Continuing to expand its medical capabilities, Nypro Inc. is set to more than double the size of its clean room space at its plant in Asheville, N.C., to 75,000 square feet.
Construction of the new 40,000-square-foot clean room will begin this fall and is scheduled to be completed by next spring, said Brian Payson, vice president of business development for Nypro Healthcare, in a June 9 telephone interview.
The expansion will include the addition of at least four injection molding machines ranging from 100-400 tons of clamping force.
Payson also said a new 35,000-square-foot clean room in Chartres, France, has been completed.
“We will start operations of that clean room next month and have a grand opening at the end of the summer,” he said. “We want to solidify our base to support the drug-delivery and diagnostics markets in Europe.”
Additionally, Payson said Nypro has launched a major push to retain the current business it has with pharmaceutical manufacturers when their prescription drugs lose their patent protection and become generic products in the 2012-2015 time frame.
The Asheville expansion will both increase capacity and allow Clinton, Mass.-based Nypro to expand the services it offers customers from that plant, Payson said. “We have new significant business programs that will be going into the Asheville plant.”
Payson added that Nypro was continuing to transform its plants in China from consumer electronics manufacturing facilities to health-care plants.
“We have been able to develop more of a health-care complex at those facilities” he said. In the last three years, health care has grown from 30 percent of Nypro's annual sales to 35 percent. The company plan is to have health care account for 40 percent of its revenue “within three years,” Payson said.
“We are pretty optimistic and excited about the health-care business,” Payson said. “We will finish our fiscal year [which ends June 30] with revenues that are up 14 percent year-over-year. And we sense that we are close to finalizing some plans to launch a new injection molding system project.”
He called the efforts to retain the work from pharmaceutical companies the primary initiative at the company because of the dollars involved.
“It has been something that has been on the radar screen for about a year, but we have seen it come full stride and trigger cost pressures in the last six months,” Payson said. Nypro already is working with three of its top six pharmaceutical company partners, and being proactive with the other three, with the same objective in mind.
“Three of our top six approached us directly with where they are headed and with their costs goals so we could work on them together,” Payson said. “With the others, we want to drive out costs in advance of them asking for it.
“There is no question that if we meet their expectation in terms of manufacturing and these cost-cutting initiatives, they will reward us with new programs,” Payson said.
“In the past, pharmaceutical companies would have let products go to generic suppliers,” he said. “But now the pharmaceutical companies want to protect their market share and compete with generics by driving out costs in injection molding.
“Their objectives are quite aggressive and they are looking at taking significant costs out and have turned to the supply base to help with that.”
Payson said Nypro is “looking at enhancements to both the assembly side and the automation side to drive out costs and increase output.” That includes lean and Six Sigma initiatives both internally and with its customers.
Another tactic is to relocate where products are manufactured within Nypro. Whenever manufacturing involves manual assembly, Payson said pharmaceutical companies are looking to move the work to “low-cost manufacturing areas.”
The pressure on costs is not coming just from pharmaceutical companies, he said.
“There will be continued pressures on the cost side” in the health-care industry, as hospitals seek to cut costs, and because of the extra costs that will be imposed on manufacturers when the 2.3 percent tax on medical devices goes into effect in 2013, Payson said.
“We will be looking for larger, more-scalable manufacturing plants with the ability to absorb costs and to lean the costs out of the products,” Payson said. “We have to take costs out, but we also have to continue to provide our customers with high quality. They will not tolerate any cost-cutting that adversely impacts quality.”
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