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Patricia Van Arnum was executive editor of Pharmaceutical Technology.
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'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.
(PHOTO: JORG GREUEL/GETTY IMAGES)
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).
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:
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:
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:
PAT and QbD
The survey also examined the degree to which newer technologies, such as those relevant for PAT and QbD, are being applied and to what extent do they influence purchasing decisions on equipment and machinery. The survey showed that 57.6% of respondents do not incorporate PAT into their manufacturing activities, and 42.4% do. For those companies that do incorporate PAT, the leading benefits were better process understanding (64.2% of respondents cited as such) and increased efficiency or reduced waste (60.4% of respondents) (see Figure 1). For those companies using PAT, half increased their spending on machinery and equipment related to PAT in 2010, and half did not. For 2011, for those companies using PAT, slightly more (53.7%) will increase spending on PAT-related applications. For those companies not using PAT, 37.5% said the benefits don't justify the costs, and 26.4% said they do not use PAT because PAT would require modifications to equipment and procedures.
Figure 1: Benefits of process analytical technology (PAT) cited by survey respondents.
Areas of spend
2010 levels. Similar to spending trends in 2009, the survey showed that the areas of highest spending for equipment and machinery in 2010 were in solid-dosage manufacturing, parenteral/aseptic/sterile manufacturing, and manufacturing for biologic-based active pharmaceutical ingredients (APIs), although the distribution of that spending reflected less spending on equipment for manufacturing solid-dosage forms and more for biologic-based APIs. The survey showed that 24% of respondents spent the most on equipment and machinery in 2010 for the manufacturing of solid-dosage forms (24.0%), followed by biologic-based APIs (17.5%), and then parenterals (13.6%)(see Figure 2). In 2009, 31% spent the most for solid-dosage manufacturing equipment, 18.5% spent the most on parenteral/aseptic/sterile manufacturing, and 15.8% spent the most on biologic-based APIs (1).
Figure 2: Areas of highest expenditures for equipment and machinery in 2010. API is active pharmaceutical ingredient.
The survey further examined spending habits in equipment categories. The results showed the following trends for those that increased spending or kept spending the same in 2010 compared with 2009:
2011 planned expenditures. The survey showed higher 2011 planned spending for equipment and machinery for quality assurance/quality control, making this category the second-highest area of expenditures for 2011. Similar to actual spending in 2009 and 2010, equipment for solid-dosage manufacturing will be the highest area of planned spending in 2011; 29.3% of respondents said they plan to spend the most in this area (see Figure 3). The next highest area will be in equipment for quality assurance/quality control, with 22.0% of respondents reporting that this will be their company's area of highest expenditures for planned purchases of equipment and machinery in 2011, up from 14.9% of respondents that reported this area of their highest level of spend in 2010 (see Figure 2). Planned purchasing for equipment and machinery producing biologic-based APIs and parenteral manufacturing are the next strongest areas for spending in 2011; 13.8% of respondents each reported these areas as targets of their highest spending levels in 2011 (see Figure 3).
Figure 3: Areas of highest planned expenditures for equipment and machinery in 2011. API is active pharmaceutical ingredient.
Interestingly, the survey showed some spending shifts in planned expenditures for 2011 compared with actual spending levels in 2010. In looking at the percentage of respondents that said that they were going to increase spending in certain product areas, more respondents will increase their spending in 2011 for equipment and machinery used in chemical API manufacturing, including continuous API manufacturing. The survey also showed that respondents will reduce their level of increases slightly for equipment for manufacturing solid-dosage forms, quality assurance/quality control, biologic APIs, parenterals, and continuous manufacturing for finished products.
In analyzing spending in equipment categories, the survey showed the following results for 2011 planned spending:
2010 results. The survey also examined the factors that influenced the type and size of the purchase. The two most influential factors for spending in 2010 were overall economic conditions (40.4% of respondents cited this as a high-impact factor) and compliance with GMPs (48.3% of respondents reported this as a high-impact factor) (see Figure 4). The influence of macroeconomic conditions on purchasing decisions was largely the same in 2010 as it was in 2009; 41.4% cited overall economic conditions as a high-impact factor in 2009 compared with the 40.4% that did in 2010 (1). Overall economic conditions was the one factor that seemed to have the greatest effect, as only 4.6% of respondents said that macroeconomic conditions had no impact (see Figure 4). Also, fewer respondents in 2010 reported that GMP compliance was a high-impact factor in influencing their purchasing decisions for equipment and machinery. In 2009, 56.1% of survey respondents regarded GMP compliance as a high-impact factor compared with the 48.3% that cited it as such in 2010 (1).
Figure 4: Level of impact of factors influencing decisions about the type of machinery and equipment purchased or the size of purchases for purchases made in 2010.
As would be expected, expanding manufacturing facilities, replacing existing equipment, and adding enhancements, upgrades, or other technology also were factors that influenced purchasing decisions. Almost two-thirds of respondents (65.5%) said expanding manufacturing facilities had either a "high" or "medium" impact on their purchasing decisions in 2010. Nearly two-thirds (64.4%) said replacing existing equipment had either a "high" or "medium" impact. A similar level (63.9%) said adding enhancements, upgrades, and/or innovative technology was either of "high" or "medium" impact, and 61.4% said improving process control and automation was similarly influential in their 2010 purchasing decisions (see Figure 4).
As shown in other trends from the survey, outsourcing played a stronger role in purchasing decisions in 2010 compared with 2009. In 2010, 43.3% of respondents said that their decision to outsource to decrease capital expenditures was a high- or medium-impact factor as compared with 38.6% that said so in 2009 (1). In 2010, 15.3% said that outsourcing to reduce capital spending had "high" impact, and 28.0% said it had "medium" impact (see Figure 4).
Although not weighing in as strongly as some other issues, newer technologies also played a role in influencing purchasing decisions in 2010. Approximately one-third of respondents regarded the following as medium-impact factors: improving security and anticounterfeiting capabilities (31.8% of respondents identified as such); application of QbD (36.2%); and application of PAT (35.6%). It is interesting to note that PAT-influenced spending was higher in 2010 compared with 2009. In 2009, one-third of respondents said that PAT had either a "high" or "medium" impact on their purchasing decisions for equipment in 2009; 11.6% said it had an "high" impact and 21.7% said it had a "medium" impact. In 2010, however, 47.0% of respondents said PAT had either a "high" or "medium" impact. (see Figure 5).
Figure 5: Level of impact of factors influencing decisions about the type of machinery and equipment purchased or the size of purchases for purchases planned for 2011.
2011 planned spending. The degree of influence for those factors influencing planned expenditures for 2011 are similar to those cited in 2010, but compliance to GMPs will be somewhat less influential and macroeconomic conditions about the same, although these factors will still be the two largest elements influencing purchasing of equipment and machinery. The influence of macroeconomic conditions on purchasing decisions will be largely the same in 2011 as it was in 2010; 39.5% cited overall economic conditions as a high-impact factor for planned expenditures in 2011, compared with the 40.4% that did so in 2010 (see Figures 4 and 5). Perhaps reflective of improving conditions, 8.4% of respondents said that the overall economy had no impact on their planned purchasing decisions in 2011, almost double the 4.6% of respondents that said macroeconomic conditions had no impact in 2010 (see Figures 4 and 5). And again, fewer respondents in 2011 say their purchasing will be influenced by GMP compliance compared with 2010. Just over one-third (37.3%) of respondents said that GMP compliance is a high-impact factor in influencing their planned purchasing decisions for equipment and machinery, compared with the 48.3% that cited it as such in 2010 (see Figures 4 and 5).
Also, fewer companies will buy equipment and machinery for expanding facilities or other upgrades in 2011. More than one-half (57.7%) of respondents said expanding manufacturing facilities had "high" or "medium" impact or on their planned expenditures in 2011 compared with their spending in 2010, when almost two-thirds regarded these factors as important. Almost 60% (59.7%) said adding enhancements, upgrades, and/or innovative technology was either of "high" or "medium" impact for planned purchases in 2011, down slightly from the 63.9% that said so in 2010. Slightly more respondents in 2011 (68.9%) than in 2010 (64.4%) regard replacing existing equipment as a "high" or "medium" impact factor in purchasing (see Figures 4 and 5).
Figure 6: Level of industry innovation in select manufacturing areas during the past two years (2009 and 2010). API is active pharmaceutical ingredient.
Outsourcing will be less influential in purchasing decisions in 2011. For 2011, 38.7% of respondents said that outsourcing to decrease capital expenditures was a high- or medium- impact factor as compared with 43.3% who said so in 2010 (see Figures 4 and 5). For 2011, 16.0% said outsourcing to reduce capital spending had "high" impact, and 22.7% said it had "medium" impact (see Figure 5).
Figure 7: Level of industry innovation for select equipment and machinery types during the past two years (2009 and 2010).
Some newer technologies will have more import in purchasing. The survey showed that 42.8% of respondents regard improving security and anticounterfeiting capabilities as a high- or medium-impact factor for their planned purchases in 2011 compared with 45% who did for actual purchases made in 2010. More companies will spend to apply QbD in 2011 and a similar number of respondents cite PAT as an influential. (see Figures 4 and 5). More than half of respondents (52.2%) said that applying QbD is a high- or medium- impact factor for planned purchases in 2011, slightly more than the 50/% who did for actual spending in 2010 (see Figures 4 and 5). For 2011, 44.4% of respondents said PAT will have either "high" or "medium" impact for planned purchases, compared with 47.0%, who said it had that importance in 2010.
About two-third (65.2%) of respondents said that innovation is "extremely" or "very" important in their purchasing decisions for equipment and machinery. In evaluating innovation, respondents thought the level of innovation was highest during the last two years in biologic API manufacturing (33.9% said so) and equipment for quality assurance/quality control (26.7% said so) (see Figure 6). Innovation was considered the lowest for high-potency/high-containment manufacturing for APIs and finished products, both for which 22.1% of respondents said there has been no innovation during the past two years (see Figure 6). In terms of specific equipment types, the highest-ranked area was for innovation in process control and automation, followed by disposables for biopharmaceutical manufacturing, laboratory equipment, and analytical instrumentation. Innovation in tablet presses, capsule-filling machines and equipment for vial- or syringe-filling ranked the lowest (see Figure 7). Roughly two-thirds of respondents do not use continuous processing for finished products (66.9%) or APIs (69.4%). For disposables or single-use components, 63.9% use them in biopharmaceutical manufacturing, and 36.1% do not. For future purchases, respondents show a slight preference for a mix of stainless-steel equipment and disposables (35.7%), 34.3% will purchase stainless-steel equipment only, and 27.1% will only buy disposables.
1. P. Van Arnum, Pharm. Technol. 34 (4), 48–56 (2010).