More on West Pharmaceuticals.
I just listened to the West presentation at the UBS Global Life Sciences Conference earlier this month
(registration likely required to access the slate of presenters and archived presentations).
Here are my scribbled notes:
Note that the company did a very nice job of explaining the competitive advantage, barrier to competition, and growth drivers in the industry. I will do some financial write-up on the company for a future blog.
West at UBS
Donald Morel - Chairman
Manufacturer of components for injectable drug delivery and disposable medical products.
Rubber stoppers, syringe plunger tips.
Serves wide range of customers - BD is largest.
Manufacture globally. Building manufacturing in China. Key manufacturing partners in Mexico and Japan.
Got out of clinical services and other non-core businesses, focus on manufacturing. Looking for acquisitions in the field - increased dividend and buying back shares.
Pharmaceutical systems - 70% sales
Technology group - 30% of sales
40% of sales in Europe, 9% from Asian
Check on overseas growth.
Sold into China and India for 25 years, but just now looking into manufacturing there.
Growth drivers - demographics, biologics (FDA pipeline) - more packaging / high margin products. Shift to 'point-of-care' (uses more disposable West products) with self contained systems (example West produces components used in ~95% of insulin packaging used today - including inhalable insulin - Nektar/Pfizer). Diabetes is ~110M revenue.
HUGE competitive barriers. Regulatory system barrier to component changes (he explains this well). Patents too, but not as large a barrier as regulatory.
Nest generation systems being developed including anti-counterfeiting / RFID. Simpler 'home-use' systems. All-plastic syringe (2010-2011) more compatible with biologics (silicone free / glass free).
New markets - building in China (a bit delayed - Ground breaking early 08). A few customers in place. Also rubber manufacturing for China domestic market.