Buying Used Equipment - Pharmaceutical Technology

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Buying Used Equipment
Experts offer tips to potential buyers.


Equipment and Processing Report

Asset management and redeployment are gaining recognition as important parts of managing pharmaceutical equipment. “We are seeing more formal programs and procedures in place to redeploy unused assets,” says Matthew Hicks, COO of Federal Equipment, which specializes in asset management of process equipment.  “Some companies now have an in-house asset disposition department or, more commonly, a person charged with asset management who will work with a service provider to handle the details.”

Many types of used laboratory and process equipment are available. Used laboratory equipment (e.g., mass spectrometers, high-performance liquid chromatography equipment) has always been widely available, and the industry is also seeing more growth in available processing equipment than 5 or 10 years ago, comments Roger Gallo, CEO and president of EquipNet, a Boston-based broker and auctioneer of laboratory and manufacturing equipment. Most of what would be needed for a complete solid-dosage or liquids manufacturing and packaging operation is available in the used equipment market, adds Hicks.
 
Factors such as budget restrictions and the recognition that assets must be handled efficiently have led to global, mainstream adoption of buying and selling used equipment by both Big Pharma and mid-size and smaller organizations, said Tom Burton, executive vice-president and president of the Capital Assets Group at Liquidity Services in a recent article (1).

Value-proposition for purchasers of used equipment
Used equipment offers two main benefits for purchasers—cost-savings and quick availability—and buyers are increasingly interested. Original equipment manufacturers (OEMs) have increasingly tight schedules for supplying new equipment, which can make it difficult to get equipment quickly, notes Gallo. Second-hand equipment can be obtained without long lead times.   

“Used equipment can be a good option for anyone who has an urgent need for equipment—anything from having equipment down and needing to replace it to wanting to meet a market need,” adds Hicks.  

Cost savings of used equipment compared to new can be significant, although the savings depend somewhat on the purchase method. Buyers can find used equipment through private transactions made directly with the seller, from the inventory of used-equipment providers, and through online liquidations or auctions.

For transactions made directly with a seller, much information is available. It could be known, for example, what the equipment was used for, when it was last used, and where it had been stored. Large companies typically keep good records on their equipment, adds Gallo, and a potential buyer might even be able to speak with an engineer who knows the equipment. Purchasing equipment that comes straight from the working environment of a reputable company is one way to know that the equipment has been maintained, noted Burton (1).

In an auction of a specific facility closure, information would be relatively available about the equipment and how it was used. In an auction that is run by a dealer or an exchange, equipment often comes from various sources, there is less information about the equipment available, and there is greater risk. Pricing, however, generally reflects this uncertainty and risk, and the cost at auctions can be attractive, notes Gallo.

Buyers should consider removal and shipping costs, as well as installation costs at their facility, in their purchase decision, said Burton (1). 

Know before you buy 
Most importantly, buyers should know what they are purchasing, because equipment is generally sold “as is.” “A buyer should very carefully read the description and examine the picture of the equipment to make sure that there is no question in their mind as to what is or is not included,” warns Gallo. A picture, for example, may show something in the background that is not part of the sale as listed in the description.

Buyers should also ensure that the equipment meets their needs, because it may be older technology. Buyers should know if the equipment they are purchasing is supported by the OEM. “We recommend buying equipment that is supported by the OEM for installing, revalidating, and upgrading,” says Hicks. “We have relationships with the OEMs so that if a piece of equipment or its controls, for example, are no longer supported, we can make the buyer aware.” 

If the OEM is no longer supporting the equipment, buyers should be sure that they have someone that is capable of servicing the equipment (e.g., fixing a control panel, calibrating an instrument) and that replacement parts are available, adds Gallo.

Relatively new equipment can be available, however, from companies that upgrade their equipment on a regular basis, companies that purchase an item and then find they do not need it, or facility closures, explained Burton (1).

“In process equipment, we are seeing high-quality inventory of late-model equipment that is well taken care of,” adds Hicks. An increase in availability of recent models may be due partly to consolidation and facility closures and partly to the increasing use of asset-management services. 

Reference
1. T. Burton, BioPharm Int. 26 (11) 45-48 (2013).

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