West Sets Up New Facility in India

West Pharmaceutical Services’ (WST - Snapshot Report) indirect subsidiary, West Pharmaceutical India Packaging Private Ltd., has commenced the construction of a new compression molding facility in Sri City, India. The facility will be a quantum of the company’s global logistics of its remarkable international standard pharmaceutical packaging components.

Earlier this year, West Pharmaceutical forged a contract to lease an area of 72,800 square meters for 99 years in Sri City Special Economic Zone (SEZ). Sri City boasts of an urban location with special benefits of an SEZ, was selected on the basis of availability of utilities, appropriateness of labor, supply chain facility and living standards, among others.

The first plant in India underlines the company’s focus on business expansion in Asia. According to the company, the Indian facility will support its effort to meet the dynamic and burgeoning market demand, especially in the Asia Pacific region. The move is also expected to form an accord with the projected consumer base of West Pharmaceutical in India.

The construction of Phase 1 of the facility, which will manufacture metal and elastomeric pharmaceutical components to be used in the packaging of the company’s injectable medicines, has already begun. The set-up area of Phase 1 is 15,300 square meters. The commercial production of metal components is not expected to begin before the first quarter of 2014, while production of a variety of premium elastomeric components is expected to commence in the first quarter of 2015.

Manufacture of ready-to-use sterilized components will actualize in 2016. Construction of Phase 3 is expected to complete in 2023 with a total built-up area of 37,700 square meters.

Per management, the new plant will facilitate timely supply to the company’s customers in India. Also, West Pharmaceutical will be able to monitor its costs of production based on the improved global supply chain as well as process engineering know-how.

West Pharmaceutical is a global leader in the provision of drug administration systems and components for packaging as well as delivery of injectable drugs and delivery system components across various industries. Its compression molding facility in China is under construction and is expected to be completed at the end of 2012.

West Pharmaceutical has a significant competitive advantage in the market it serves. Additionally, it continues to make headway into new geographies to expand its business.

However, macroeconomic pressure across the globe remains a headwind.

West Pharmaceutical, which competes with 3M Co. (MMM - Analyst Report) and Rexam plc. (REXMY) in certain niches, currently has a Zacks#2 Rank, which translates into a short-term Buy rating.