Stevanato Group: Glass vs Plastic Drug Containers

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Switching is expensive. But from the perspective of the customers, the pharmaceutical companies, are they satisfied with their supplier base? Do they feel like they have limited options and wish there was another player who could offer better pricing and more choices?

Generally, we tend to be dissatisfied with our suppliers. For instance, Amgen began to transition away from glass because we were not pleased with Becton Dickinson (BD). We had issues with their investigations among other things. This dissatisfaction seems to be the norm now. However, other companies find it challenging to make such changes due to the cost, time, and regulatory expectations involved. If a process change is required to accommodate a new raw material, it becomes an even larger hurdle as it may necessitate bioequivalency studies.

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From the perspective of a public shareholder or minority shareholders, do you think it's a positive thing that this Italian family still effectively controls the business? Or is it something to be cautious about as an outsider?

When you're building a glass plant, the line you build to make vials is not the same as the one you build to make syringes. Cartridges and vials are more similar, although they also have aspects of syringes. They are like a hybrid piece of equipment because they have openings on both sides, unlike a vial, which is only open on one side. So, if I have excess capacity in syringes, I can't just change parts or the machine and start making more vials.

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From the perspective of a public shareholder or minority shareholders, do you think it's a positive thing that this Italian family still effectively controls the business? Or is it something to be cautious about as an outsider?

Similarly, if I am producing a lot of vials and have recently purchased equipment to make more vials for the pharmaceutical industry due to the vaccines, I can't easily convert those into syringes. They require different equipment and different lines. On the positive side, Stevanato manufactures the glass forming equipment and sells it to companies, including Corning and some of their competitors, which I find surprising. However, they also have to buy cane from these companies, so there's a need for cooperation. It would be quite easy for Corning, for example, to decide to keep everything during a shortage.

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