The following discussion should be read in conjunction with the Management's Discussion and Analysis and consolidated financial statements and accompanying notes included in our annual report on Form 10-K for the fiscal year ended December 31, 2008.

COMPANY OVERVIEW

West Pharmaceutical Services, Inc. (which may be referred to as West, the Company, we, us or our) is a manufacturer of components and systems for injectable drug delivery and plastic packaging and delivery system components for the healthcare and consumer products industries. The vast majority of our business is conducted in healthcare markets. Our mission is to develop and apply proprietary technologies that improve the safety and effectiveness of therapeutic and diagnostic healthcare delivery systems. Our business is conducted through two reporting segments - "Pharmaceutical Systems" and "Tech Group." Pharmaceutical Systems focuses on primary packaging and systems for injectable drug delivery, including stoppers and seals for vials, closures and other components used in syringe, intravenous and blood collection systems, prefillable syringe components, and safety and administration systems. The Tech Group offers custom contract-manufacturing solutions using plastic injection molding and manual and automated assembly processes targeted to the healthcare and consumer products industries. Our customer base includes the leading global producers and distributors of pharmaceuticals, biologics, medical devices and personal care products.

As a result of our global manufacturing and distribution presence, more than half of our sales are generated outside of the U.S. in currencies other than the U.S. dollar. For consolidated financial reporting purposes, transactions and balances reported in foreign currencies must be translated into U.S. dollars based upon applicable foreign currency exchange rates. Fluctuations in foreign currency exchange rates, therefore, can have a significant effect on our consolidated financial results. In general, our financial results are affected positively by a weaker U.S. dollar and negatively by a stronger U.S. dollar as compared to the foreign currencies in which we conduct our business. In terms of net sales and operating profit, the most significant foreign currencies are the Euro, the British Pound, the Danish Krone and the Singapore Dollar, with Euro-denominated sales representing the majority of sales transacted in foreign currencies. Management expects that the U.S. dollar for the majority of 2009 will be relatively stronger than in 2008 which will have an overall negative effect upon our full-year financial results.

Executive Overview

During the three and six months ended June 30, 2009, we reported revenues of $261.0 million, down 6.6%, and $503.4 million, down 8.5%, respectively, from the same periods a year ago. Excluding the effects of currency, second quarter and first half 2009 revenues increased 0.7% and decreased 1.1%, respectively, compared with the prior year. In addition to unfavorable foreign currency impacts, both 2009 periods reflected the impact of customer inventory reduction and cost-cutting programs due to the current economic uncertainty, the impact of regulatory-related constraints imposed on certain customers' products and overall reduced consumer products spending. Sales of certain key products for the second quarter including advanced pharmaceutical packaging components and safety and administration systems were slightly ahead of the prior year quarter, lead by West Spectra™ seals and our Mixject™ powdered-drug reconstitution product. In spite of weak economic times, progress continues with our efforts to convert customers to our enhanced product offerings, including advanced coated and/or washed components, that generally lower customers' total cost while increasing quality.

Second quarter 2009 net income per diluted share was $0.57, which included previously announced Tech Group restructuring and related charges of $0.01 per diluted share. Same quarter 2008 net income per diluted share was $0.82, including a net benefit of $0.09 per diluted share relating to a gain on contract settlement proceeds ($0.11) partially offset by restructuring and related charges ($0.02). Net income per diluted share for the first half of 2009 was $1.03, which included a net benefit of $0.03 per diluted share resulting from discrete income tax benefits ($0.05) partially offset by restructuring and related charges ($0.02). First half 2008 net income per diluted share was $1.58 including a net benefit of $0.13 per diluted share from the gain on contract settlement proceeds ($0.14), discrete income tax benefits ($0.03) and restructuring and related charges ($0.04). Excluding the impact of these discrete items, 2009 net income per diluted share was below the prior year amount due to higher pension and other selling, general and administrative costs, unfavorable effects from foreign currency translation and a reduction in gross profit on lower sales and unfavorable mix and reduced product throughput for the year-to-date period ended June 30, 2009.

Recent Trends and Developments

Pharmaceutical Systems

Although we have been negatively affected by the current economic downturn as evidenced by our customers' deferral of new development programs and their inventory reduction programs, demand within Pharmaceutical Systems remained relatively strong resulting in increased revenue, excluding currency effects, for the three months ended June 30, 2009 as compared to the prior year quarter. However, our long-term visibility into customer demand remains relatively low as our customers continue to be conservative in their ordering patterns. Looking ahead, orders on-hand as of the end of June 2009 are stronger on a constant-currency basis compared to the same point a year ago. Orders relating to H1N1 influenza virus, or "swine flu", preparedness are contributing, and we anticipate that additional H1N1-related orders will be received during the second half of the year, although it is too early to determine how many of these orders will be produced and sold in 2009. We remain cautiously optimistic that recent improvement in backlog trends may indicate that customer stock reduction programs have begun to wane, and demand has strengthened in support of current inventory levels. If these trends continue, we expect full-year 2009 sales, excluding the impact from foreign exchange, will exceed those achieved in the prior year.

Tech Group

Despite year-to-date sales shortfalls compared to the prior year, we have been able to generate higher gross margins partly due to higher volumes and improved sales mix from our European operations. Our Tech Group revenues will continue to be adversely affected by weakness in consumer products demand and our customers' delays in new product launches caused by economic conditions, as well as lower plastic resin prices which are passed-through to customers. Our ability to maintain profit improvement for the remainder of the year may be impacted by lower consumer products volumes in the U.S. and the resulting impact on production efficiency and, therefore, segment operating profits.

RESULTS OF OPERATONS

For the purpose of aiding the comparison of our quarterly and year-to-year results, we refer in management's discussion and analysis to results excluding the effects of changes in foreign exchange rates. Those re-measured results are not in conformity with U.S. generally accepted accounting principles ("GAAP") and are considered "non-GAAP financial measures." The non-GAAP financial measures are intended to explain or aid in the use of, not as a substitute for, the related GAAP financial measures.

Percentages in the following tables and throughout this Results of Operations section may reflect rounding adjustments.

NET SALES

The following table presents net sales by reportable segment:

                           Three Months Ended          Six Months Ended
Net sales:                      June 30,                   June 30,
($ in millions)             2009          2008         2009         2008
Pharmaceutical Systems   $    197.8      $ 212.6     $   381.1     $ 420.1
Tech Group                     66.8         69.6         129.1       136.0
Intersegment sales             (3.6 )       (2.9 )        (6.8 )      (6.1 )
Total net sales          $    261.0      $ 279.3     $   503.4     $ 550.0

Consolidated second quarter 2009 net sales decreased by $18.3 million, or 6.6%, compared to those achieved in the prior-year second quarter. Excluding unfavorable foreign currency effects of $20.2 million, or 7.3 percentage points, second quarter 2009 net sales increased $1.9 million, or 0.7%, as compared to the prior year quarter. The higher constant-currency sales were the result of sales price increases that contributed 2.1 percentage points of growth, partially offset by unfavorable sales volumes and mix of 1.4 percentage points.

Net sales for the six months ended June 30, 2009 decreased by $46.6 million, or 8.5%, compared to the first six months of 2008 including an unfavorable foreign exchange impact of $40.5 million, or 7.4 percentage points. Excluding foreign currency translation effects, consolidated 2009 year-to-date net sales decreased $6.1 million, or 1.1%, from the prior year. Unfavorable sales volumes and mix contributed 2.9 percentage points to the decline, which was partially offset by selling price increases of 1.8 percentage points resulting from annual price increases. The healthcare, pharmaceutical and consumer products markets remained relatively soft as the overall weakness from the latter half of 2008 has continued, contributing to the unfavorable sales volume.

Pharmaceutical Systems

Pharmaceutical Systems sales for the second quarter were $14.8 million, or 7.0%, lower than in the corresponding prior year quarter. Excluding the unfavorable foreign exchange impact of $18.2 million, sales increased by $3.4 million, or 1.6%. This increase was the result of higher demand for pharmaceutical packaging products, primarily rubber components used in prefilled injection packaging and lining materials used for insulin applications.

This segment's sales for the six month period ended June 30, 2009 were $39.0 million, or 9.3%, lower than in the corresponding prior year period, including $36.7 million resulting from unfavorable foreign currency translation effects. Excluding the unfavorable foreign exchange impact, sales declined by $2.3 million, or 0.6%, which was primarily the result of customer stock reduction of disposable medical components including those used in non-filled syringes. Increased sales of pharmaceutical packaging components and safety and administration systems in the period were substantially offset by lower sales of laboratory and other services.

Tech Group

Second quarter 2009 sales were $2.8 million below 2008 levels, including $2.0 million of unfavorable foreign currency translation. Excluding the effect of foreign currency changes, sales were $0.8 million, or 1.1%, below prior year levels resulting from lower sales of consumer products partially offset by increases in sales of healthcare devices. Consumer products sales declined by $4.8 million compared to the prior year quarter due to our decision to exit a specific customer's consumer products business in Mexico and due to reduced plastic resin costs, which are contractually passed through to many Tech Group customers in the form of adjusted selling prices. Healthcare device sales improved $5.2 million due to increased demand for intra-nasal medical devices manufactured in Europe and disposable healthcare products sales in the U.S., and tooling and other revenue declined $1.2 million compared to the prior-year quarter.

Tech Group year-to-date net sales were $6.9 million below prior-year levels, including unfavorable foreign currency translation effects of $3.8 million. Excluding the effect of foreign currency translation, 2009 year-to-date sales were $3.1 million, or 2.2%, unfavorable to the prior year. This reduction was the result of lower consumer products sales, the majority of which related to decreased selling prices, partially offset by increased sales of healthcare devices in the European and U.S. markets, consistent with the second quarter explanation.

The majority of intersegment sales in all periods presented represent sales of healthcare devices from the Tech Group to Pharmaceutical Systems, which were eliminated in consolidation.

GROSS PROFIT

The following table presents our gross profit and related gross margins by
reportable segment:

                              Three Months Ended          Six Months Ended
Gross profit:                      June 30,                   June 30,
($ in millions)               2009           2008         2009         2008
Pharmaceutical Systems
Gross Profit                $    66.9       $  73.2     $   126.7     $ 148.1
Gross Margin                     33.8 %        34.4 %        33.2 %      35.3 %

Tech Group
Gross Profit                $    11.8       $  10.4     $    21.3     $  19.0
Gross Margin                     17.7 %        14.9 %        16.5 %      13.9 %

Consolidated Gross Profit   $    78.7       $  83.6     $   148.0     $ 167.1
Consolidated Gross Margin        30.2 %        29.9 %        29.4 %      30.4 %

Second quarter 2009 consolidated gross profit decreased $4.9 million over the same quarter in 2008. Excluding an unfavorable foreign exchange impact of $6.1 million, gross profit increased by $1.2 million as a result of higher gross margins from the Tech Group. For the six-month period ended June 30, 2009, consolidated gross profit was $19.1 million below that reported in the same period of 2008, including a decline of $11.1 million caused by foreign currency translation. Excluding the foreign exchange impact, gross profit for the first half of the year decreased by $8.0 million due to the lower contribution from Pharmaceutical Systems as described below.

Pharmaceutical Systems

The gross margin percentage for Pharmaceutical Systems declined by 0.6 percentage points and 2.1 percentage points, respectively, for the second quarter and first half of 2009 versus the prior year periods. The majority of the decline was attributable to higher production costs including raw materials, utilities, wage increases, depreciation and lower capacity utilization due to reduced volumes, partially offset by selling price increases and product mix. As the majority of our materials and utilities cost increases were experienced in the latter part of 2008 and have only recently declined, our first half 2009 costs are unfavorable to those experienced in the same period of 2008. In addition, several of our raw material supply contracts include lagging energy cost surcharges, which results in delaying the benefit in periods of declining costs.

Tech Group

Gross margin for the Tech Group improved 2.8 percentage points and 2.6 percentage points, respectively, for the second quarter and first half of 2009 compared to the prior year results. The gross margin performance was largely due to favorable sales volume and mix and improved operating efficiency in our European operations, as we recently increased production capacity to meet higher demand for several higher value medical devices. In addition, we benefited from lower raw material prices on sales of medical devices in both Europe and the U.S. The gains experienced during the first quarter in reduced U.S. plant overhead resulting from our restructuring efforts and improving production efficiencies were largely offset in the second quarter as a result of lower production volumes caused by declining demand for consumer products.

RESEARCH AND DEVELOPMENT ("R&D") COSTS

The following table presents R&D costs by reportable segment:

                            Three Months Ended           Six Months Ended
                                 June 30,                    June 30,
($ in millions)            2009            2008          2009          2008
Pharmaceutical Systems   $     4.4       $     4.5     $    8.3       $  9.4
Tech Group                     0.3             0.4          0.6          0.9
Total R&D expense        $     4.7       $     4.9     $    8.9       $ 10.3

Total R&D costs during the first half of 2009 were $1.4 million lower than those incurred in the prior year, with the majority of this variance occurring in the first quarter of 2009. R&D expenses have declined as several Pharmaceutical Systems development projects have transitioned into early stages of commercial production and, therefore, the focus has shifted from R&D to expanding production capabilities and related activities.

We expect consolidated R&D costs for the full year 2009 to reach approximately $21.0 million, and a major focus of our innovation team will continue to be the development of our proprietary Crystal Zenith® prefillable syringe systems, advanced injection systems using auto-injector technology, passive needle safety devices and various other applications that help customers mitigate drug product development risks, enhance drug efficacy and improve drug delivery safety for patients and caregivers.

SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") COSTS

The following table presents SG&A costs by reportable segment including
corporate and unallocated costs:

                                                    Three Months Ended              Six Months Ended
                                                         June 30,                       June 30,
($ in millions)                                    2009             2008           2009           2008
Pharmaceutical Systems                          $     28.5       $     28.8     $     57.0      $    54.9
SG&A as a % of segment net sales                      14.4 %           13.5 %         14.9 %         13.1 %

Tech Group                                      $      5.4       $      4.7     $      9.7      $     9.2
SG&A as a % of segment net sales                       8.1 %            6.8 %          7.6 %          6.7 %

Corporate costs:
General corporate costs                                4.8              4.3            9.4            9.9
Stock-based compensation expense                       2.3              1.6            3.7            4.0
U.S. pension and other retirement benefits             4.1              1.5            8.2            3.0
Total Selling, General & Administrative costs   $     45.1       $     40.9     $     88.0      $    81.0
Total SG&A as a % of total net sales                  17.3 %           14.6 %         17.5 %         14.7 %

Second quarter and first half 2009 consolidated SG&A expenses were $4.2 million and $7.0 million, respectively, above those recorded in the same periods in 2008. Excluding favorable effects from foreign currency translation of $2.4 million and $4.7 million for the second quarter and first half, respectively, SG&A expenses were $6.6 million and $11.7 million higher than the respective prior-year periods.

In Pharmaceutical Systems, excluding the favorable impact from foreign currency translation, 2009 SG&A expenses increased by $2.0 million and $6.6 million, respectively, over the prior-year second quarter and first half. Compensation costs were $0.4 million and $1.9 million above those incurred in the 2008 second quarter and first half, respectively, due to increased staffing of information technology and other necessary technical and manufacturing support functions and from the impact of annual salary increases. Depreciation expense, primarily associated with our 2008 information systems implementation, accounted for $0.7 million and $1.4 million, respectively, of the second quarter and year-to-date increase.

For the six months ended June 30, 2009, severance and related benefit costs increased by $1.1 million, most of which resulted from our decision to consolidate laboratory functions into our Lionville, PA facility and to relocate certain development center functions to our St. Petersburg, FL plant. Various other costs including utilities, professional services and other facilities costs contributed to the remaining increase in SG&A expense as compared to both the second quarter and first half of 2008.

General corporate SG&A costs for the second quarter and first half were $0.5 million higher and $0.5 million lower, respectively, compared to 2008 levels. The second quarter year-over-year comparison reflects an increase in compensation expense, while the favorability in the first half comparison reflects a reduction in our estimated annual performance-based incentive costs. Stock-based compensation costs for the second quarter 2009 increased $0.7 million due primarily to the impact of our higher stock price on the fair value of our deferred compensation liabilities, and decreased slightly for the year-to-date period. The deferred compensation liability is indexed to our stock price and valued at its quarterly closing market price with the resulting change in value recorded in earnings.

U.S. pension plan expense in the second quarter and first half of 2009 was $2.6 million and $5.2 million, respectively, higher than in the comparable 2008 periods, primarily resulting from lower beginning-of-the-year plan asset values. We anticipate full-year 2009 U.S. pension and other retirement benefit costs to be $10.4 million higher than the $6.0 million incurred during 2008. The costs of non-U.S. pension and other retirement benefit programs are reflected in the operating profit of the respective segment.

RESTRUCTURING AND OTHER ITEMS

Other income and expense items are generally recorded within the respective segment or corporate and are generally attributable to gains and losses on the sale of fixed assets, impairments of segment assets, foreign exchange transaction gains and losses on intercompany and third-party transactions, and miscellaneous royalties and sundry transactions. Certain restructuring and other items considered outside the control of segment management are not allocated to our reporting segments. The following table presents our restructuring charges and other income and expense items for the respective period:

                                              Three Months Ended          Six Months Ended
                                                   June 30,                   June 30,
($ in millions)                               2009           2008         2009          2008
Pharmaceutical Systems                      $    (0.2 )     $  (0.4 )   $    (0.2 )    $ (0.1 )
Tech Group                                          -           0.6           0.2         0.5
Corporate                                         0.1           0.2           0.1         0.2
Unallocated charges (credits):
Contract settlement and related gain, net           -          (6.6 )           -        (7.9 )
Restructuring and related charges                 0.4           1.4           1.1         2.4
Total unallocated charges (credits)               0.4          (5.2 )         1.1        (5.5 )
Total restructuring and other items         $     0.3       $  (4.8 )   $     1.2      $ (4.9 )

There were no significant other income and expense items during the 2009 and 2008 periods presented. Pharmaceutical Systems' other items in the second quarter and first half of 2008 include miscellaneous income from government grants. Tech Group other expense during the second quarter and first half of 2008 includes the loss on several asset impairment charges.

Contract settlement and related gain, net - In February of 2008 we entered into an agreement with our customer, Nektar Therapeutics, which provided for the full reimbursement of, among other things, severance-related employee costs, purchased raw materials and components, equipment, leases and other facility costs for maintaining and closing the Exubera device production facility. During the first and second quarters of 2008, we received payments from Nektar which more than offset the related costs incurred, resulting in net gains for both the three and six month periods ended June 30, 2008.

Restructuring and related charges - As part of a plan to reduce Tech Group operating costs, we initiated a series of restructuring initiatives at the end of 2007 to align the plant capacity and workforce of our Tech Group with our revised business outlook. The majority of these charges related to severance and post-employment benefits and a smaller portion resulted from asset write-offs and other related costs. The restructuring program was substantially completed during the second quarter of 2009.

OPERATING PROFIT

Operating profit by reportable segment and corporate and other unallocated items
were as follows:

                                                 Three Months Ended              Six Months Ended
                                                      June 30,                       June 30,
($ in millions)                                 2009             2008           2009           2008
Pharmaceutical Systems                       $     34.2       $     40.3     $     61.6      $    83.9
Tech Group                                          6.1              4.7           10.8            8.4
Corporate and other unallocated items:
General corporate costs                            (4.9 )           (4.5 )         (9.5 )        (10.1 )
Stock-based compensation costs                     (2.3 )           (1.6 )         (3.7 )         (4.0 )
U.S. pension and other retirement benefits         (4.1 )           (1.5 )         (8.2 )         (3.0 )
Other unallocated (charges) income                 (0.4 )            5.2           (1.1 )          5.5
Total operating profit                       $     28.6       $     42.6     $     49.9      $    80.7

Pharmaceutical Systems' operating profit for the second quarter and first half was lower than that of the prior year by $6.1 million and $22.3 million, respectively. Excluding unfavorable foreign currency translation impacts of $3.2 million and $5.2 million, operating profit was $2.9 million and $17.1 million lower for the second quarter and first half of 2009, respectively, as compared to the same 2008 periods. The reduction in operating profit was the result of higher SG&A costs combined with lower gross profit margins as discussed above.

Tech Group operating profit was $1.4 million and $2.4 million above that achieved in the prior-year second quarter and first half, respectively, largely due to the increased gross profit resulting from higher European sales and . . .