West Pharmaceutical Services Stock

West Pharmaceutical Services, Inc. is a leading global manufacturer in the design and production of technologically advanced, high-quality, integrated containment and delivery systems for injectable drugs and healthcare products. The company’s products include a variety of primary proprietary packaging, containment solutions, reconstitution and transfer systems, and drug delivery systems, as well as contract manufacturing, analytical lab services and integrated solutions. The company’s customers include leading biologic, generic, pharmaceutical, diagnostic, and medical device companies in the world.

Business Segments

The company operates through two segments, Proprietary Products and Contract-Manufactured Products.

Proprietary Products

Proprietary Products segment offers proprietary packaging, containment solutions and drug delivery systems, along with analytical lab services and other integrated services and solutions, primarily to biologic, generic and pharmaceutical drug customers. The company’s packaging products include stoppers and seals for injectable packaging systems, which are designed to help ensure drug compatibility and stability with active drug products, while also supporting operational efficiency for customers. These packaging products also includes syringe and cartridge components, including custom solutions for the specific needs of injectable drug applications, as well as administration systems that can enhance the safe delivery of drugs through advanced reconstitution, mixing and transfer technologies. The company also provides films, coatings, washing, vision inspection and sterilization processes and services to enhance the quality of its packaging products and mitigate the risk of contamination and compatibility issues.

This segment’s product portfolio also includes drug containment solutions, including Crystal Zenith, a cyclic olefin polymer, in the form of vials, syringes and cartridges. These products can provide a high-quality solution to glass incompatibility issues and can stand up to cold storage environments, while reducing the risk of breakage that exists with glass. In addition, the company offers a variety of self-injection devices, designed to address the need to provide at-home delivery of injectable therapies. These devices are patient-centric technologies that are easy-to-use and can be combined with connected health technologies that have the potential to increase adherence.

In addition to its Proprietary Products product portfolio, the company provides its customers with a range of integrated solutions, including analytical lab services, pre-approval primary packaging support and engineering development, regulatory expertise, and after-sales technical support. Offering the combination of primary proprietary packaging components, containment solutions, and drug delivery devices, as well as a broad range of integrated services, helps to position the company as a leader in the integrated containment and delivery of injectable medicines. This segment has manufacturing facilities in North and South America, Europe, and Asia, with affiliated companies in Mexico and Japan.

Contract-Manufactured Products

Contract-Manufactured Products segment serves as a fully integrated business, focused on the design, manufacture, and automated assembly of complex devices, primarily for pharmaceutical, diagnostic, and medical device customers. These products include a variety of custom contract-manufacturing and assembly solutions, which use technologies such as multi-component molding, in-mold labeling, ultrasonic welding, clean room molding and device assembly. The company manufactures customer-owned components and devices used in surgical, diagnostic, ophthalmic, injectable, and other drug delivery systems, as well as consumer products.

The company has vast expertise in product design and development, including in-house mold design, process design and validation and high-speed automated assemblies. This segment has manufacturing operations in North America and Europe.

International

The company has significant operations outside of the United States (U.S.), which are managed through the same business segments as its U.S. operations – Proprietary Products and Contract-Manufactured Products. Sales outside of the U.S. accounted for 58.0% of the company’s net sales in 2023.

Intellectual Property

The company owns or licenses intellectual property rights, including know-how and issued patents and pending patent applications in the U.S. and in other countries, that relate to various aspects of its business. In 2023, more than 190 patents were issued to West across the globe. Certain key value-added and proprietary products and processes are exclusively licensed from Daikyo.

Marketing

The company’s Proprietary Products customers primarily include many of the major biologic, generic, and pharmaceutical drug companies in the world, which incorporate its components and other offerings into their injectable products for distribution to the point of care and ultimate end-user, the patient. The company’s Contract-Manufactured Products customers include many of the world’s largest pharmaceutical, diagnostic, and medical device companies. Contract-Manufactured Products components generally are incorporated into its customers’ manufacturing lines for further processing or assembly. The company’s products and services are sold and distributed primarily through its own sales force and distribution network, with limited use of contract sales agents and regional distributors.

The company’s ten largest customers accounted for 41.4% of its consolidated net sales in 2023, and one of these customers, individually accounted for more than 10% of consolidated net sales, at 10.9% contributing to net sales in both the Proprietary and Contract Manufacturing reporting segments.

The company recognizes the majority of its revenue, primarily relating to Proprietary Products product sales, at a point in time, following the transfer of control of its products to its customers, which typically occurs upon shipment or delivery, depending on the terms of the related agreements. The company recognizes revenue relating to its Contract-Manufactured Products product sales and certain Proprietary Products product sales over time. The company recognizes revenue relating to its development and tooling agreements over time, as its performance creates or enhances an asset that the customer controls as the asset is created or enhanced.

Government Regulation

The design, development, manufacturing, marketing, and labeling of certain of the company’s products and its customers’ products that incorporate its products are subject to regulation by governmental authorities in the U.S., Europe, and other countries, including the U.S. Food and Drug Administration (FDA), the European Medicines Agency, and the National Medical Products Administration (China).

History

West Pharmaceutical Services, Inc. was founded in 1923. The company was incorporated under the laws of the Commonwealth of Pennsylvania in 1923.