Chinese company unveils product for medical packaging

Even though the company labels the product “a new generation of medical sealing TPE,” it in essence is a thermoplastic butyl rubber, or TPIIR. 

The high-performance compound is being evaluated by West Pharmaceutical Services Inc., said Derek Zhang, Shandong Dawn's import and export director. The material received U.S. Pharmacopeial Convention Class VI certification in February. It also obtained a certification of Drug Master File Type III from the U.S. Food and Drug Administration last year.

“Once it passes West's testing and becomes accepted by the market, we expect to see explosive growth,” Zhang said.

The material is patent pending, added Tian Hongchi, the company's chief engineer and deputy general manager.

Dawn started research and development of the TPIIR in 2006, and it reached trial production in 2012. But the official commercialization took place at the end of last year with 10,000 metric tons of annual capacity.

Dawn received $4.5 million of government funding for the project.

“It's best fit to make medical gaskets, stopper and caps for pharmaceutical packaging and IV delivery systems,” Tian said. 

It has excellent water and air barrier properties and seals perfectly after needles are inserted and pulled out, the company said.

Tian said existing pharmaceutical packaging uses thermoplastic elastomers for the soft part of the cap that needles can penetrate but because TPEs can absorb drug content, there needs to be an extra layer of polypropylene film to seal off the contents.

Compared to traditional vulcanized rubber stoppers, Tian said, the new material is made on an injection molding machine and can increase productivity tenfold. “It can reduce energy consumption by 75 percent, doesn't yield scrap and can be done in a much smaller clean room.”

It also can be co-injected with poly-propylene to make what Tian calls a combination cap.

He said Dawn is supplying the new material to Chinese customers Anhui Huafeng Pharmaceutical Rubber Co. Ltd. and Hunan Novol Medicine Packing Material Scientific & Technological Co. Ltd.

Another new product Dawn is launching is hydrogenated nitrile butadiene rubber, intended for aerospace and drilling applications. Tian said the company will launch 2,000 tons of capacity this year.

That would make Dawn the third company in the world to make this material. The other two players are Lanxess A.G. and Zeon Corp. “It's a specialty product, charging a premium of about $35 per pound.” Tian said, “There's only a total of 22,000 tons of capacity in the world.”

Outside of the push for new products, Dawn is focused primarily on TPEs, primarily thermoplastic vulcanizates. The automotive market represents more than 80 percent of its sales.

Its Phase 3 expansion is well underway. “Construction of factory buildings has been completed with designed capacity of 60,000 tons,” Zhang said. Once commissioned, it would push the company's total capacity to 150,000 tons.

In the meantime, Dawn is planning to go public by the end of the year on the Shenzhen Stock Exchange. The company had attempted an IPO in 2012, but it fell through. The China Securities Regulatory Commission did not disclose specific reasons. Apparently Dawn is taking a second shot this year with much confidence.

Early filings show that Dawn reported sales of $80.5 million in 2013 and $46.2 million in the first half of 2014. Operating profit reached $8.3 million in 2013 and $4.2 million in the first half of 2014.

Dawn's success in the U.S. market is limited.

“(The) U.S. only represents 1 percent of our export,” Zhang said. “We are going to change our old thinking habits and try new things.”

The company exhibited at a spacious 4,000-sq.-ft. booth at NPE, a step up from a small booth in the Chinese pavilion in previous years.

Zhang also alluded to options outside of organic growth in the U.S. but declined to go into details. “We are going public so we can't reveal too much,” he said.

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