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What The Future Holds For West Pharmaceutical Services Inc. (NYSE:WST)?

West Pharmaceutical Services Inc. (NYSE:WST) is a company operating in the field of manufacturing components that are used in the healthcare and pharmaceutical fields. It manufactures products like syringes, blood collection devices, vials, and intravenous. It provides contract laboratory services for evaluating and testing components. It offers its products across the world. The company generates 54% of its total revenue from outside the U.S., with a major contribution coming from Europe. The company states that it is one of the main suppliers in the U.S. industry and has noteworthy market share in Europe against its peers.

The operations

West Pharmaceutical operates into two main divisions, Delivery systems and Packaging systems. The division of Packaging Systems is the prime source of profitability. It accounts for 71% of revenue and almost 94% of operating profit. The division offers elastomeric products which are improved with various coatings and films to improve performance, mitigate contamination risk, and enhance the shelf life of drugs packed within.

The second segment

The second segment of Delivery Systems provides contract-based assembly and manufacturing, using many processes like multi-component molding and ultrasonic welding to produce devices utilized in several settings from at-home to in-surgery. West Pharmaceutical’s both divisions are growing but the Delivery Systems has been a major contributor of growth as the company makes attempt to diversify its product lines.

The other details

The sales within the healthcare segment are usually quite robust. In many cases when a business relationship is formed, there is considerable work to be performance by customers to shift to another product, resulting in higher retention rates. The companies that offer technological advances on simple items can achieve high margins as drug-makers and hospitals pay the extra cost to control risk. These groups are not concerned with higher infection rates; equipment malfunctions or drugs failures within their operations that can considerably increase cost.

In last trading session, West Pharmaceutical Services Inc. (NYSE:WST) share price declined 0.37% to close at $56.68.

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