Pharmaceutical Technology's Equipment and Machinery Spending Survey - Pharmaceutical Technology

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Pharmaceutical Technology's Equipment and Machinery Spending Survey
The pharmaceutical industry plans moderate increases in spending for equipment and machinery in 2007 as expenditures hold steady.

Pharmaceutical Technology



Figure 3
The increase in the percentage of respondents indicating spending of 2.1–4% of their overall company's revenues seems to have come at the expense of higher levels of spending.Three ranges of spending declined in 2007 over 2006. Only 6.4% of respondents say their companies plan to spend 6.1–8% of their overall revenues on equipment and machinery in 2007, compared with 12.2% in 2006. Only 4.2% plan to spend 8.1–10% of their overall revenues on machinery and equipment in 2007, compared with 6.2% in 2006. And, only 4.3% plan to spend greater than 10% of their overall revenues on equipment and machinery in 2007, compared to 12.2% in 2006.

In terms of absolute dollar amounts, almost three-fourths of the respondents (72.3%) say their companies plan to spend $10 million or less on equipment and machinery in 2007 (see Figure 3). In 2006, 60.4% of the respondents said their companies increased spending by $10 million or less, and 18.8% increased spending by $11–50 million (see Figure 3).


Figure 4
For 2007, spending at moderate levels is increasing over 2006. In 2007, 12.5% of the respondents plan to increase spending 4.1-6%; only 6.3% increased spending by this level in 2006. In 2007, 29.2% of the respondents plan to increase spending by 2.1-4%; in 2006, only 18.7% increased spending by this level. (see Figure 4).



Spending trends


Figure 5
In analyzing spending trends, 46.8% of respondents said that their company's growth in spending on machinery and equipment is holding steady, and 8.5% of respondents said their spending will grow faster in 2007 than in 2006 (see Figure 5). Over the past two years (2006 and 2005), 40.8% said that spending growth held steady, and 20.4% said that it grew faster year over year. Consistent with 2005 and 2006 spending levels, 10.6% of respondents say spending on equipment and machinery is contracting in 2007 (spending less in 2007 than in 2006), and 21.3% of respondents say their spending growth is slowing (rate of increase is less year-over-year).

Reasons for increasing spending


Figure 6
Facilities expansion and new or expanded projects were the major reasons behind growth in spending in 2006 and planned spending for 2007 (see Figure 6). In 2006, 71.4% of respondents increased spending on machinery and equipment because of facilities expansion or new or expanded projects, and 78.1% responded similarly for spending planned in 2007. Roughly one-quarter (21.9% in 2007 and 25.7% in 2006) of the respondents said spending growth resulted from the replacement of existing equipment.


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