Contract Packaging Organisation: A Comprehensive Guide to Pharma CPOs

Your guide to choose the right CPO (contract packaging organisation) for your company.

It’s difficult  to make the right choices when it comes to suppliers in the pharmaceutical industry. This is especially important during drug development and manufacturing. Contract Packaging Organisations (CPOs) are essential in this process. This guide is designed for pharmaceutical decision-makers and provides a detailed overview of CPOs. It will help you make informed choices for your pharmaceutical supply chain.

Understanding CPOs

A Contract Packaging Organisation (CPO) is a company that specialises in packaging and sometimes labelling pharmaceutical products on behalf of pharmaceutical companies. This outsourcing allows Pharma companies to concentrate on their core competencies while taking advantage of the CPOs’ expertise in packaging processes.

Breakdown of main services offered by CPOs

Primary Packaging: Involves the initial packaging of the pharmaceutical product.

Services:

• Blister packaging

• Bottle filling

• Sachet filling

• Vial filling

Secondary Packaging: Refers to packaging the primary packaged product into its final presentation for distribution.

Services:

• Cartoning

• Labeling

• Overwrapping

• Kit assembly

Tertiary Packaging: Encompasses packaging for transportation and distribution, ensuring the products reach their destination safely.

Services:

• Palletizing

• Shrink wrapping

• Case packing

• Bundle wrapping

Contract packaging organization market trends

The global CPO market has experienced significant growth in recent years, driven by increasing outsourcing trends and the need for specialized expertise. According to industry reports the CPO market.

The Global Contract Packaging Market size is expected to grow from USD 67.46 billion in 2023 to USD 102.33 billion by 2028, at a CAGR of 8.69% during the forecast period (2023-2028).
Source: Mordor Intelligence

Market trends and key drivers

Companies Outsourcing Non-Core Operations to Attain a Competitive Advantage

Industries have been modernising and adapting to the constantly evolving wants of consumers while also modifying their processes, which has allowed them to stay competitive. Outsourcing their non-core operations is frequently the wisest course of action. Consequently, outsourcing is more popular than ever, particularly in the packaging sector, where forward-thinking producers seek the assistance of contract experts for help with overall packaging requirements.

Growing Demand for the E-commerce Industry

Modern technology is widely adopted and driven by e-commerce packaging businesses. The demand for packaging solutions by the sector to better meet client expectations has also been fueled by the growing number of e-commerce businesses operating globally. This growth can be seen over the past ten years. In the e-commerce sector, co-packers serve as a procurement arm, a storage arm, and a packaging production arm to expedite the supply chain. The e-commerce sector depends on supply chain speed to provide the quickest client experience.

Advancement in R&D

The growth in  research and development in the pharmaceutical industry has resulted in the introduction of new drugs, with more exceptional performance compared to their predecessors. Recent improvements in medical sciences and additions to medicines already available for numerous diseases and deficiencies drive the contract packaging market, indirectly, as the necessity of packaging the drugs has multiplied rapidly.

Rising demand for complex drug forms

As pharmaceutical companies develop more sophisticated and personalised medications, they require specialized packaging solutions that CPOs can provide.

Benefits

There are many benefits to partnering with a CPO. Here are some of the most important:

1. Reduced costs

CPOs can help you save money on your packaging costs in a number of ways. First, they have economies of scale, which means they can buy materials and supplies in bulk at lower prices. Second, they have the expertise to optimize your packaging processes, which can help you reduce waste and improve efficiency.

2. Enhanced quality and compliance

CPOs are experts in pharmaceutical packaging regulations. They can help you ensure that your products are packaged correctly and meet all of the necessary safety and quality standards. This can help you avoid costly recalls and regulatory problems.

3. Faster time to market

CPOs can help you get your products to market faster by streamlining your packaging process. They have the capacity and expertise to handle large orders quickly and efficiently.

4. Scalability and flexibility

CPOs can adapt to your changing needs. They can scale their operations up or down to meet your demand. This is especially helpful if you are a growing company or if you have seasonal fluctuations in demand.

5. Focus on core competencies

By outsourcing your packaging to a CPO, you can free up your internal resources to focus on your core competencies. This can help you improve your overall efficiency and profitability.

6. Access to specialized packaging solutions

CPOs have the expertise to handle a wide range of packaging challenges. They can help you develop custom packaging solutions for your unique products.

7. Improved sustainability

CPOs are increasingly focused on sustainability. They can help you develop packaging that is more environmentally friendly.

8. Reduced risk

Partnering with a CPO can help you reduce your risk of packaging-related problems. CPOs have the experience and expertise to handle all aspects of your packaging, from sourcing materials to labeling and distribution.

9. Increased profitability

By partnering with a CPO, you can improve your bottom line in a number of ways. You can save money on costs, improve your quality and compliance, and get your products to market faster.

Challenges

While partnering with a CPO offers numerous benefits for pharmaceutical companies, navigating this collaboration also presents a range of potential challenges. Here are some key hurdles to consider:

Finding the Right Partner:

• Matching Expertise: Selecting a CPO with the specific experience and technical capabilities to handle your unique product types and regulatory requirements can be complex.
• Cultural Fit: Ensuring alignment in values, communication styles, and working practices with your chosen CPO is crucial for a smooth and successful partnership.
• Capacity and Scalability: Choosing a CPO with adequate infrastructure, technology, and personnel to meet your current and future production needs is essential.

Communication and Collaboration:

• Clear Expectations: Setting clear expectations from the outset regarding timelines, quality standards, communication protocols, and decision-making processes is vital to minimize misunderstandings and prevent friction.
• Open Communication: Maintaining open and transparent communication throughout the partnership is crucial to address issues promptly, build trust, and ensure alignment.
• Transparency and Oversight: Implementing robust measures to ensure transparency in the CPO’s processes and maintaining effective oversight are key to guaranteeing quality control and compliance.

Quality Control and Risk Management:

• Compliance Concerns: Partnering with a CPO introduces risk of regulatory non-compliance if their facilities or procedures fall short of standards. Thorough due diligence and ongoing audits are crucial.
• Quality Control Systems: Evaluating and verifying the CPO’s quality control systems and procedures are essential to ensure product integrity and patient safety.
• Data Security and Confidentiality: Robust data security measures and clear protocols regarding confidential information are vital to protect sensitive drug data and intellectual property.

Costs and Pricing:

• Hidden Costs: Be mindful of potential hidden costs beyond the initial quoted price, such as change orders, material surcharges, and quality control failures.
• Contract Negotiations: Negotiating comprehensive and transparent contracts that clearly define pricing structures, payment terms, and responsibilities is crucial to avoid disputes and manage costs effectively.
• Cost Savings Evaluation: Carefully assess whether the cost savings projected by partnering with a CPO outweigh the potential risks and costs associated with outsourcing.

Partnering with a CPO can be a strategic win for pharmaceutical companies, but it’s crucial to navigate potential challenges thoughtfully. By conducting thorough due diligence, setting clear expectations, and establishing robust communication, risk management, and quality control procedures, pharmaceutical companies can secure the benefits of CPO collaboration while minimising potential drawbacks.

Opportunities

Exploring the Growth Potential of Contract Packaging Organizations (CPOs)

Expanding Market & Diversification:

• The global CPO market is projected to reach USD 191.02 billion by 2030, presenting a booming potential for growth and expansion.
• Diversification into niche areas like biologics, personalized medicine, and specialty packaging offers immense potential for CPOs with specialized expertise.
• Geographical expansion into emerging markets with rising demand for pharmaceuticals creates exciting opportunities for both established and new CPOs.

Innovation and Technological Advancements:

• Implementing cutting-edge technologies like automation, robotics, and data analytics streamlines processes, improves accuracy, and boosts efficiency, creating a competitive edge for CPOs.
• Investing in green technologies and sustainable packaging solutions caters to the growing demand for eco-friendly practices within the pharmaceutical industry.
• Developing data-driven solutions for real-time tracking, serialization, and anti-counterfeiting measures enhances product safety and regulatory compliance, offering valuable solutions for pharma companies.

Enhanced Services and Partnerships:

• Expanding service offerings beyond basic packaging to include clinical trial services, kitting, serialization, and post-market surveillance provides comprehensive solutions for pharmaceuticals, increasing value and strengthening partnerships.
• Collaborating with research institutions and universities fosters innovation and facilitates the development of novel packaging solutions for advanced drug forms.
• Partnering with logistics providers and technology companies creates an integrated ecosystem that optimizes supply chain management and delivers faster time-to-market for pharmaceuticals.

Value-Driven Partnerships and Specialisation:

• CPOs can position themselves as strategic partners, offering not just cost-savings but also expertise in regulatory compliance, risk management, and supply chain optimization.
• Specializing in specific therapeutic areas or drug forms allows CPOs to develop in-depth knowledge and cater to the unique needs of niche markets.
• Building strong relationships with pharmaceutical companies based on trust, transparency, and open communication fosters collaborative innovation and long-term partnerships.

Contract Packaging Organisations include

• Allpack Group AG
• Aaron Thomas Company Inc.

• Multipack Solutions

• Pharma Tech Industries

• Reed-Lane Inc.

• UNICEP Packaging

• Jones Packaging Inc.

• Stamar Packaging

• Hollingsworth LLC

• Complete Co-Packing Services Ltd

• Sharp Packaging

• Assured Edge Solutions

How to find the right contract packaging partner

• Define your needs and requirements: Clearly understand your specific packaging needs, regulatory considerations, and budget constraints.

• Research and shortlist potential partners: Conduct thorough research, gather references, and shortlist CPOs that align with your needs.

• Develop a comprehensive RFP: Craft a detailed Request for Proposal (RFP) outlining your expectations, evaluation criteria, and desired outcomes.

• Evaluate proposals and negotiate terms: Carefully assess proposals, compare pricing structures, and negotiate terms that are mutually beneficial.

• Establish a strong partnership: Foster open communication, build trust, and collaborate effectively to ensure a successful partnership.