Rubber stoppers

Rubber Stoppers Global Market Outlook:

MARKET OVERVIEW

Global Demand: $970 million (2023 E)

Global Demand CAGR: 3.5–4 percent (2023-2027)

• The global market for rubber stoppers is expected to grow by about 4–5 percent CAGR over 2023-2027, driven by impact of COVID-19 and increasing presence of lifestyle and chronic diseases that require parenteral drugs

• Energy crisis in the European and Asian countries have led to increased manufacturing costs, but pricing pressure is expected to reduce over the next 12 months

• North America has emerged as the largest market, owing to increased drug and vaccine manufacturing for COVID-19. Similarly, demand from APAC has increased significantly, as the region is the largest vaccine manufacturer

Porter's Analysis on Rubber Stoppers : Developed Regions

Rubber stoppers are fairly standard product, but the consolidated nature of the supply base and the high switching costs result in low rivalry among suppliers and low bargaining power to the buyers.

Supplier Power

• Suppliers are mostly large chemical firms, who produce multiple products and cater to a wide range of industries

• Their largest buyers are automobile and construction firms, and as a result, rubber stopper manufacturers do not have much power in the value chain

• Butyl rubber is commoditized, which slightly moderates the power

Barriers to New Entrants

• Regulatory approval, clean room requirements, and sterile packaging require high initial investment

• There is also additional investment, in terms of R&D requirement to develop custom barriers

• The industry is also oversupplied leading to significant difficulty in gaining market share

Intensity of Rivalry

• Owing to consolidated nature of the supply base and high supplier switching cost, there is low competition among suppliers, as buyers do not change suppliers often

Threat of Substitutes

• Currently, there is no pertinent substitute, which will adhere to the elasticity, inertness, permeability of rubber

• Even though corks and glass/plastic closures can act as substitutes for rubber stoppers, to replace the physical qualities of rubber, will take a fair bit of innovation, which is currently not there in the industry

Buyer Power

• Buyers of rubber stoppers have high negotiation power, due to the standard nature of the product

• The consolidated nature of the industry and high supplier switching cost moderate the power

Cost Outlook and Forecast of Rubber Stoppers

Cost Drivers

Raw Material Cost

• Butyl rubber prices have stabilized in 2021-22, after falling in 2020. The prices are expected to fluctuate within ±2 percent over the next two years, with no significant change

Indirect Cost

• Indirect cost includes packaging, logistics, administrative, and other general expenses and contribute to about 6 percent of the overall cost

• There are stable components of manufacturing and are well regulated

Utility Cost

• Utility expenses have increased significantly in the last 12 months, especially in Europe and Asia, owing to ongoing energy crisis in the regions

• Prices have stabilized and are expected to remain at the current levels for the next two quarters

Labor Cost

• Labor costs are fairly regulated and mostly remain stable. However, the ongoing pandemic is expected to result in increasing skilled labor costs over the next two years

• Employees will expect higher benefits and higher pay to work, especially in the markets, such as the US, India, and China, where there is a significant impact