so as to better promote the whole the range of solutions that we are able to provide and our capacity to assist our clients in the management of this market-specific complexity.
What are your strengths to succeed in this market?
E. P.: In this unique market, our MSBU (Market Segment Business Unit) and its pharmaceutical offering is undoubtedlya strength, which means experts that speak the same language and invest time into our clients, purchase managers, marketing directors, engineers, heads of logistics, R&D.
Amongst our fellow companies, we are the only ones to propose such a concept. With a wide European scope and a strong presence in the United Kingdom and Germany, DS Smith is also present in China through partnerships, which is an asset not to be neglected when we know the potential of such a market. Africa, South America and India might be our future destinations.This international dimension perfectly meets the needs of major pharmaceutical companies that are present all over the world.
Moreover, the size of our group can guarantee a certain performance and the ability to honour our commitments