Operating Review

Growing Innovation team made significant progress this year.



Bespak revenue from products and services grew 1.7% to £95.0m (FY2012: £93.5m), in line with expectations. Bespak operating profit (before special items2) grew 6.6% to £19.5m (FY2012: £18.2m) with operating margin increasing to 20.5% (FY2012: 19.5%) largely from increased service income and operating leverage.

Our growing Innovation team has made significant progress this year, developing a strong pipeline of new opportunities. Many of these have been introduced to customers with a very positive reception, and the team's services have also been commissioned on an "Innovation on Demand" basis.

Our development pipeline is exceptionally strong. Our tried and proven process methodologies are delivering progress on a number of programmes. The award of the Nicoventures programme has brought new opportunity to the pipeline.

Following the successful grant of the clinical trials license in 2011, the regulatory team is developing the necessary processes and controls for commercial drug handling. This will be an integral part both of the Nicoventures project and one of the pipeline nasal contracts: the team is confident of the successful grant of regulatory licensing for this in 2013.

In March 2013, the Chiesi NEXTHaler was launched following a significant development and industrialisation programme, which began in 2005. Industrial planning is well advanced to scale up facilities and equipment for Nicoventures manufacturing, which will include the reopening and refurbishment of our Milton Keynes facility.


Innovation Methodology


We have developed a range of "service" offerings and business models that are focused on meeting the needs of the market, in an exciting and formative year for Innovation. This has involved building a team, drawn from a variety of backgrounds, and providing appropriate facilities in Cambridge.

With a larger team now in place we are making good progress in identifying unmet or unsatisfied market needs and generating viable concepts that meet the expectations of all parties involved with a drug device, including the patient, clinician and our Life Sciences partner. We are also looking at aspects of the supply chain and the drug as opportunities to innovate. Through this effort, we have a full pipeline of development projects from simple functional elements through to full product developments and clearly identified opportunities that exist for both our "opportunity discovery" and "Innovation on Demand" offerings.

The innovation process starts by investigating potential opportunities and using our four stage-gate process, and results in robust concepts that we know meet unsatisfied need and equally importantly will be reproducible in high volume manufacture. The primary objective of the process is to minimise the overall risk (commercial, user, pharmaceutical and technical) through early targeted mitigation activities thereby maximising the chances of success once the product is in the market.

We do not offer a one size fits all process; we listen to our clients and have taken the approach of creating a series of proven functional building blocks rather than developing a fixed device that solves a given specific problem. This approach provides the flexibility to meet the needs of our clients in two ways: opportunity discovery and Innovation on Demand.

Opportunity discovery allows us to build device solutions that will satisfy the needs of our clients and identify new needs as well as those that are not met in the current market. For instance there is a trend towards larger volume delivery of more viscous drugs. In response to this we have developed drug delivery techniques that enable these challenges to be overcome. This delivery technology combined with our other functional building blocks has enabled us to develop a range of five injection devices from a simple assisted injector - the Syrina Micro, through to the sophisticated Syrina AI which inserts the needle, delivers the drug, waits a short period of time to allow the drug to disperse before retracting and informs the patient that the process is complete and that the needle is safely shielded. The next step is work with our partners to embody this into a fully functional device that meets the needs of a specific patient group.

Innovation on Demand is beginning to show its value as a service offering. We can use our increasing range of basic building blocks to solve the very specific challenges encountered by the client. This requires working closely with our clients and discussing those "difficult-to-solve" challenges. As an example, a client has a drug that consists of two viscous, liquid components that need mixing moments before injection but must be kept separate prior to this. The aim was to find a single device solution that was both easy to use and convenient for the clinician and patient alike. Armed with this brief and within four weeks of discussing the problem, the Innovations team was able to produce a working demonstrator of a potential device. This was a combination of proven functional elements and novel elements, and satisfied the basic requirements of our client. We are now working with the client to produce a more robust demonstrator.

Bespak assembles more than 500 million devices per annum, comprising 3.6 billion components.

Bespak -130-new

Bespak device assembly

Fast Fact

Production statistics

  • 8,000 square metres of clean room space
  • 500 million devices
  • 3.6 billion components
  • 2.6 billion components moulded on site
  • 27 full automated assembly lines

Product Development

Bespak operates in every phase of a device's development lifecycle, from early to late stage clinical trials, as well as post launch where the business may become a second source of supply. Device suppliers who partner with customers whilst a product is in development invariably become the sole supplier at launch. Bespak's preference is for early involvement where it is possible to apply greatest influence on the product design, not just to assure functional robustness but also to make it suitable for high volume manufacture.

Whilst the overall approval timescales for drug delivery devices are long, the development lead times can be very aggressive in order to achieve clinical and launch deadlines. Bespak recognises that product development is an iterative process and it aspires to reduce the number of iterations required for a product, whilst progressing through each iteration as quickly as possible. In order to achieve this, the business has developed capabilities and competencies internally as well as having established a network of third party specialist suppliers. Internal capabilities include 3D CAD platforms (Unigraphics, ProE, SolidWorks, AutoCAD), mouldflow simulation, 3D printing (suitable for early stage functional evaluation), CT Scanning and an extensive laboratory capable of analytical and physical testing with both placebo and active ingredients. Bespak was an early investor in CT Scanning technology and it has proved pivotal in the diagnosis of discovery during product development. Rapid identification of root cause significantly reduces development iteration and reduces the associated lead times.

Bespak has a proven track record in developing both proprietary products and products owned by others. The Easifill primeless valve is a proprietary product currently pending FDA approval via a lead customer. This product was designed to meet an unmet need in the market. Development increased the breadth of the organisation's Intellectual Property portfolio whilst challenging and helping to evolve internal capabilities and competencies. Development progressed through pilot tooling and hand assembly with extensive laboratory product verification testing to determine iterative requirements to achieve robustness suitable for volume manufacture. The product is currently manufactured using multi-cavitation tooling and automated assembly with capacity in the millions. Variants of the Easifill valve are currently being sampled and evaluated by a range of other customers.

On the Nicoventures programme, Bespak's role here is to support the "Design Authority" not only to achieve the functional specification but to influence design such that the product is suitable for high volume manufacture. Bespak's experience of drug/device interaction is critical to analysis of the root cause and solution generation. The product leverages Bespak's check valve, Metered Dose Inhaler valve technology and medical device product expertise making Bespak the ideal partner of choice.

Regulatory and Quality

Bespak's products are used in medical drug delivery applications, where patient outcomes can be directly affected by product quality. Consequently Bespak operates in a highly regulated environment with demanding quality and reliability expectations and requirements.

Our experience and focus in this sector has enabled us to develop significant expertise in high quality automation and sophisticated online checking systems. This has enabled us to achieve the product reliability standards necessary for medical products. We have hired talented people, enabling us to develop the business processes, experience, and "know-how" required to meet complex regulations and precise manufacturing methodologies and controls.

Our regulatory audit performance demonstrates that we reliably meet regulatory expectations. Our quality performance is well illustrated by a recent report from a major customer where the defect level of products supplied over the prior 12 months was 0.2 parts per million — this exceeds the internationally accepted six sigma level of excellence.

We have developed and grown our Analytical Laboratory services — these enable us to provide a full service to our customers in product development, in clinical trials, and in volume manufacturing.

We have progressively developed our regulatory competence, and with it our business model offerings. This journey began with ISO 9001, then ISO 13485 — for medical devices. Then in May 2011 we were granted the necessary licence to make clinical trials supplies. In the summer of 2013 we will be seeking a licence that will allow us to manufacture and supply fully completed pharmaceutical products at a commercial scale into the distribution network. This drug handling capability will enable us to produce finished product for Nicoventures as well as one of our nasal programmes currently in the development pipeline.

Device assembly

Industrialisation, Manufacturing, Continuous Improvement (CI)

In order to meet its customers' new product industrialisation needs, Bespak has evolved a framework which is tailored to meet the individual requirements of each programme. A programme manager navigates the journey from entry into the business, through product and process development, to handover into routine operations. The process is risk based and whilst stages exist in series, they are often run in parallel to compress lead times. All activities are undertaken in full compliance with applicable guidelines and regulations.

Chiesi's Nexthaler was industrialised at Bespak and launched in March 2013 in Germany, with other European territories expected to follow in due course. Nexthaler entered Bespak in 2005 via Cambridge Consultants from another contract manufacturer. Bespak's initial brief was to transfer the technology into the business and support Design for Manufacture activities resulting in a low volume capability suitable for clinical trials. Over the past years, Bespak has supported design iteration and subsequent design verification whilst evolving a manufacturing capability suitable for launch. Work will continue at King's Lynn for the next year as additional capacity is installed. Establishing a suitable manufacturing footprint for the Nexthaler operation enabled the business to redevelop some existing footprint, whilst also providing an opportunity to consolidate other product operations under one roof. This consolidation effort was undertaken over the past 12 months and led to significant productivity improvements with resultant cost savings.

One of our customers reported a defect level of just 0.2 parts per million, exceeding the international six sigma level of excellence.

Following the award of the Nicoventures programme, the decision was taken to re-open and re-fit the Milton Keynes facility which will be used for all of the injection moulded components. Product assembly will take place in King's Lynn.

As a manufacturer, Bespak has over 8,000 square metres of clean room space currently installed and operational at its King's Lynn facility.

The business assembles more than 500 million complex devices per year comprising more than 3.6 billion components, of which approximately 2.6 billion are moulded on site. The site boasts 27 automatic assembly lines, 95 injection mould presses and more than £50m of tooling assets. All of these numbers are expected to grow as the exciting range of new products pass through the industrialisation pipeline to volume manufacture. Bespak also has an exceptional quality record and has manufactured more than 1 billion HFA MDI valves and 500 million Diskus devices without major issue.

Manufacturing processes are developed to ensure that a product can be supplied in high volume to the agreed specification at all times. These processes are continuously improved to minimise waste in all of its forms and maximise the value-add to customers. Bespak has well established Continuous Improvement processes and practices built on lean manufacturing/6 sigma principles, and it aspires to achieve World Class standards in operations. A pilot initiative has just been launched to build on the Continuous Improvement platform implemented over the past few years to drive World Class Manufacturing and associated productivity improvements to the next level. This will lead to a further exciting transformation in Operations performance.

King Systems (pre-disposal 15 February 2013)

King Systems like for like revenues1 from products and services grew 0.4% to £34.5m (FY2012: £34.3m) and fell 20.0% (FY2012: £43.1m) without adjusting the comparatives. King Systems like for like operating profit decreased 23.0% to £2.0m (FY2012: £2.6m) with operating margin decreasing to 5.9% and decreased by £1.3m (38.6%) without adjusting the comparatives (FY2012: £3.3m).

King Systems' transformation continued strongly in the year under Consort Medical's ownership.

The Ohio facility was exited as expected about two weeks before the sale of the business completed. This was made possible by achievement of milestones on the Manufacturing Automation programme, on both the bag dip and breathing mask lines.

In addition, the King Vision video laryngoscope continued its sales growth, fulfilling our expectations up to the time of the sale. In addition, the development of the next generation King Vision was also progressing on schedule.

King Systems was also successful in securing a multi-year exclusive supply contract with HPG, a major partner in the Hospitals supply chain.

The business departed the Group in good shape, well positioned to grow both revenue and profitability in the future. The disposal transaction was also structured in such a way that Consort Medical shareholders will be able to participate in the financial upside which the King Vision video laryngoscope will continue to bring.

Full details of the transaction are included in the Financial Review.


The breadth and depth of our development pipeline is substantial, and in the coming twelve months we expect to see significant progress through the achievement of milestones on current programmes, including product launches, as we deploy significant additional resources to convert these opportunities.

In addition to the firm pipeline, we have a number of live early stage project enquiries under review, including new projects from our Innovations team. We would expect to convert at least one of these into our development pipeline over the next six months.

Volume production at the Bespak business continues to meet our expectations for the current year, which will include the ramp-up in production of the Chiesi NEXThaler following launch and roll-out to further territories.

The Board expects the sustained organic growth initiatives to continue to convert into progressively increased revenue and operating leverage for Consort Medical over time, as well as from further development programme wins. The Group continues to evaluate suitable inorganic opportunities which are consistent with its strategy.

  1. Like for like basis adjusts the comparative figures to reflect the fact that King Systems was disposed of on 15 February 2013. A reconciliation of the like for like figures to the statutory accounts is included in the Financial Review.
  2. Bespak (£19.5m) and King (£2.0m) operating profit before special items performance measures are prepared on a basis that is consistent with the historical segmentation analysis. Operating profit before special items is reconciled in total to the Group statutory accounts on (£21.5m).