Rise in price of plastics, oil drives up cost of non-prescription drug packaging

Key commodity costs involved in the manufacturing of over-the-counter non-prescription medication have risen sharply over the last few years, Procurement Leaders reports.

Specifically, the cost of the plastic materials that go into making blister packs, plastic bottles and other drug packaging have risen by "double digits" over the past two and a half years, according to the consulting and research firm Kline & Company.

Data from the group's recently published report, "OTC Drugs: U.S. Competitor Cost Structures 2010," indicates that the rise in the price of oil and other raw materials that go into packaging components is driving up production and distribution costs by a significant amount.

"The decreased availability of resins has caused costs of packaging materials to increase by 10 to 15 percent since 2007. There is little room for improvement in cost structures of most branded companies, apart from international sourcing of raw materials from countries including China and India," the study revealed.

Plastics aren't the only thing driving up the cost of OTC drugs, however. The report notes that "[a]dvertising and marketing expenses continue to represent the largest cost components," although many drug companies cut their advertising budgets in the wake of the economic crisis.