December 17, 2018

Why “Shop Local” Works for Healthcare Packaging Too

In March 2013, UK-based Filtrona — a supplier of plastics and fibre products — acquired Contego Healthcare Limited, a manufacturer of cartons, labels and other packaging materials for the pharmaceutical and healthcare industries. That deal was worth $242 million.

In February 2014, Chesapeake, a global supplier of paper-based packaging products for healthcare and consumer markets in Western Europe, merged with Multi Packaging Solutions (MPS), another packaging provider that served similar markets, but focused in North America.

Between 2016 and 2018, Westrock Co. acquired Cenveo Packaging, the aforementioned MPS, as well as Plymouth Packaging Inc, and Kapstone (a rival pulp and paper company).

Notice a pattern here?

Consolidation has been on the rise in the packaging industry for the past several years, and the trend shows no signs of slowing down.

Yet despite the benefits that consolidation may promise, there are downsides too — and they’re not insignificant. From licensing to procurement for different markets, a cookie-cutter approach doesn’t always, well … cut it.

My answer to the headaches of consolidation? Shop local.

Consolidation Is the New Normal

Healthcare packaging is big business. According to a recent report from GMR Data, the global healthcare packaging market is set to generate $117B in revenue in 2018. That’s right … 117 billion dollars.

Part of that growth is tied to healthcare growth in general: Aging populations, an expanding pool of consumers who can afford more healthcare, and the growth of expensive chronic disease management protocols all contribute to increased spending on health care overall.

Yet, as in any other industry, healthcare companies are under constant pressure to grow their business and lower the total cost of ownership on their operations at the same time.

Consolidation has become a way of achieving both ends through the same means.

By eliminating the number of supply chain partners they have to deal with and bringing everything in under one roof, businesses can save money through efficiencies and economies of scale.

By acquiring a company that is already operating in a market they want to enter, businesses can take a shortcut to expansion. They’re not just acquiring assets — they’re very often acquiring access to markets where they don’t yet have a footprint.

So it’s not hard to see why this path has become such an attractive option for companies that can afford it.

But as promising as consolidation might seem in the boardroom, it doesn’t always pan out that way on the ground.

I’ve seen this happen time and again: Large companies with big in-house operations stumble on execution when they enter a local market, because their global policy-and-procedure organizations aren’t alert to market-specific regulations and requirements.

And local regulations and requirements are non-negotiable in the healthcare sector. If you can’t meet them, your product doesn’t get on the shelf.

That’s why many global healthcare businesses engage local co-packers (like Ravenshoe Group in Canada) to get their product onto retails shelves with minimum friction and maximum quality. Think of it as “shop local”approach to doing business globally.

The Power of “Shopping Local”

When global healthcare companies sell into different international markets, they come up against a whole host of requirements and regulations that are particular to that market. Every country is different.

This is where consolidation can work against the goals of efficient execution.

By definition, consolidation eliminates difference. In many cases, that’s a good thing — operations and outcomes are more predictable, and get more efficient over time.

But the problem is that when you only look at things in the aggregate — the “big picture”— you lose sight of important differences in the details. And when it comes to healthcare packaging, that can cost you a lot of money and opportunity.

Sometimes, “going local” is a much smarter option for global companies who need to get their healthcare products onto retail shelves while clearing all licensing and regulatory hurdles. A local supply chain partner has specialized knowledge of the market environment that it’s operating in. Ravenshoe Group, for example, has specialized knowledge of regulations in Canada and close relationships with Health Canada regulators.

But there are other important reasons to shop local when you partner with a co-packer to get your product to market, too.

You Can More Easily Maintain Compliance

As anyone in the healthcare market will tell you, regulatory compliance is everything. Few markets are more heavily regulated than healthcare, and that includes packaging. What works in one jurisdiction, may not work in another.

I’ve written before about the idiosyncrasies of Health Canada’s regulations around labelling and language requirements. If you’re selling products in the Canadian market, a Health Canada license is an absolute must-have for getting your product on retail shelves.

Health Canada Regulations

As a co-packer working in the Canadian market, Ravenshoe is intimately aware of what it takes to meet Health Canada requirements. We undergo audits every year — including facility inspections — and remain in good standing with government regulatory authorities, because we know that our clients’ businesses depend on it. You should expect the same from your own local partners.

You Can Solve Procurement Headaches

Manufacturing and distribution rely on a solid supply chain. But even at the secondary packaging point of the supply chain, where Ravenshoe operates, there are multiple moving parts required to get the job done.

From engineering prototypes, to graphic design, to compliant labelling, to tertiary (display) packaging,to delivery, a good local co-packer can help you execute on all of the activities that have to happen to get your product to market.While most large corporations have their own procurement organizations, many prefer to partner with smaller co-packers to reduce their costs. A local co-packer can handle materials planning, procurement, and even inventory control on their behalf. At Ravenshoe, we have dedicated in-house representatives for each account who focus exclusively on seeing a project through to execution.

“Local” doesn’t always mean “small” — in our case, it means “focused.”

You Can Get Quicker Turnaround Times

Because local co-packers generally operate and iterate within a specific local market, they’re often more agile — they have a deep understanding of their operational efficiencies and constraints.

This agility translates to more customization and quicker turn-around times. That isn’t just desirable — it’s necessary, if you want to meet your order obligations and avoid late delivery fines.

At Ravenshoe, for example, we’re set up to handle batches of different sizes (large or small), but we’ve also created a templated approach to display development. Having a predictable and repeatable methodology allows us to turn an order around within 24-48 hours, without any of the obstacles or red tape that larger organization soften encounter.

The Devil Is in the Details

Consolidation in the healthcare packaging industry is here to stay. And while consolidation might solve larger “macro” problems of market access and supply chain management, in some areas, it introduces new ones.

To my mind, it makes more sense to move packaging and distribution closer to the market where a product is being used — precisely because of the non-negotiable regulatory requirements in certain markets, the finer details of the procurement process, and the penalties from retailers for not meeting delivery obligations.

When you partner with a local co-packer, you’re leveraging their expertise and specialized knowledge of the local market to ensure that your product gets to shelves quickly, safely and with all licensing bases covered.

In this era of consolidation, “shopping local” solves more problems than you might think.

Curious to know more? I’d love to chatget in touch with me at Ravenshoe Group today.

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