Targeting Spending and Innovation Levels: Annual Equipment and Machinery Survey - Pharmaceutical Technology

Latest Issue
PharmTech

Latest Issue
PharmTech Europe

Targeting Spending and Innovation Levels: Annual Equipment and Machinery Survey
Pharmaceutical Technology's annual survey on equipment and machinery shows fewer companies increased spending in 2008 and still fewer will increase spending in 2009 as overall economic conditions affects purchasing decisions.


Pharmaceutical Technology
Volume 33, Issue 3, pp. 60-70


INSET IMAGES: ESS TECHNOLOGIES, OYSTAR, PANALYTICAL, WEST PHARMACEUTICAL SERVICES, PALL LIFE SCIENCES. DARTBOARD: STOCKBYTE/GETTY IMAGES
Declining economic conditions are having a chilling effect on the pharmaceutical industry's capital investment. The results of Pharmaceutical Technology's annual survey on spending and innovation trends for pharmaceutical equipment and machinery show that fewer companies increased spending in 2008 than in 2007 and still fewer plan to spend more in 2009. Overall economic conditions are the chief culprit behind the fall. When spending, however, the chief motivation for increasing spending is to facilitate regulatory compliance. Other key findings show more than a majority of respondents have implemented process analytical technology (PAT) in their manufacturing lines and are using disposables or single-use components in biopharmaceutical manufacturing.

Spending levels


Figure 1 Compared with 2007, did your company 2008 spending on equipment and machinery
The results of the survey showed fewer companies increased spending on equipment and machinery in 2008 when compared with 2007 and less spending planned for 2009. More than one-third (35%) of respondents said that they increased spending on equipment and machinery in 2008, but less than one-quarter (24%) said they plan to increase spending in 2009 (see Figures 1 and 2). These levels are also down from Pharmaceutical Technology's previous survey in which almost half (47%) of respondents said that they increased spending in 2007 (1). Approximately 20% of respondents said they decreased spending in 2008, and more, nearly 28%, said they plan to decrease spending in 2009.


Figure 2 Compared with 2008, will your company 2009 spending on equipment and machinery
Uncertain economic conditions seem to be affecting purchasing decisions. More than two-thirds of respondents said that they postponed buying equipment and machinery in 2008 and will again in 2009 because of overall economic conditions (see Figure 3). Respondents also reported difficulty in securing financing for capital investments, reduced production, and a slight increase in outsourcing because of economic conditions. Twenty-two percent of respondents said that they had difficulty in securing financing for capital investments in 2008, and slightly more, 27%, said they had such difficulty for planned expenditures in 2009 (see Figure 3). About one-fifth of respondents said they face reduced production because of customers' financial difficulties, and a similar level reported that they did or plan to increase outsourcing to avoid capital costs (see Figure 3).


Figure 3 Which of the following apply to your company because of overall economic conditions?
For those companies increasing spending, the level of spending as a percentage of sales, absolute spending, and the amount of spending increases are expected to be less in 2009 compared with 2008 levels. Respondents' companies' mean percentage of overall sales spent on equipment and machinery in 2008 was 4.3%; the median was 3.5%. For absolute spending, the mean expenditure in 2008 was $74.5 million; the median was $4.4 million. Planned expenditures for 2009 are less. Respondents' companies' mean percentage of overall sales that they plan to spend on equipment and machinery in 2009 is 3.9%; the median is 3.0%. For absolute spending, the mean expenditure planned for 2009 is $51.1 million; the median is $4.3 million.

Spending increases on equipment and machinery were most prevalent in 2008 by generic-drug companies; 55.6% of these companies increased spending in 2008. Biotechnology and consumer healthcare companies followed, with nearly 43% of biotechnology and 42% of consumer healthcare companies reporting increases in spending in 2008. Approximately 30% of contract manufacturers and 24% of innovator pharmaceutical companies reported increases in spending in 2008.

For 2009, 50% of consumer healthcare companies said they plan to increase spending. Generic-drug companies were the second largest company type to increase spending (27% plan to increase spending in 2009) followed by contract manufacturers (23%), biotechnology companies (23%), and innovator pharmaceutical companies (19%).

For those companies that increased spending in 2008 compared with 2007, more than three-fourths (76%) said the increase was greater than their 2006–2007 increases; 21% said it was on par, and 3% said it was less. For 2008, the mean increase in spending was 8.7%; the median was 4.3%.

Lower spending increases are anticipated for 2009. For those respondents whose companies plan to increase spending from 2008 to 2009, 60% said their planned increase will be greater than their 2007–2008 increase; 36% said it is on par; and 2% say it is less. The mean planned increase for 2009 is 5.9%; the median is 3.7%.

Spending by equipment type


Figure 4 Year-over-year, how did or how will your spending change for the following equipment areas?
Figure 4 details how respondents spent in 2008 and plan to spend in 2009 in specific areas. In 2008, respondents' companies most frequently increased their spending on equipment for manufacturing and processing (37%), quality assurance and control (35%), and laboratory equipment (31%). For purposes of the survey, manufacturing and processing equipment includes clean-in-place and steam-in-place systems, hoppers and drums, materials handling and conveying equipment, pallets, pipes and fittings, robotic equipment, stainless-steel tanks and tubing, and other piping.

For 2009, respondents' companies most frequently plan to increase their spending on machinery and equipment for quality assurance and control (23%), manufacturing of biologic-based (active pharmaceutical ingredients (APIs) (21%), and machinery and equipment for packaging (21%).

Where was spending the highest? Respondents' companies spent the most on machinery and equipment in 2008 in manufacturing and processing equipment (17%), solid-dosage manufacturing (16%), and parenteral manufacturing/aseptic or sterile processing (11%). A similar pattern holds up for 2009. Companies responded that they plan to spend the most in 2009 on manufacturing and processing equipment (16%), solid-dosage manufacturing (14%), and parenteral manufacturing (9%).

Impact factors


Figure 5 What was the impact of the following factors on your purchasing decisions for equipment and machinery?
The factors that most influenced purchasing decisions in 2008 were compliance with good manufacturing practices (GMPs) (57% of respondents reported as a high-impact factor), expansion of manufacturing facilities (41% reported as a high-impact factor), and other regulatory compliance (34% reported as a high-impact factor) (see Figure 5).

Compliance again is the leading reason for planned spending on equipment and machinery in 2009. Forty-six percent of respondents report that GMP compliance was a high-impact factor in their planned expenditures , and 35% said other regulatory compliance was a key factor (see Figure 5). Unlike in 2008, when 41% of respondents said facility expansion was a strong influence for spending increases, only 27% said facility expansion will be a major influence on their planned spending for 2009 (see Figure 5).


ADVERTISEMENT

blog comments powered by Disqus
LCGC E-mail Newsletters

Subscribe: Click to learn more about the newsletter
| Weekly
| Monthly
|Monthly
| Weekly

Survey
What role should the US government play in the current Ebola outbreak?
Finance development of drugs to treat/prevent disease.
Oversee medical treatment of patients in the US.
Provide treatment for patients globally.
All of the above.
No government involvement in patient treatment or drug development.
Finance development of drugs to treat/prevent disease.
27%
Oversee medical treatment of patients in the US.
12%
Provide treatment for patients globally.
8%
All of the above.
46%
No government involvement in patient treatment or drug development.
7%
Jim Miller Outsourcing Outlook Jim MillerCMO Industry Thins Out
Cynthia Challener, PhD Ingredients Insider Cynthia ChallenerFluorination Remains Key Challenge in API Synthesis
Marilyn E. Morris Guest EditorialMarilyn E. MorrisBolstering Graduate Education and Research Programs
Jill Wechsler Regulatory Watch Jill Wechsler Biopharma Manufacturers Respond to Ebola Crisis
Sean Milmo European Regulatory WatchSean MilmoHarmonizing Marketing Approval of Generic Drugs in Europe
Seven Steps to Solving Tabletting and Tooling ProblemsStep 1: Clean
Legislators Urge Added Incentives for Ebola Drug Development
FDA Reorganization to Promote Drug Quality
FDA Readies Quality Metrics Measures
New FDA Team to Spur Modern Drug Manufacturing
Source: Pharmaceutical Technology,
Click here