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. BUSINESS.
General
West Pharmaceutical Services, Inc. (which may be referred to as West, the Company, we, us or our) is a manufacturer of components and systems for the packaging and delivery of injectable drugs as well as delivery system components for the pharmaceutical, healthcare and consumer products industries. Our products include stoppers and seals for vials, prefillable syringe components and systems, components for intravenous and blood collection systems, safety and administration systems, advanced injection systems, and contract design and manufacturing services. Ou
r customers include the leading global producers and distributors of pharmaceuticals, biologics, medical devices and personal care products. The Company was incorporated under the laws of the Commonwealth of Pennsylvania on July 27, 1923.
All trademarks and registered trademarks used in this report are the property of West Pharmaceutical Services, Inc., either directly or indirectly through its subsidiaries unless noted otherwise. Teflon® is a registered trademark of E.I. DuPont de Nemours and Company. Crystal Zenith® is a registered trademark of Daikyo Seiko, Ltd.
Acquisitions
In July 2010, we acquired 100% of the outstanding shares of La Model Ltd., a developer of an electronic patch injector system using pre-filled cartridge technology.
In July 2009, we acquired the éris™ safety syringe system and other intellectual property and business assets from Plastef Investissements SA, a developer and manufacturer of safety systems.
For additional details regarding these acquisitions, see Note 2, Acquisitions, to our consolidated financial statements.
West Website
West maintains a website at www.westpharma.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available on our website under the Investors – SEC Filings caption as soon as reasonably practical after we electronically file the material with, or furnish it to, the Securities and Exchange Commission (SEC). These filings are also available to the public over the Internet at the SEC’s website at
www.sec.gov. You may also read and copy any document we file at the SEC’s Public Reference Room at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room.
Throughout this Form 10-K, we incorporate by reference certain information from parts of other documents filed with the SEC and from our Proxy Statement for the 2011 Annual Meeting of Shareholders (“2011 Proxy Statement”), which will be filed with the SEC within 120 days following the end of our 2010 fiscal year. Our 2011 Proxy Statement will be available on our website on or about March 31, 2011, under the caption Investors — Proxy Materials.
Information about our corporate governance, including our Corporate Governance Principles and Code of Business Conduct, as well as information about our Directors, Board Committees, Committee Charters, and instructions on how to contact the Board is available on our website under the Investors — Corporate Governance caption. Information relating to the West Pharmaceutical Services Dividend Reinvestment Plan is also available on our website under the Investors — Dividend Reinvestment Program caption.
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We will provide any of the foregoing information without charge upon written request to John R. Gailey III, Vice President, General Counsel and Secretary, West Pharmaceutical Services, Inc., 101 Gordon Drive, Lionville, PA 19341.
Business Segments
Effective January 1, 2010, our business operations were reorganized into two new divisions, Pharmaceutical Packaging Systems (“Packaging Systems”) and Pharmaceutical Delivery Systems (“Delivery Systems”), in order to better align our business units with the underlying markets and customers they serve. All historical periods have been restated for the changes to our segment reporting structure. Comparative segment revenues and related financial information for 2010, 2009 and 2008 are presented in a table contained in Note 5, Segment Information, to our consolidated financial statements and are discussed within Results of Operations i
n the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this 2010 Form 10-K.
Packaging Systems Segment
Our Packaging Systems segment designs, manufactures and sells a variety of packaging components and systems used in injectable drug delivery for the pharmaceutical and biopharmaceutical industries. The growth strategy for Packaging Systems includes organic growth through market segmentation, new-product innovation, strategic acquisitions and geographic expansion. The primary components we manufacture are subject to regulatory oversight within our customers’ manufacturing facilities. We have manufacturing facilities in North and South America, Europe and Asia, with affiliated companies in Mexico and Japan. See Item 2, Properties, for additional information on our manufacturing and oth
er sites.
Our Packaging Systems segment consists of three operating segments — Americas, Europe and Asia Pacific — which are aggregated for reporting purposes.
The Packaging Systems business is composed of the following product lines:
Pharmaceutical packaging
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Elastomeric stoppers and discs, which serve as primary closures for pharmaceutical vials.
Secondary closures for pharmaceutical vials called Flip-Off® seals, consisting of an aluminum seal and a removable plastic button that is removed to permit needle access to the vial contents.
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Elastomeric plungers, needle shields and tip caps to fit most standard prefilled syringes and combination seals for dental cartridges and pen delivery systems.
Pharmaceutical containers, closures and dispensers, including the West Ready Pack™ system.
Enhanced component processing: NovaPure™, Envision™, VeriSure™, Westar® RS (ready-to-sterilize) and Westar® RU (ready-to-use).
Disposable medical components
Elastomeric components for blood collection systems, as well as flashback bulbs and sleeve stoppers for intravenous dispensing systems.
Elastomer and co-molded elastomer/plastic components for infusion and intravenous systems.
Non-filled syringe components.
Dropper bulbs for applications such as eye, ear and nasal drops, diagnostic products and dispensing systems.
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Laboratory and other services
Extractables and leachables testing, package/container testing, method development/validation, stability testing, process development and problem resolution.
Sales of pharmaceutical packaging components represented approximately 60%, 60% and 59% of consolidated net sales for 2010, 2009 and 2008, respectively. Disposable medical components sales, as a percent of consolidated net sales, were 9%, 10% and 10% for 2010, 2009 and 2008, respectively.
Our tamper-evident Flip-Off seals are sold in a wide range of sizes and colors to meet customers’ needs for product identification and differentiation. The seals can be provided using proprietary printing and embossing technology for multiple layers of protection, such as point-of-use instructions, item-level information such as vial contents, drug dosage and strength, and cautionary statements that can serve as counterfeiting deterrence.
Elastomeric components are offered in a variety of standard and customer-specific configurations and formulations and are available with advanced barrier films and coatings to enhance their performance. West FluroTec® coating is a film that is applied using a patented molding process to reduce the risk of product loss by contamination, enhance seal integrity and protect the shelf life of packaged drugs. We also apply a Teflon® coating to the surface of stoppers and plungers to improve compatibility between the closure and the drug. B2-Coating is a coating applied to the surface of stoppers and plungers using a patented process that eliminates the need for conventional silicone application. It helps manufacturers reduce product rejections due to trace levels of silicone molecules found in non-coated packaged drug compounds. Fluro
Tec and B2-Coating technologies are licensed from our Japanese partner, Daikyo Seiko, Ltd.
The West Ready Pack system is a one-source solution ideal for pharmaceutical research and development and clinical work. Each system comes with West stoppers, Flip-Off seals and vials conveniently packaged in small volumes. Because the components are delivered ready-to-use, component preparation is eliminated from our customers’ processing, saving them time and money.
West’s Envision components (plungers and stoppers) are inspected by an automated vision inspection system to ensure they meet enhanced quality specifications for visible and subvisible particulate and contamination.
Our VeriSure components are an example of how laboratory services can be combined with a product offering. These components allow pharmaceutical and biopharmaceutical companies to navigate the complex task of extractables identification and the related analysis for qualifying a drug product’s container/closure system more efficiently. The customer receives a Certificate of Analysis with each shipment of components. Also, with a known extractables profile, customers are able to begin the design of leachables studies on a quicker basis.
In addition, our post-manufacturing processes, Westar RS and Westar RU, are documented and fully validated procedures for washing and siliconizing stoppers and syringe components to remove biological materials and endotoxins. Westar RS prepares components for introduction into the customer’s sterilizer and Westar RU provides sterilized components. The Westar processes increase the overall efficiency of injectable drug production by outsourcing component processing, thereby eliminating steps otherwise required in each of our customers’ manufacturing processes, and help to assure compliance with the latest regulatory requirements for component preparation.