Exacerbated by patent expirations and weak flu season in North America
Global packaging company Rexam said the environment continued to be challenging for its healthcare division, which saw sales dip 1% to £219m in the first half of 2012. Excluding passing through higher resin costs, sales were down by £4m (2%).
Although there was good growth in a new range of insulin pens and multi layer containers, a weak flu season in North America and the impact on the pricing of a key device as the drug it delivers comes off patent next year, dented the figures, the firm said.
Operating profit in healthcare was down to £27m from £36m owing to the pricing impact of a drug patent expiration. Lower prescription and primary packaging volumes also had an effect.
For the second half, healthcare profitability is expected to be at a similar level to that of the first.
Looking ahead, Rexam said it would continue to pursue opportunities to develop or co-develop solutions with pharmaceutical companies. The firm has a range of new products including insulin pens and the next generation of drug delivery devices as well as innovative platforms for pumps and valves.
The extension of the plant in La Verpillière in France to accommodate increased volumes of insulin pens for global customers is progressing according to plan and is expected to be ready for production by the end of 2012.
The plant in India has also been extended to meet increased demand from local customers.
Total sales (of beverage cans and plastic packaging, which includes healthcare), rose by 3% to £2.16bn in the first half of 2012. Pre-tax profit grew by 1% to £207m.
Graham Chipchase, Rexam’s chief executive, said: ‘We are encouraged by the progress of the continuing business in the first half and, in spite of a challenging trading environment, our overall performance was in line with our expectations.
‘In an increasingly uncertain macroeconomic environment, we will continue to focus on generating cash, managing costs and return on capital employed for the rest of 2012. Our progress to date gives us confidence of achieving our 15% return on capital employed target by the end of 2013.’