The Bottom Line

Pharma Labels: What doesn’t kill you will make you wealthy

June 2, 2014

In 2002, a documentary called Spellbound followed a group of school-age children as they trained and competed in a national spelling bee. The students worked endlessly in preparation for the event, memorizing and learning the origins of thousands of words.  The amount of training and its intensity seemed to border on child abuse. 

Yet a comment posed by one of the parents in the film sticks with me to this day. Spelling bee entrant Neil Kadakia’s father asked, “What is valuable in life that is easy to achieve?”

The question particularly applies to participating and succeeding in the daunting pharmaceutical label industry. It’s an industry rife with regulations and frequent audits. It requires the relentless pursuit of 100% printing accuracy, because one product recall could be catastrophic to all players involved. And of course, it’s highly competitive.

There’s nothing easy about the pharma label business. Fortunately, the risk also provides huge rewards. This is one of printing’s most profitable sectors, and it shows promising growth for 2015 and beyond.  A report from the Freedonia Group indicates that demand for the $14.3 billion pharmaceutical packaging industry is to increase 5.3 percent annually through the end of this year.

That’s healthy growth, but not everyone gets to play in this sandbox. It takes more than deep pockets or knowing the right people. It takes an elite organization, one that understands how important quality standards are in every aspect of the operation.

These companies don’t just give lip service to quality processes.  They follow them and improve them, every day, in every way.

Zero Tolerance For Failure
For most label printers, the goal is to reduce waste and production miscues as much as possible. Quality processes are important, but more often than not, they’re not a label printer’s top priority.

I’ve written often about what it takes to become an organization dedicated to quality.  This is a holistic undertaking, in which a company, from top to bottom, focuses on data-driven processes. Transitioning to this world can be a long-term, difficult process. Perhaps that’s why so many label printers shy away from making a true commitment to quality controls. Instead, they focus on generating more revenue to compensate for any shortcomings.

You simply don’t have that luxury in the pharma industry. As Bruce Rankin, president and CEO of Tursso Companies (we’ll get to him in a bit) told me, “We shoot for 100% compliance. We tolerate zero defects.” 

Pharma label printing requires that various aspects of the printing effort work together. Leadership, manufacturing, quality assurance, quality control, regulatory affairs, legal and marketing almost operate in conjunction with each other.

This excerpt from L&NW’s Catherine Diamond’s 2013 interview with Corey Holstrom of Pfizer Global Quality Operation provides a perfect example of how interwoven all these functional areas must be:

“A product was offered in both red and green liquid formulations. The marketing materials and the labels, however, showed only red liquids. A production line worker noticed that some of the products were green, and pointed it out to others. The company’s art and regulatory departments, among others, had approved all the materials. No one realized that the product label and marketing materials all had to match the actual product.”

Can Technology Take the Heat Off?
The root cause of all this consternation? Government regulations aimed at enforcing good manufacturing processes.

Ardi Batmanghelidj of Innovatum revealed just how difficult the compliance end of the spectrum can be. He pointed to regulations like 21 CFR Part 11: “Few other industries require multilevel security access, version control, electronic signatures and comprehensive audit trails for labeling.”

Innovatum provides a number of software products, including ROBAR, an Enterprise Label Management System for the FDA regulated industries.

“Our goal is to help pharma companies manage the labeling lifecycle,” he said.

Batmanghelidj points out that label printers, due to the unique requirements of pharma labels, may have customized off-the-shelf label software. That approach requires a lot of manual procedures, with regulators and auditors demanding that the customized software and the procedures required to operate it must be validated. 

“You need quality assurance and/or IT personnel to write and execute comprehensive protocols and test scripts,” Batmanghelidj noted. 
That requires a huge investment, the kind that is prohibitive to most companies. Innovatum’s approach is to reduce the degree of human involvement (and subsequent margin for error), while also offering up a standardized system for multi-site environments.

Multi-site environments ties into global expansion, and for pharma label printers, this is yet another obstacle that only makes the job more difficult.

Think about a printing company buying a label printer in Brazil, and then trying to harmonize their efforts with the rest of the organization. You’re going to encounter a language gap, a culture gap, a geographical gap – it’s the kind of multi-layered challenge where you’ll need some technological innovation (or perhaps Superman) to solve. 

But even if you manage to use technology to overcome this hurdle, another one awaits: competition.

Competition vs. Compliance
The dogged, relentless quest to be 100 percent compliant requires a Herculean effort.  Yet, while you’re so focused on keeping lock-step in compliance, you also have to remember you’re in a business. 

In the business world, your competition is also engaged in the relentless quest to be 100 percent compliant and error-free and they want to do it faster and more efficiently than you.

No one understands fighting this two-front war better than Bruce Rankin and Tursso Companies. Headquartered in St. Paul, MN, USA, Tursso is an industry leader in pharma and medical device label printing.  Their success did not occur overnight. 

Fifteen years ago, the company made a commitment to specialize in pharmaceutical and medical devices printing. They realized how extremely difficult the undertaking would be, and yet it also saw that a complete focus by a company could have a transformative effect.

By virtue of the pharma label beast, if you want to engage with this sector, you must commit to building a sophisticated infrastructure and becoming a highly efficient and effective global organization.  And you not only have to comply with that requirement, you must embrace it, invest in it, and use it as a springboard for bigger and better things.

Tursso, for example, became the first ISO certified printing company in Minnesota. It is cGMP compliant (at the behest of the pharma industry) and ISO certified for its medical device manufacturers. 

It’s a “mindset,” Rankin notes, and he’s right.  Employees and management of a pharma label company have to be passionate – almost zealots – about what they do.  They must strive to become masters of their industry not because they have to, but because they want to.
When they achieve this mindset, it can open doors for new opportunities. For example, Tursso leveraged its expertise to create and patent products that satisfy complex labeling challenges. (We’ll detail this product and Tursso in next month’s Bottom Line.)

Gaining Access to the Pharma Label Industry
At this point, are you still interested in entering the pharma label industry? If you’re a brave soul with the guts to move forward, here are some tips on how to gain access:

Don’t go it alone.  If you’re a label printer with sights on expanding into the industry, you’re probably aware that your expertise with your equipment and even your personnel won’t be enough.  You need to enlist the help of a hardcore pharma veteran to help you navigate the regulatory terrain.

Invest in technology. We mentioned Innovatum earlier in the article, and the types of obstacles the right technology can help you overcome. Much like you can’t venture into this industry without solid experience, you also can’t break-in without the best technology you can find.

Commit to quality.  To determine if you have the belly for the pharma label industry, make a commitment to quality, right now. Is there a willingness to take the first step, much like Tursso did 15 years ago, and commit whole-heartedly to quality processes and procedures?

Enter in an unconventional way.  There’s no reason to reinvent the wheel.  If you’re in the right financial position, a merger or acquisition of the right company can provide you with the wedge you need to access the industry. Before I’d even consider an M&A, however, I’d enlist the help of an industry veteran who knows the ins and outs of what it takes to succeed. Warren Buffet says he never invests in anything he’s not an expert in, and this is definitely an industry where that thinking applies.

In the final analysis, the pharma industry isn’t for everyone.  In fact, it seems amazing that anyone can stand up to its rigors and requirements. But many do. And they do it profitably and with great passion.  Anything is possible if you put your heart and head into the effort, and printing pharma labels is no different. 

Remember the spelling participant’s father’s question: “What is valuable in life that is easy to achieve?” Now ask yourself:  Are you willing to go the extra mile(s) to achieve success in the pharma label industry?

Rock LaManna, President and CEO of LaManna Alliance, helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path.