Measuring Spending Levels - Pharmaceutical Technology

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PharmTech Europe

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

How much did companies spend on equipment and machinery in 2010? The survey looked at spending levels as a percentage of overall sales and at absolute levels. In 2010, 20% of respondents reported that their spending on equipment and machinery was between 0 and 2% of their sales; 29.2% said spending was between 2.1 and 4% of sales, and 18.5% said spending was in the range of 4.1 and 6% of sales. Almost one-third of companies had spending levels in excess of 6% of sales. Ten percent of respondents reported that their 2010 spending on equipment and machinery was between 6.1 and 8% of sales; 6.9% spent at levels between 8.1 and 10%, and 15.4% spent more than 10% of sales.

On an absolute level, a good proportion of respondents spent less than $1 million on machinery and equipment in 2010; 44.0% spent $1 million or less, making this range the largest spend category in 2010. The remaining spending on an absolute level was broken down as follows:

  • 39.7% spent between $1 million and $50 million
  • 7.1% spent between $51 million and $100 million
  • 4.3% spent between $101 million and $500 million
  • 2.8% spent between $501 million and $1 billion and $1 billion.

Expenditures for 2011 . Planned expenditures for machinery and equipment will increase slightly in 2011 although more respondents will keep spending the same or reduce it than will increase it. More than half of the respondents (54.1%) will maintain or reduce spending in 2011; 57.1% did in 2010. This improving trend also is seen in spending gains. In 2011, 45.9% of respondents plan to increase their purchases compared with 42.9% that did in 2010.

Another positive sign is more respondents will spend more. Of the respondents planning to increase spending in 2011, 37.7% plan to do so by more than 6%: 15.5% between 6.1 and 8% and 22.2% by more than 8%. In 2010, 31.2% increased spending by more than 6%. As in 2010, respondents mostly will increase spending moderately in 2011; 62.3% will increase it by less than 6%. The survey showed that 17.8% will increase spending between 0 and 2%; 26.7% between 2.1 and 4%, and 17.8% between 4.1 and 6%.

For those respondents decreasing spending in 2011, almost two-thirds (64.2%) will decrease it by less than 6%: The survey also showed that 28.6% of respondents plan to decrease their spending by more than 8%, and 7.2% plan to decrease it between 6.1 and 8%.

The survey looked at planned spending levels as a percentage of overall sales and at absolute levels and compared them with actual spending levels reported by respondents in 2010. In 2010, about two-thirds (67.7%) of respondents spent less than 6% of their overall sales on pharmaceutical equipment and machinery; in 2011, almost three-fourths (74.7%) of respondents said their companies plan to spend below 6% of their sales on equipment and machinery. As a result, fewer companies plan to spend at higher levels in 2011 compared with 2010. In 2010, almost one-third of respondents (32.3%) said that their companies spent more than 6% of their overall sales on equipment and machinery in 2010, but in 2011, only one-fourth (25.3%) plan to spend more than 6% of their sales on equipment and machinery. Overall planned spending levels for equipment and machinery in 2011, as measured as a percentage of sales, breaks down as follows:

  • 21.0% of respondents plan to spend between 0 and 2% of their sales
  • 26.3% plan to spend between 2.1 and 4% of their sales
  • 27.4% plan to spend between 4.1 and 6% of their sales
  • 5.3% plan to spend between 6.1 and 8% of their sales
  • 13.7% plan to spend between 8.1 and 10% of their sales
  • 6.3% plan to spend more than 10% of their sales

These lower spending trends also are seen on an absolute level. In 2010, 83.7% of respondents said their companies spent less than $50 million on equipment and machinery, and 16.3% spent more than $50 million. More companies plan to spend less in 2011. In 2011, 88.8% of respondents said their companies plan to spend less than $50 million, and 11.2% plan to spend more than $50 million. For 2011, respondents plan to spend at the following levels for equipment and machinery:

  • 41.8% plan to spend between $0 and $1 million
  • 33.7% plan to spend between $1 million and $10 million
  • 13.3% plan to spend between $11 million and $50 million
  • 3.1% plan to spend between $51 million and $100 million
  • 5.1% plan to spend between $101 million and $500 million
  • 2.0% plan to spend more between $501 million and $1 billion
  • 1.0% plan to spend more than $1 billion.


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