Measuring Spending Levels - Pharmaceutical Technology

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Measuring Spending Levels
Pharmaceutical Technology's annual survey on equipment and machinery reveals the spending levels and type of spending made in 2010 and planned for 2011.


Pharmaceutical Technology
Volume 35, Issue 3, pp. 50-62


(PHOTO: JORG GREUEL/GETTY IMAGES)
Pharmaceutical Technology's annual survey on purchasing and innovation trends showed spending levels for 2010 on par with 2009 levels and even indicated a small uptick planned for 2011. Equipment for solid-dosage manufacturing and quality assurance/quality control continue to be important areas of current and future spending. Specialized equipment for high-potency/high containment manufacturing also was a strong area of investment in 2010 and will continue to be in 2011. Also, companies plan to invest slightly more in newer technologies relevant to quality by design (QbD) and process analytical technology (PAT) in 2011 compared with 2010 levels.

Spending trends

Spending levels for 2010. The survey results showed a slight curtailment in spending on equipment and machinery in 2010 compared with spending levels in 2009. More than half (57.1%) of respondents either kept spending levels the same (35.3%) or decreased spending (21.8%) in 2010 compared with 2009. Roughly 43% (42.9%) increased spending in 2010 over 2009 levels. In 2009, 55.9% of respondents spent the same (31.4%) or decreased spending (24.5%) compared with 2008 levels, and 44.1% increased spending (1).

For those respondents that increased spending in 2010, most did so moderately. The survey results showed that 21.9% increased spending between 0 and 2%; 20.3% increased spending between 2.1, and 4%, and 26.6% increased spending between 4.1 and 6%. The survey showed some higher spikes: 28.1% of respondents increased spending by more than 8%, and 3.1% raised expenditures between 6.1 and 8%.

For those decreasing spending in 2010 compared with 2009, the declines were steeper than the increases. More than half (52%) decreased spending by more than 6%. Twenty percent decreased spending between 6.1 and 8%, and 32% decreased it by more than 8%. The remaining spending reductions were more modest. Twenty-eight percent of respondents decreased spending between 0 and 2%; 12% decreased spending by 2.1 and 4%. Eight percent decreased spending between 4.1% and 6%.

As in 2009, overall economic conditions influenced purchasing decisions in 2010. More than half (58.3%) of respondents said they postponed purchasing (45.5%) or did not buy (12.8%) new equipment in 2010 because of overall economic conditions. The 45.5% delaying purchasing activity in 2010 was slightly higher than in 2009, when 42.1% reported postponing purchasing because of economic conditions.

Other financials came into play. One-fifth (21.2%) of respondents had difficulty in securing financing for capital investments in 2010, which was slightly higher than the 18.4% who encountered such difficulties in 2009. On a positive note, fewer respondents had to curtail their own purchasing decisions as a result of lower production levels resulting from their customers' financial difficulties. In 2010, 12.8% of respondents reduced production because of financial problems with their customers, almost half the level reported in 2009, when 23.7% limited purchasing for that reason. Interestingly, purchasing decisions also were more strongly influenced by outsourcing in 2010 compared with 2009. In 2010, 17.9% of respondents increased their level of outsourcing to reduce capital costs, almost one-third more than 2009, when 12.6% of respondents increased outsourcing to reduce capital expenditures (1).


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