Navigating the Equipment and Machinery Market

Pharmaceutical Technology's annual survey on equipment and machinery reveals the spending levels and type of spending made in 2011 and planned for 2012.
Apr 02, 2012


(MOBILE ILLUSTRATION BY DAN WARD)
Pharmaceutical Technology's annual survey on spending and innovation trends for equipment and machinery showed a modest gain in spending overall in 2011. Equipment for solid-dosage manufacturing, biopharmaceutical production, and analytical instrumentation were the areas of strongest spending. Overall spending levels for 2012 are projected to be on par with 2011, and the United States and Western Europe will continue to be the targets of the majority of capital investment.

Spending levels


Figure 1: Spending on equipment and machinery in 2011 compared with 2010 levels (percentage of respondents). (SCOTT HEINER/INGRAM PUBLISHING/GREGOR SCHUSTER/GETTY IMAGES)
Spending for 2011. The survey showed a slight uptick in spending for equipment and machinery in 2011 compared with 2010. Almost 48% of respondents increased spending in 2011 (see Figure 1) compared with 43% in 2010 (1). One-third kept spending the same in 2011, and 18.5% decreased spending in 2011 (1) (see Figure 1).

For those respondents that increased spending, 60% increased spending by more than 4% compared with 2010 levels, and 40% raised expenditures more modestly, less than 4%. The survey showed:
  • 31.6% increased spending by more than 8%
  • 28.9% increased spending between 4.1% and 6.0%
  • 28.9% increased spending between 2.1% and 4.0%
  • 10.5% increased spending between 0% to 2%.

For those decreasing spending in 2011, 85% decreased spending by more than 8%, and 15% decreased spending by 4.0% or less.

In looking at spending as percentage of annual sales, the survey showed:

  • 21% spent between 0% and 2% of their annual sales on equipment and machinery
  • 21% spent between 2.1% and 4.0% of their annual sales
  • 23% spent between 4.1% and 6.0% of their annual sales
  • 13% spent between 6.1% and 8.0% of their annual sales
  • 8.0% spent between 8.1% and 10.0% of their annual sales
  • 14% spent more than 10% of their annual sales.

On an absolute level, half of the respondents spent less than $1 million on equipment and machinery, and one-third spent between $1 million and $50 million.


Figure 2: Planned spending on equipment and machinery in 2012 compared with 2011 actual spending (percentage of respondents). (SCOTT HEINER/INGRAM PUBLISHING/GREGOR SCHUSTER/GETTY IMAGES)
Spending planned for 2012 . The survey results showed a modest gain in planned spending for equipment and machinery in 2012 compared with actual spending in 2011. Nearly half of respondents plan to increase spending in 2012 compared with nearly 48% of respondents who increased spending in 2011 (see Figures 1 and 2). As in 2011, one-third of respondents plan to decrease spending in 2012, and 17.2% plan to decrease spending in 2012 (see Figure 2).

For those respondents that plan to augment expenditures on equipment and machinery in 2012, spending increases are expected to be higher than in 2011. Nearly three-fourths of respondents plan to increase spending by more than 4% compared with 2011 levels. In contrast, in 2011, 60% of survey respondents increased spending by more than 4%. For planned spending in 2012, the survey showed:

  • 14.3% plan to increase spending by more than 8%
  • 25.7% plan to increase spending between 6.1% and 8.0%
  • 34.3% plan to increased spending between 4.1% and 6.0%
  • 20.0% plan to increased spending between 2.1% and 4.0%
  • 5.7% plan to increased spending between 0% and 2.0%

For those planning to decrease expenditures in 2012, the declines were more evenly distributed than in 2011, when 85% of respondents decreased spending by more than 8%. For planned expenditures for 2012, the survey showed:

  • 8.3% plan to decrease spending between 0% and 2%
  • 16.7% plan to decrease spending between 2.1% and 4%
  • 8.3% plan to decrease spending between 4.1% and 6%
  • 33.3% plan to decrease spending between 6.1% and 8%
  • 33.3% plan to decrease spending by more than 8%.

So how much do companies plan to spend on equipment and machinery in 2012? In looking at spending as percentage of annual sales, the survey showed:

  • 23.2% will spend between 0% and 2% of their annual sales on equipment and machinery
  • 21.7% will spend between 2.1% and 4.0% of their annual sales
  • 31.9% will spend between 4.1% and 6.0% of their annual sales
  • 7.2% will spend between 6.1% and 8.0% of their annual sales
  • 10.1% will spend between 8.1% and 10.0% of their annual sales
  • 5.8% will spend more than 10% of their annual sales.

On an absolute level, 38.8% of the respondents plan to spend less than $1 million on equipment and machinery in 2012. Almost one-third (31.3%) will spend between $1 million and $10 million, and 16.4% will spend between $11 million and $50 million.