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.
- 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.
- 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).