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.

Executive Overview

During the three and nine months ended September 30, 2009, we reported revenues of $258.9 million, up 1.0%, and $762.3 million, down 5.5%, respectively, from the same periods a year ago. In each of the three quarters this year, the U.S. dollar was relatively stronger than in 2008 which had an overall negative effect upon our quarterly and year-to-date financial results. Excluding these currency effects, third quarter and year-to-date 2009 revenues increased 4.3% and 0.6%, respectively, compared with the prior year. Although sales have rebounded moderately in the third quarter, both 2009 periods continue to reflect the impact of customer inventory reduction and cost-cutting programs, the impact of regulatory-related constraints imposed on certain customers' products and lower consumer and personal care products spending.

Third quarter 2009 net income per diluted share was $0.50, which included a net gain resulting from our participation in a tax amnesty program in Brazil ($0.04) and discrete income tax benefits ($0.01). See Note 3, Restructuring and Other Items, for a discussion of the Brazil tax amnesty benefit. The adverse effects of foreign currency translation reduced net income per diluted share by $0.01 during the third quarter. Same quarter 2008 net income per diluted share was $0.40, including a net benefit of $0.03 per diluted share relating to discrete income tax benefits ($0.06) partially offset by contract settlement costs ($0.03). Excluding the impact of foreign exchange and these discrete items in both years, net income per diluted share in 2009 surpassed 2008 levels by $0.09 as a result of improved gross margins on higher Pharmaceutical Systems sales.

Net income per diluted share for the first nine months of 2009 was $1.53 including a combined benefit of $0.08 per diluted share from the Brazil tax amnesty gain ($0.04) and discrete income tax benefits ($0.06), partially offset by restructuring and related charges ($0.02). The effects of foreign currency translation reduced year-to-date 2009 net income per diluted share by $0.14. Net income per diluted share for the first nine months of 2008 was $1.98 including a net benefit of $0.15 per diluted share from the gain on contract settlement proceeds ($0.11) and discrete income tax benefits ($0.09), partially offset by restructuring and related charges ($0.05). Excluding the impact of foreign currency and discrete items, year-to-date 2009 net income per diluted share fell below the prior year amount by $0.24 due to higher pension and other selling, general and administrative costs and a reduction in gross profit on lower sales and reduced product throughput.

On July 6, 2009, we acquired certain business assets of Plastef Investissements SA ("Plastef") and its subsidiaries, a France-based developer and manufacturer of drug delivery devices. Plastef's products include the Eris safety syringe system, which addresses the market for fixed-needle prefilled syringes and complements our NovaGuard™ safety system, which employs the other common syringe format, luer-lock syringes. The business assets included a manufacturing facility located at Le Vaudreuil, Normandy, Plastef's intellectual property and working capital. The purchase price included cash paid at closing of $16.9 million, funded from cash on hand, and contingent consideration with a fair value of $2.6 million which is dependent upon the achievement of operating goals and other milestones over the next several years. Sales of $4.0 million and operating results for this acquisition are included in our consolidated statements of operations from the date of acquisition, but they are not expected to have a significant impact on 2009 earnings.

Recent Trends and Developments

Pharmaceutical Systems

Although we experienced slower than anticipated growth in orders during the third quarter, as our pharmaceutical customers remain conservative in their ordering patterns, sales improved over the prior year quarter driven by higher sales volume of packaging materials for H1N1 influenza vaccines and improved sales pricing. Excluding unfavorable foreign currency translation effects, Pharmaceutical Systems sales for the third quarter increased almost 8% over the prior year amount. Sales of our value-added pharmaceutical packaging components for the third quarter were ahead of the prior year quarter, led by an increase in Westar® processed stoppers for the H1N1-related orders as we continue with our efforts to convert customers to our enhanced product offerings. Our gross margins also improved during the quarter due to the increased production volumes, higher selling prices and lower raw materials costs. Looking ahead, these favorable sales and gross profit trends are expected to continue into the fourth quarter as orders on-hand at the end of September 2009 were higher than those one year ago on a constant-currency basis. We continue to expect that full-year 2009 sales will exceed those achieved in the prior year, excluding the impact from foreign exchange.

Tech Group

Many of our Tech Group customers have further reduced orders in an attempt to manage inventory levels in response to continued weakness in consumer demand, resulting in lower than expected sales for the third quarter. Sales for the third quarter and first nine months of 2009 were 6% and 4%, respectively, lower than those achieved in the prior year, excluding the impact of foreign currency. Despite lower sales, gross profit for the nine-month period remains above the prior year amount. The trending lower sales are expected to continue for the near term as a number of our U.S.-based customers have postponed plans for new product launches pending further analysis of their markets, which is expected to result in lower year-over-year revenues and a negative impact on margins for the fourth quarter as compared to the prior year period. As we enter the final quarter of 2009, we continue to pursue new business opportunities while aggressively managing our cost structure to mitigate the impact of lower volumes.

Restructuring

In November 2009, we initiated restructuring plans for certain business operations and support functions in both of our reporting segments. The Pharmaceutical Systems plan involves exiting certain specialized laboratory services offerings due to a change in market demand, reducing support personnel primarily associated with information technology applications and discontinuing other non-core initiatives and associated assets. The costs are estimated to be between $6.0 million and $7.0 million, which consist of approximately $2.0 million in cash expenditures, related to severance benefits and $4.0 million to $5.0 million in asset impairment charges primarily related to laboratory equipment and certain plant assets. The Tech Group plan is intended to better align our available production capacity with expected levels of contract manufacturing activity by consolidating manufacturing operations and support functions. The costs of the Tech Group plan are estimated to be between $2.0 million and $3.0 million, which consist of $1.0 million to $2.0 million in cash expenditures for severance and asset relocation costs and approximately $1.0 million in asset impairment charges. In the aggregate, we expect to incur costs of approximately $7.0 million in the fourth quarter of 2009, with the balance in 2010 as the associated costs are incurred. The combined plans are expected to generate savings of approximately $6.0 million in 2010, increasing to approximately $8.0 million annually following completion including approximately $1.0 million in reduced depreciation expense.

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          Nine Months Ended
Net sales:                    September 30,              September 30,
($ in millions)             2009          2008          2009         2008
Pharmaceutical Systems   $    198.1      $ 190.5     $    579.2     $ 610.6
Tech Group                     62.9         68.3          192.0       204.3
Intersegment sales             (2.1 )       (2.6 )         (8.9 )      (8.6 )
Total net sales          $    258.9      $ 256.2     $    762.3     $ 806.3

Consolidated third quarter 2009 net sales increased by $2.7 million, or 1.0%, compared to those achieved in the prior-year third quarter. Excluding unfavorable foreign currency effects of $8.2 million, or 3.3 percentage points, third quarter 2009 net sales increased $10.9 million, or 4.3%, 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 and increased volume and a more favorable mix of higher-value pharmaceutical packaging components.

Net sales for the nine months ended September 30, 2009 decreased by $44.0 million, or 5.5%, compared to the first nine months of 2008 including an unfavorable foreign exchange impact of $48.8 million, or 6.1 percentage points. Excluding foreign currency translation effects, consolidated 2009 year-to-date net sales increased $4.8 million, or 0.6%, from the prior year. The majority of this increase was due to the favorable impact of annual selling price increases of 1.9 percentage points, partially offset by lower year-to-date sales volume and mix of those sales in both of our segments.

Pharmaceutical Systems

Pharmaceutical Systems sales for the third quarter were $7.6 million, or 4.0%, higher than in the corresponding prior year quarter. Excluding the unfavorable foreign exchange impact of $7.2 million, sales increased by $14.8 million, or 7.8%. This increase was the result of higher demand for pharmaceutical packaging products, primarily rubber and metal components used in prefilled injection packaging for insulin applications, and rubber stoppers used in packaging for various drugs including the H1N1 influenza vaccine. The overall increase in sales for the third quarter relating to the H1N1 vaccination effort was estimated at $9.7 million.

This segment's sales for the nine month period ended September 30, 2009 were $31.4 million, or 5.1%, lower than in the corresponding prior year period, including $43.9 million resulting from unfavorable foreign currency translation effects. Excluding the unfavorable foreign exchange impact, sales increased by $12.5 million, or 2.0%, which was primarily the result of the higher demand for the packaging components mentioned above, partially offset by customer stock reduction of disposable medical components including those used in non-filled syringes.

Tech Group

Third quarter 2009 sales were $5.4 million below 2008 levels, including $1.0 million of unfavorable foreign currency translation. Excluding the effect of foreign currency changes, sales were $4.4 million, or 6.4%, below prior year levels due to reduced volume and lower plastic resin costs, which are contractually passed through to many Tech Group customers in the form of adjusted selling prices. Sales of consumer and personal care products declined by $4.1 million compared to the prior year quarter as a result of our decision to exit a specific customer's business in Mexico, regulatory action affecting one of our customer's products and lower resin costs. Healthcare device sales were relatively consistent with the prior year quarter as the incremental $4.0 million in sales from the Plastef acquisition was offset by lower sales

volume in the U.S. resulting from third-party legal actions affecting one of our customer's products and overall reduced demand due to our customers' stock reduction efforts.

Tech Group year-to-date net sales were $12.3 million below prior-year levels, including unfavorable foreign currency translation effects of $4.9 million. Excluding the effect of foreign currency translation, 2009 year-to-date sales were $7.4 million, or 3.7%, unfavorable to the prior year. This reduction resulted from lower sales of consumer and personal care products, the majority of which related to decreased selling prices and our decision to exit the business in Mexico as discussed above. Partially offsetting the decline in our consumer business was increased sales of healthcare devices resulting from higher demand for an intra- nasal medical device manufactured in Europe and incremental sales from the acquisition of Plastef.

The majority of intersegment sales in all periods presented represent healthcare devices sales 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          Nine Months Ended
Gross profit:                    September 30,              September 30,
($ in millions)               2009           2008          2009         2008
Pharmaceutical Systems
Gross Profit                $    63.4       $  56.2     $    190.1     $ 204.3
Gross Margin                     32.0 %        29.5 %         32.8 %      33.5 %
Tech Group
Gross Profit                $     8.3       $   9.8     $     29.6     $  28.7
Gross Margin                     13.2 %        14.4 %         15.4 %      14.1 %
Consolidated Gross Profit   $    71.7       $  66.0     $    219.7     $ 233.0
Consolidated Gross Margin        27.7 %        25.7 %         28.8 %      28.9 %

Third quarter 2009 consolidated gross profit increased $5.7 million over the same quarter in 2008. Excluding an unfavorable foreign exchange impact of $1.8 million, gross profit increased by $7.5 million as a result of higher gross margins contributed by Pharmaceutical Systems. For the nine-month period ended September 30, 2009, consolidated gross profit was $13.3 million below that reported in the same period of 2008, the majority of which ($12.9 million) related to the impact of foreign currency translation. The year-to-date consolidated gross margin percentage remained substantially unchanged at 28.8% compared to the first nine months of 2008.

Pharmaceutical Systems

The gross margin percentage for Pharmaceutical Systems improved by 2.5 percentage points for the third quarter, but declined by 0.7 percentage points over the first nine months of 2009 versus the prior year periods. The improvement during the third quarter was the result of sales price increases, favorable sales volume and mix and lower raw materials costs, which more than offset higher depreciation expense resulting from our recent capital expansion activity. The decline in the year-to-date comparison was attributable to lower capacity utilization due to reduced volumes and higher raw materials and other production costs, partially offset by selling price increases. As the majority of our raw materials cost increases were experienced in the latter part of 2008 and have only recently declined, our year-to-date 2009 costs continue to be unfavorable to those experienced in the same period of 2008. We expect to benefit from lower raw materials costs which are expected to continue to improve our gross margin percentage in the fourth quarter.

Tech Group

Gross margin for the Tech Group declined by 1.2 percentage points during the third quarter as compared with the prior year, but remained favorable by 1.3 percentage points for the year-to-date period. Margins in the third quarter were adversely affected by lower sales volumes caused by lower demand for consumer and personal care products in the U.S., partially offset by the impact of reduced raw materials costs and improved plant efficiency in the U.S. and Europe. The year-to-date gross margin improvement was largely due to the impact on sales price of reduced resin costs, lower raw materials prices on sales of medical devices in both Europe and the U.S., and improved operating efficiency in our European operations from higher demand for several higher value medical devices.

RESEARCH AND DEVELOPMENT ("R&D") COSTS

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

                            Three Months Ended           Nine Months Ended
                               September 30,               September 30,
($ in millions)            2009            2008          2009           2008
Pharmaceutical Systems   $     4.6       $     4.2     $    13.0       $ 13.6
Tech Group                     0.5             0.4           1.1          1.2
Total R&D expense        $     5.1       $     4.6     $    14.1       $ 14.8

Total R&D costs during the first nine months of 2009 were $0.7 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 $20.0 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             Nine Months Ended
                                                       September 30,                 September 30,
($ in millions)                                    2009             2008           2009          2008
Pharmaceutical Systems                          $     28.7       $     28.7     $     85.6     $    83.6
SG&A as a % of segment net sales                      14.5 %           15.1 %         14.8 %        13.7 %

Tech Group                                      $      5.1       $      4.4     $     14.9     $    13.6
SG&A as a % of segment net sales                       8.1 %            6.5 %          7.7 %         6.7 %

Corporate costs:
General corporate costs                                3.7              3.8           13.0          13.7
Stock-based compensation expense                       2.5              3.1            6.3           7.1
U.S. pension and other retirement benefits             4.3              1.5           12.5           4.5
Total Selling, General & Administrative costs   $     44.3       $     41.5     $    132.3     $   122.5
Total SG&A as a % of total net sales                  17.1 %           16.2 %         17.4 %        15.2 %

Third quarter and year-to-date 2009 consolidated SG&A expenses were $2.8 million and $9.8 million, respectively, above those recorded in the same periods of 2008. Excluding favorable effects from foreign currency translation of $1.0 million and $5.7 million for the third quarter and year-to-date period, respectively, SG&A expenses were $3.8 million and $15.5 million higher than in the respective prior-year periods.

In Pharmaceutical Systems, excluding the favorable impact from foreign currency translation, 2009 SG&A expenses increased by $1.0 million and $7.5 million, respectively, over the prior-year third quarter and first nine months. Compensation costs were $0.5 million and $2.6 million above those incurred in the 2008 third quarter and first nine months, 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 $0.5 million and $1.5 million, respectively, of the third quarter and year-to-date increase. For the nine months ended September 30, 2009, severance and related benefit costs increased by $1.3 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 for the year-to-date period as compared to the first nine months of 2008.

Tech Group increases during the third quarter and year-to-date period were the result of annual adjustments to employees' compensation, costs associated with information systems upgrades and increased depreciation and amortization expense.

General corporate SG&A costs for the third quarter and year-to-date period ended September 30, 2009 were slightly favorable compared to 2008 levels due to lower outside professional service fees and other administrative costs. Stock-based compensation costs for the third quarter 2009 and year-to-date period were also favorable compared to the prior year periods due to adjustments to reflect lower expected attainment in certain periods covered by our long-term performance vesting shares, partially offset by the impact of our higher stock price on the fair value of our deferred compensation liabilities. 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 and other retirement benefits expense in the third quarter and first nine months of 2009 was $2.8 million and $8.0 million higher, respectively, than in the comparable 2008 periods due to increased amortization of actuarial losses and lower expected return on plan assets resulting from the loss in plan asset values during the 2008 stock market decline. We anticipate full-year 2009 U.S. pension and other retirement benefit costs to be $10.6 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 usually consist of 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              Nine Months Ended
                                                   September 30,                  September 30,
($ in millions)                                2009             2008           2009            2008
Pharmaceutical Systems                      $      0.2       $      0.2     $        -       $     0.1
Tech Group                                         0.1             (0.1 )          0.2             0.4
Corporate                                            -              0.1            0.1             0.3
Unallocated charges (credits):
Brazil tax amnesty benefit                        (3.9 )              -           (3.9 )             -
Contract settlement and related gain, net            -              1.8              -            (6.1 )
Restructuring and related charges                    -                -            1.1             2.5
. . .