West Pharmaceutical at William Blair Conference: Strategic Growth Insights

On Thursday, 05 June 2025, West Pharmaceutical Services Inc (NYSE:WST) presented its strategic outlook at the 45th Annual William Blair Growth Stock Conference. CEO Eric Green emphasized the company’s robust position in the injectable medicine market while navigating challenges such as post-pandemic market normalization and tariff impacts. The company is poised for sustainable growth, driven by its focus on High Value Products (HVP) and expansion into biologics and biosimilars.

Key Takeaways

• West Pharmaceutical is a leader in the injectable medicine sector, producing over 41 billion components annually.
• High Value Products account for 60% of revenues, contributing significantly to gross profit growth.
• The company targets 7-9% organic growth and aims to improve operating margins by over 100 basis points annually.
• Tariffs present a $20-25 million headwind, which West is mitigating through strategic measures.
• New product offerings, including a prefilled syringe, are slated for launch in early 2026.

Financial Results

• Over 80% of West’s portfolio is proprietary, with the rest in contract manufacturing.
• Biologics and biosimilars support approximately 40% of the business.
• Delivery devices contribute 14% to revenue, while GLP-1s represent 7% of total sales.
• West has invested $1 billion in facilities over the past five years, with capital expenditure expected to stabilize at 6-8% of sales.

Operational Updates

• West operates 25 manufacturing plants globally, with HVP plant capacity utilization at 60%.
• A longstanding partnership with Daikyo in Japan strengthens its strategic alliances.
• New offerings include integrated systems like prefilled syringes, and expansion into drug handling within contract manufacturing.
• Cost reduction in SmartDose devices aims to improve margins, with potential adjustments to the product portfolio.

Future Outlook

• Growth is driven by biologics, Annex One compliance, and participation in the GLP-1 market.
• West is leveraging existing capacity to support these growth vectors.
• The company is prepared for potential impacts of oral alternatives on injectable GLP-1 demand.

Q&A Highlights

• West’s expertise in the diabetes space positions it well for the GLP-1 market.
• Proprietary assets are adaptable for various drug therapies, ensuring capacity protection.
• Integrated systems differ from drug delivery devices, focusing on elastomer-glass interaction.

For further details, please refer to the full conference call transcript.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Matt Larue, Analyst, William Blair: Okay. Thank you, everyone, for sticking with us here on Thursday and joining us for the WES management presentation. My name is Matt Larue. I cover WES and and life science tool space here at William Blair. Very pleased to have WES CEO, Eric Green, here with us today and John Sweeney from investor relations.

So thank you both for for being here. Two quick things. The breakout is in the Maher Room. You can join us there afterwards. And then I have to inform you that for a complete list of our disclosures or conflicts of interest, you can visit WilliamBlair.com.

So I’m very pleased to have West with us. Thanks for being here. Eric, I’ll I’ll turn it over to you.

Eric Green, CEO, West: Great. Alright. Thank you, Matt. And thank you for the invitation to the Blaire conference. It’s actually been a very productive day, and I’m looking forward to be able to talk to you a little bit about the WES story.

Before we get started, I just want to reference the safe harbor statement. It’s also available at our website at westpharma.com if you are interested to go through the entire document. Look, there’s five pillars I do wanna talk about about the investment thesis at West. And we’re gonna walk through that today, but I’m excited to share with you not just where we are, but actually where we’re going. The first one is really around the strong platform that’s driving sustainable growth for a number of years.

Let’s start talking about what we do at West. Our portfolio is pretty expansive around primary containment and also drug delivery devices. And we have a very strong leadership position in those areas. As you think about who we serve, it’s the global pharmaceutical market, whether it’s small biotechs out to the largest companies in the globe. And we do look at the opportunity on a global basis to be able to support our customers.

And why it matters is that we are enabling our customers to be able to deliver these most complex molecules into the market to the patients on regular basis with high quality for their injectable therapies. Let’s look at the numbers at West. One I wanna point out is that we do approximately over 41,000,000,000 components a year of manufacturing in our 25 manufacturing plants across the globe. And if you look at that 41,000,000,000 plus components that equates to, we believe over a hundred million patients a day are being touched by one way or the other of our products. Most of our portfolio is in our proprietary business over 80%, while the rest is in our contract manufacturing position.

And we’ve been building this business over one hundred years that we just bypassed last year. If you think about the diversity of the portfolio from a geographic point of view, we’re well balanced between North The Americas and also throughout Europe. We do have strong presence in Asia Pacific. I do wanna note one of our strategic partners over the last fifty years is Daikyo in Japan, who represents us very well in that particular market. We represent them outside of Japan.

And from a product segment perspective, which I’m going to go a little bit deeper into next, it’s quite diverse, but the largest portion of that portfolio is growing the fastest when you think about market trends and also the outlook of future requirements for our customers and the drug molecules they’re developing. And the last is when you think about the segment perspective, if you were following West 5, 7 Years ago, this was quite different at that point in time. Now roughly around 40% of our business is supporting biologics and biosimilars, again across the globe. Let’s go a little bit deeper dive around our portfolio. And if we think about the fastest growing markets, the biologics is being supported by our HVP components.

So HVP, High Value Products, is a combination of components and also delivery devices. Delivery devices is roughly around 14% of the entire company based on last year’s revenues. We’ve had a lot of discussion in the last four or five months, and I will go into greater detail later around a product called SmartDose. And that product is less than a quarter of that 14%. So it’s a technology that we’re advancing into the marketplace.

We have asked into the marketplace that’s still a small portion of high value products. But the fastest growing area, if you think about HVP, sixty percent of our revenues within the organization and over 75% of the growth profits that’s being driven by our high value product components. We have a very unique business model that’s been built over decades and it’s rare and it’s resilient as you think about the cycle we have with our customers. We are early on in the discussions with our customers as they develop new molecules in the marketplace. And we’re as you think about the journey they’re on to get it approved and into the market, we are part of their filing process as you think about enabling us to be part of their partnership with them with the drug molecule for a long duration of time.

You can see that several of the drug molecules in market have ten, twenty, thirty years of a drug life cycle that we participate. And as the regulations change and requirements change, we’re able to move with them through that journey with our high value product portfolio. There are other accelerators that do come into play when you think about the GLP-1s, the Annex one regulation that is now part of our algorithm. And as you think about the biologic space continue to be the fastest growing area with injectable medicines. But it is a sustainable, unique business model that gives us the ability to work to our customers from a platform perspective as they introduce new molecules into the marketplace.

This has resulted in over time, if you think about where we are today versus where we are five years ago, that more of our revenues are coming from our HVP components. And while that is continuing to grow, you’ve seen this natural mix shift from a margin perspective that enables us to grow operating margin on a normalized market conditions about 100 plus basis points per annum. And we believe this has a very attractive growth algorithm ahead of itself as more of these growth drivers are requiring our HVP components. Roughly just to articulate about 25% of our products are HVP from a unit perspective, while the revenues are significantly higher. This is the year of pivoting.

If you think about the growth that we’ve had at WES for a number of years, driving HVP components continue to be the preferred supplier of choice, whether it’s in large or small molecule launches. We were part of the equation around the COVID pandemic, but we’re also part of the equation of the destocking era after the COVID pandemic. We see twenty twenty five is a year of transition back to more normalized market conditions, which equates to the type of growth algorithm we expect here at West from an organic perspective. Let’s turn to the second pillar that I believe differentiates WES from an investment thesis is our leadership position in the fastest growing area of health care, which is injectable medicines. The macro trends are pretty clear.

When you think about on near term, there’s a lot of conversation around GLP-1s, which I’ll talk about a little bit in a moment. But you also think about the hospital to home opportunity about self administration of some unique complex molecules that require combination devices that we can is another macro trend that we see in the marketplace. As we think about shifting product needs from a regulatory perspective and also evolving external pressures, you see about the biologics growth, you see the more complex advanced therapies entering into the marketplace, and also the higher value needs of our portfolio from a macro perspective. So these trends all play in favor of where we are in our portfolio and where we’re going to drive growth into the future. I mean, I get asked many times because of your market position on the elastomer components, what’s your headwind?

Other not headwind, but headspace from a market perspective? We believe this market, the injectable medicine and delivery devices is roughly around $13,000,000,000 in size. It’s growing about mid single digits. And we’re a portion of that in that market. We have opportunity to grow with the market, but also grow above the market with several other programs that we have launched.

The third pillar I want to talk about is unmatched advantage ensuring strong growth moat around the business. And let’s talk about this. There’s really four areas, four advantages I want to talk about. The first one is long term reoccurring revenues. I touched on it briefly earlier, but we work early on with our customers to identify what is the right primary packaging configuration for their molecule they want to launch into the market.

Once that is commercialized, that tends to be a very long duration on that molecule for several decades. And we continue to partner with our customers on the most complex molecules that continue to get approved in the marketplace. We’re pretty proud about our position in biologics. Roughly around over 90% of the biologics that are approved, we’re participating with our customers across the globe. The second advantage is really a combination of multiple technologies that we are working with partners and brought into West to support us on product development and also in our manufacturing processes.

We have a fifty plus year partnership with Dykeel. As you think about the technologies that we have that we bring to them and the technologies they have, they bring to us, that has been an extremely healthy foundation that’s given us the ability to build out that portfolio, to be able to be more robust and to continue to be specked into about three fourths of all small and large molecules on a global basis. The third advantage is the regulatory stack, and it continues to get more complex, but we’re very well positioned to be able to support our customers as the regulations continue to change. Obviously, in 2023, components is now written into the European GMP regulations. And we’re able to respond with our customers to build support them on meeting those regulatory requirements as we move down the road with our customers.

It’s a deep understanding of the regulatory nature where we partner with our customers to enable them to be able to get approvals in the market and they’ll have sustainable long term growth on their drug molecules. The fourth advantage around our high value product components is really the infrastructure. And we’ve been building this out for a number of years, but we do have centers of excellence today in our five different locations. There’s a strong presence in North America, in Europe, and we do have a facility capabilities in Singapore. During the COVID time period, we had to ramp up and to build support the vaccines that were distributed throughout the globe.

We made investments into our high value product facilities, which now gives us a very good platform to continue to grow, which is unmatched when you look at a volume perspective for not just the whole portfolio, but particularly around our high value products. The fourth pillar I want to talk about is the growth vectors that is on us today. And I’m excited to kind of go a little bit deeper in all four. You think about biologics, Annex One, GLP-one, and also how do we leverage our capacity expansion at WES. The first is, as you know, you see this with the number of new approvals of biologics to the market continued is on the rise compared to small molecules.

That positions us well to provide our customers with the highest end of high value products. And again, as I mentioned earlier, we’re about 90 plus percent on molecules that are being approved. It allows us to continue to be that leader with our partners in the biologic space. The second growth driver is around Annex One. And we’re very uniquely positioned in this area.

And let me give you a little bit of context around here. So we talked about earlier about 41,000,000,000 components a year that we manufacture. If you take contract manufacturing out the proprietary business is roughly around 35,000,000,000 components. High value products is roughly 25 of that. So the core, the standard products that we have historically at WES for over decades, you’re looking at approximately $2,526,000,000,000 dollars components.

That’s the overall opportunity. The reason why we’ve framed it around 6,000,000,000 components because we looked at which molecules are in market that are reaching into the European Union. We looked at which customers tend to take more leading advantage on making sure their portfolio is meeting, able to go into all markets across the globe. We believe this is a long term journey. This is not going to be a short term one or two year impact to the business, but gradually increase over time.

Why is it differentiated? It’s because these products already commercialized in the marketplace. And what we’re partnering with our customers on, they’re looking at us to make that decision. Do they invest the capital to do pharmaceutical washing? Could be envision, could be sterilization, could be leveraging various big technologies, or do they give it to have outsource to West, which is part of our HVP continuum.

So we’re able to take existing formulas that are on existing molecules in the marketplace, commercialize and be able to go on that journey to be able to provide the products that meet the Annex One regulations. It doesn’t happen overnight. From the time we start a project to the time we actually can commercialize with our customer is approximately eighteen months. Every customer is different. The size is going to be different.

The volumes are going be different. But more importantly, we’re able to partner with our customers to minimize the regulatory filings requirements that they will have to take by leveraging what’s in the market already with our formulation and to be able to help them get to a standard that they feel extremely comfortable with the documentation as they go forward. This obviously, from our perspective, allows us to move from a standard product to more high value products, which is advantageous from an ASP and also from a margin perspective. The third lever is around GLP-one, the opportunity. Let me break it down in two areas.

We participate in both parts of our business. In contract manufacturing, we’re one of many contract manufacturers that are given the IP, the technology to do mass manufacturing of auto injectors or pens to build support the GLP-one market. Our primary locations that we manufacture are Grand Rapids, Michigan and also in Dublin, Ireland. What we’re able to and that’s roughly around 40% of our contract manufacturing business, we’ll say in 2025 will be around GLP-one. We do believe we’ll be in that corridor as we move forward.

But what’s important about this is this is also given an opportunity. Our customers asking us to do the drug handling for them. This is not fill finished to be very clear. What this is, is taking the final fill finished cartridge or syringe and bring it into the pen or the auto injector of their choice and then do serialization and then out into the marketplace. But if you think about the bigger opportunity for GLP-1s, it really is around our elastomer business.

We’re participating on the GLP-1s that are in the marketplace today. And also there’s several that are being in development phase. This is roughly around 7% of our total sales, and it’s leveraging assets that we are had in place. So you think about a GLP-one primarily, yes, a lot of them are are in devices. There are a few that are in vial configuration, But these are using our HVP products and then are finishing processes in HVP that we have put installed for the COVID vaccines that are fungible or usable for other types of SKUs and customers and drug molecules that are going into the market.

So we’re very well positioned to be able to support the ramp up on GLP-one’s elastomers business by leveraging existing assets that are in our HVP plants across the globe. So as this continues to grow, we do take in consideration what potentially could impact BiOroil. We take a look at how we set up the contracts with our customers. So we’re both protecting ourselves on these investments. But more importantly, in the elastomer piece of the business, again, all these assets are being leveraged for all HVP clients, whether it’s NGLP ones or other drug categories.

The fourth driver, as we talked about, over the last five years, we’ve invested about $1,000,000,000 of capital into our facilities. And these facilities tend be really around our proprietary business while we have some business investments that are going into our contract manufacturing. Our focus has been 60% to 70 of our capital is around growth. And this has positioned us very well as we think about these growth drivers that I spoke about earlier to be able to respond and support our customers on that growth. Today, the capacity utilization of HVP plants because of these investments we make are roughly around 60 ish type of percent depending on the location, depending on the process.

But we’re very well positioned for future growth with our capacity. And we believe that we are able to drive our CapEx back to the reasonable level of 6% to 8% of our sales in the near future to support that growth algorithm of our long term financial construct of 7% to 9%. The fifth pillar I want to touch on is around the durability of the business. And in short term, our focus is to continue to drive value to our customers. There’s opportunities for us to get stronger, to respond more efficiently and effectively for our customer base.

And we’re focused to deliver on that, particularly around the components, HVP components growth of our business. And we talked about the growth drivers. We are able to leverage our global operations. And one of the benefits that we have is over the years, we have built the manufacturing capabilities in regions. So you think about the tariff challenges they’ll speak on in a moment, but aligning our operations in region allows us to be less impacted by tariffs or cross border movement of goods.

Looking at new offerings, I’m excited about the opportunity of integrated systems that we’re developing and launching in the first part of twenty twenty six. And when I say integrated systems, this is the first step really is a fully characterized prefilled syringe, one drug master file to build support our customers in new future drug launches. And that’s showing early and strong traction with our customer base. We’re also moving into drug handling with our drug contract manufacturing business, which is two times the margin for us. And it gives us a more attractive business proposition with less capital intensity.

So we’re excited about that opportunity as we advance these new offerings into the West portfolio. It is about driving performance. The last two years has been a challenge when you think about going through the destocking period of time. It’s also driving performance on the operations side, where we are really focused on how do we take that one device within drug delivery devices and improve margins. And that is focused on a cost down journey that we’re on and we’ll continue to drive so we can continue to have healthy growth in that part of the portfolio.

Talk a little bit about tariffs. So in the Q1 call, framed this as the gross headwind for us for the balance of the year is about 20 to $25,000,000. Since that call, there’s been some changes, and I suspect there’ll be more changes. But this this is the amount and the reason why it is at the 20,000,000 to $25,000,000 Again, it goes back to we’re able to support our customers with the same product in region where they want to have the final product distributed into the marketplace. We also have taken actions to mitigate the impact, the headwinds of this 20,000,000 to $25,000,000 So there are certain opportunities that we have around pricing.

We have opportunities around work with our customers to tech transfer for one part of the geography to the next to be better aligned to their end needs to the end market needs. And then we’ll continue to look at local sourcing supply. We’re pretty confident that we’re going to be able to continue to mitigate these headwinds. But until there’s certainty of what the tariffs will end and be at going forward, we’ll continue to update the investment community on our quarterly calls. And there are a lot so all these factors, when you think about the market trends, our position and our opportunities of growth, we do see our long term financial construct as a 79% organic growth driving through a mix shift effect over 100 basis points of operating margin for a number of years to come.

Now, if you think about what we’ve done prior to COVID, that was the pattern of performance that West has delivered. And we believe strongly based on our market position that we could continue with that going forward. So to summarize, excited about the future for WEST. We’re very well positioned with a phenomenal platform that gives us the strength and the ability to work with our customers on a global basis. We are the market leader, particularly around the elastomers and the components.

And it’s also in a very fast growing area of healthcare, which is injectable medicines. The motor on the business is very strong, robust, and it continues to get stronger as we launch new innovative differentiated products. And as the regulatory landscape changes, we’re able to respond and support our customers through those modifications. The growth vectors we talked about, they’re on us today. Some are more near term, some are more long term, But all those growth vectors we talked about all support the high value product components growth that we expect to get back to that double digit area that we have historically have delivered with those products.

And the durability of this business gives me the excitement that not only the last number of years that we’ve had this success, but the number of years ahead, we’ll be able to support our customers, grow this business and continue to have a meaningful impact on patient health through the support of our customers. So thank you very much. I appreciate your time. And I know that we’ll be going to a Q and A session.

Matt Larue, Analyst, William Blair: That’s right. The breakout is upstairs, so we have time for one or two questions here. So maybe I’ll kick it off, Eric. So you obviously outlined a path of durable growth, and that was a theme that you repeated. And that’s across many different drug categories, capabilities.

But certainly, GLPs is a big piece of that, and you do that in two different areas. West has been in the diabetes space for, of course, decades, going back to three ml cartridges and supporting other products prior to the the weight loss GLPs. Could you just talk about not what maybe GLPs are today, but what West’s history is in the space, how it’s grown through over time? And then I think, you know, you have a window into from speaking with customers, how they’re thinking about orals, the introduction of orals, how you’re aligning capital projects with future capacity. Of course, it’s fungible to other areas, but expected to be big in GOP.

So maybe just help us understand West’s history with GOPs, where you are today, and and how important that that one category is in the future.

Eric Green, CEO, West: Yeah. So it’s a good point. Actually, West was developed, kind of grew through work with our customers around insulin for a number of decades. And there’s many different types of products that we’ve provided over the years to support our customers. So it was a natural progression.

Obviously other types of drug molecules our customers have developed over the years, we’ve been supporting them on those also. So it’s not just in diabetes and or obesity as we go forward. But it’s a continuation of the spectrum of how we’ve been supporting our customers. And as they were developing and launching the GLP-1s, we were a natural partner of theirs to make sure that they had the right packaging configuration, whether it’s in the last mile side, but now obviously in the contract manufacturing side, we’re able to support them in that area. But we take a look at it two different ways because of potentially how does orals play into the equation.

As we think about our investment thesis, we’ve always taken into consideration that there will be a portion that will be potentially oral. And we’ll see how that evolves over time, but it’s not quite 100% clear today. But we have taken that in consideration. As you said earlier, it’s true that in the proprietary side, a lot of the assets we’re leveraging to build support our customers on the injectables is also being leveraged for other customers, other types of drug therapies and other types of SKUs. So we’re very comfortable there that the investments we’ve made already will be able to support them on their growth on the elastomer side.

When we turn over to the contract manufacturing, we’re very selective on what type of arrangement we want to embark on and how much we want to go bid for that business. Because like I said, we’re one of five or one of six that are supporting them on those type of devices. We do have different contractual arrangements in that area also. So very long term and making sure that installed capacity is protected from an investment point of view for us, but also for our customer as they embed some of their technologies into that site. So I feel that we’re in a much better place today than we would have been a long time ago.

We’ve learned a lot through COVID on how to make sure that we structure those arrangements so that either of those level of uncertainty about the ratio, we can support them in both areas.

Matt Larue, Analyst, William Blair: Okay. And then I think many people associate WES with, of course, your dominant position in components, right? And that’s the bulk of the volume. But in the last several years, in particular, devices has become a bigger part of the story. And of course, the focus is on smart disk, but you have a portfolio of devices.

You referenced a few slides ago integrated systems being an interesting opportunity going forward. Maybe talk a little bit about how important devices has become, how important it will be. And sort of in light of, what we’ve seen in SmartDose, is it still a margin accretive category for West that, you feel as confident operating in as as the component side?

Eric Green, CEO, West: Yeah. So let me break it down in two ways. First of all, integrated systems, that’s different than drug delivery devices. That’s our core. We know how the elastomer and the glass interact.

They build support with our customers, particularly around prefilled syringes and cartridges. So that’s the confidence that we built over years. We’ve been supporting them on the analytical testing for quite a long time. And now this is a national transition into bill provide the complete solution. On the drug delivery devices, the 14% of our business, it’s really call it four district areas that we operate in.

One is administration systems. These are like vial transfer to a bag and so forth of convenience in a hospital or clinical setting. You also have our CZ prefilled syringe insert needle in that category. You also have a product called SelfDose, which is an auto injector. All those areas profitability is actually very attractive.

And we’ve done a very good job to make sure that we were able to not just handle the growth, but also the profitability aspect. The SmartDose is an area where we went through a scale that it’s a two pronged approach right now. Number one is that the team is focused on driving cost out. So it’s a highly manual process that we’re transitioning to automated. That’ll give us some opportunity by the end of the year to start leveraging margin.

The second area is looking at other options around portfolio fit. So we won’t go into great detail on that, but that is the second option. So we know that the device is having a very positive impact on patients, excellent patient experience and outcome. We know we’re early on in technology in respect of a combination device in the marketplace. So wearable, there’s not many of them.

And we’re able to show success outside of the economic perspective. And it is the least profitable part of that drug delivery device portfolio, which we’re focused to fix.

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