For many years now, the Plastics & Devices Division has operated two Technical Competence Centers (TCC) especially for designing and developing custom- ized medical plastic products – one in Wackersdorf, Germany, and one in Peachtree City, USA. A third competence center was opened in Dongguan, China, in October 2014. In the TCCs, our product development activities focus on the practical use of systems and components for pharmaceutical, diagnostic and medical technology applications.
In the past, we increasingly built up our design and development expertise, especially in the Medical Plastic Systems Business Unit. This regularly gives rise to new projects and the development of innovative product ideas. We are, for example, researching the development of plastic adaptors, which will substantially improve the break resistance and hence the functioning of the glass syringes used in auto-injectors. Auto-injectors, also known as emergency pens, are used, for instance, to enable allergy sufferers to inject drugs quickly and safely in an emergency. We also work with our customers to develop complete auto-injector systems that we subsequently manufacture for the customer.
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Pharmaceutical and medical technology products must wind their way through a long approval process before the idea can proceed to series production. This process requires multiple small batches to be manufactured as clinical samples or stability batches. To meet this need, we have set up a separate small-batch production line in our competence center in Wackersdorf, Germany. It is tailor-made for these customer requirements, for instance, in the clinical phases prior to approval of a new drug. This is where we manufacture small batches in series quality and then later directly incorporate the knowledge gained from this process into large-scale series production. We are therefore able to quickly and easily manufacture a product at any stage of the project, regardless of whether this is for manufacturing development prototypes, clinical samples or products in small batches for special applications. In the development and production of cosmetic glass for perfume flacons or cream jars, we also place the highest demands on our processes and product quality; and our glass packaging for cosmetics is valued accordingly. We produce these products mainly in our moulded glass plants in Tettau, Germany, and in Momignies, Belgium. In the past financial year, we developed some 100 new glass packaging products for the cosmetics industry. Gerresheimer also produces several hundred variants of these different types of glass cosmetic packaging, in some cases applying elaborate finishing technologies such as spray coating and metallization.
PROCUREMENT
In the past financial year, the Gerresheimer Group’s total cost of materials (including raw materials, consumables and supplies, energy costs, packaging materials and purchased services) was EUR 473.0m (prior year: EUR 469.7m). Thus the procurement rate – the cost of procuring materials as a percentage of revenues – stood at 36.7%, somewhat below the prior-year rate of 37.1%. Due to the differences in the activities of our three divisions, Gerresheimer’s procurement activities are largely organized decentrally. However, various raw materials and energy are procured on a cross-divisional basis. The same is true for goods and services that are not relevant for production, such as advisory services, data networks, hardware and software. These are procured centrally. Our interaction with suppliers is governed by the Gerresheimer Compli- ance Program as well as by purchasing policies and procedural guidelines. It is also extremely important for us that our suppliers comply with the high quality requirements for our business. For this reason, we prefer to work with suppliers certified in accordance with the relevant ISO standards who also comply with the official guidelines on quality assurance in the production of drugs and active ingredients (Good Manufacturing Practices, GMP). We ensure that our suppliers adhere to the “Gerresheimer Principles for Responsible Supply Chain Management” (available on our website at: http://www.gerresheimer.com/en/investor-relations/corporate-responsibility/ customers-suppliers.html), which include key precepts on environmental protection, occupational health and ethical business conduct. We carry out regular supplier audits to ensure they continue to meet these criteria.
As a manufacturer of high-quality pharmaceutical primary packaging, we mainly use quartz sand and soda lime as raw materials to make glass, along with various additives in relatively small quantities. These basic products are freely available and we procure them from a range of suppliers. This is why there were no disruptions to supply or shortages with a significant impact on our business development in the reporting period. Moreover, glass produc- tion requires energy, primarily electricity and gas. Some customer contracts include automatic adjustments if energy prices change, with a time delay. Since contracts in the glass segment rarely carry an agreed term of more than two years, adjustments for any changes in energy prices are generally made where necessary when agreements are extended. We minimize any residual risks as far as possible using hedges. See the section “Financial risks”. The production of pharmaceutical primary packaging – especially for complex drug delivery systems like insulin pens and inhalers – mainly requires specialist plastic granules and energy. These basic products are also freely available and procured from a range of suppliers. This means there were also no disruptions to supply or shortages of these raw materials with any significant impact on our business development in the reporting period. Given that the contracts for the production of drug delivery systems generally have terms of several years, they usually include provision for adjustments if granule and energy prices should change, with a time delay, so as to minimize the risk of price changes in the named basic products.
PRODUCTION
The same extraordinarily high quality standards that apply to the production of drugs also apply to the production of pharmaceutical primary packaging. Our in-house experts, our customers, external appraisers and supervisory bodies regularly verify our compliance with these standards, which are consolidated under the term “Good Manufacturing Practices” (GMP). Whatever form the production processes in the three divisions take, the GMS principles apply in all Gerresheimer plants worldwide, see the section “Business Excellence”. This is how we ensure the consistency of management systems and quality standards.
The production capacities of each division are generally planned centrally based on the order situation, delivery deadlines and regulatory issues, and distributed to the plants in each division at a regional or global level, depend- ing on the order. Efficiency and optimum capacity utilization play a key role. Notably in the Primary Packaging Glass Division, high capacity utilization is crucial to profitability because its production processes involve smelting various raw materials into glass in energy-intensive furnaces. Another key profitability factor is minimizing idle time. Set-up times indicate how much time is required for changing the product being manufactured, i.e., converting the tools. In the last few years, we have continuously improved – notably in our Primary Packaging Glass Division – in terms of optimizing the capacity utilization of our furnaces and reducing set-up times. This represents a key competitive factor considering the large number of different products in this division.
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For the pharma industry, security of supply and reliability of deliveries are crucial factors. Accordingly, we use standardized or at least comparable technologies at all of our plants worldwide and consistently apply the GMS. We therefore enjoy the advantage that many of our products can be pro- duced at another site should local production bottlenecks arise. This gives our customers significantly enhanced security of supply – and Gerresheimer an important competitive edge.