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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 2011 and planned for 2012.
Pharmaceutical Technology's annual survey on spending and innovation trends for equipment and machinery showed a modest gain in spending overall in 2011. Equipment for solid-dosage manufacturing, biopharmaceutical production, and analytical instrumentation were the areas of strongest spending. Overall spending levels for 2012 are projected to be on par with 2011, and the United States and Western Europe will continue to be the targets of the majority of capital investment.
(MOBILE ILLUSTRATION BY DAN WARD)
Spending for 2011. The survey showed a slight uptick in spending for equipment and machinery in 2011 compared with 2010. Almost 48% of respondents increased spending in 2011 (see Figure 1) compared with 43% in 2010 (1). One-third kept spending the same in 2011, and 18.5% decreased spending in 2011 (1) (see Figure 1).
Figure 1: Spending on equipment and machinery in 2011 compared with 2010 levels (percentage of respondents). (SCOTT HEINER/INGRAM PUBLISHING/GREGOR SCHUSTER/GETTY IMAGES)
For those respondents that increased spending, 60% increased spending by more than 4% compared with 2010 levels, and 40% raised expenditures more modestly, less than 4%. The survey showed:
For those decreasing spending in 2011, 85% decreased spending by more than 8%, and 15% decreased spending by 4.0% or less.
In looking at spending as percentage of annual sales, the survey showed:
On an absolute level, half of the respondents spent less than $1 million on equipment and machinery, and one-third spent between $1 million and $50 million.
Spending planned for 2012. The survey results showed a modest gain in planned spending for equipment and machinery in 2012 compared with actual spending in 2011. Nearly half of respondents plan to increase spending in 2012 compared with nearly 48% of respondents who increased spending in 2011 (see Figures 1 and 2). As in 2011, one-third of respondents plan to decrease spending in 2012, and 17.2% plan to decrease spending in 2012 (see Figure 2).
Figure 2: Planned spending on equipment and machinery in 2012 compared with 2011 actual spending (percentage of respondents). (SCOTT HEINER/INGRAM PUBLISHING/GREGOR SCHUSTER/GETTY IMAGES)
For those respondents that plan to augment expenditures on equipment and machinery in 2012, spending increases are expected to be higher than in 2011. Nearly three-fourths of respondents plan to increase spending by more than 4% compared with 2011 levels. In contrast, in 2011, 60% of survey respondents increased spending by more than 4%. For planned spending in 2012, the survey showed:
For those planning to decrease expenditures in 2012, the declines were more evenly distributed than in 2011, when 85% of respondents decreased spending by more than 8%. For planned expenditures for 2012, the survey showed:
So how much do companies plan to spend on equipment and machinery in 2012? In looking at spending as percentage of annual sales, the survey showed:
On an absolute level, 38.8% of the respondents plan to spend less than $1 million on equipment and machinery in 2012. Almost one-third (31.3%) will spend between $1 million and $10 million, and 16.4% will spend between $11 million and $50 million.
2011 levels. In 2011, Western Europe and the United States were the two leading areas for capital investment. More than one-third (37.8%) of respondents said that their companies spent the most on equipment and machinery for facilities in Western Europe, and nearly one-third (32.0%) said their companies spent the most in the United States (including Puerto Rico).
Established markets continue to dominate spending. Nearly half (47.3%) of respondents added machinery and equipment at facilities in the US in 2011, and 42.6% did so in Western Europe (see Figure 3). Eastern and Central Europe was the third leading region for spending with 18.9% adding equipment and machinery at facilities in those regions followed by Canada, with 10.1% adding equipment there (see Figure 3). Capital investment in emerging markets trailed, with 8.9% adding equipment, respectively in China and India, and 7.7% in Mexico, Central, or South America (see Figure 3).
Figure 3: Percentage of respondents that added equipment and machinery in 2011 in various regions. (SCOTT HEINER/INGRAM PUBLISHING/GREGOR SCHUSTER/GETTY IMAGES)
2012 levels. Planned spending in 2012 is commensurate with 2011 levels in established markets and show some redistribution of expenditures in emerging markets. As in 2011, companies plan to spend the most in 2012 in Western Europe (37.7%), the US (35.1%), and Central and Eastern Europe (9.6%). As in 2011, the US, Western Europe, and Eastern or Central Europe are the three leading areas for planned capital investment in 2012. The survey showed 42.3% plan to add equipment and machinery at facilities in the US in 2012, 39.3% in Western Europe, and 12.8% in Eastern and Central Europe (see Figure 4).
As in 2011, planned spending for 2012 is less in emerging markets than in established ones. In emerging markets, one interesting shift is slightly greater investment in China. In 2012, 11.1% of respondents plan to add equipment and machinery at facilities in China compared with 8.9% who added equipment there in 2011 (see Figures 3 and 4). More respondents also plan to add equipment and machinery in Mexico and in Central and South America. In 2012, 9.4% of respondents are augmenting investment in those areas compared to 7.7% in 2011. Also, slightly less (6.8%) plan to add equipment in India compared to 8.9% in 2011 (see Figures 3 and 4).
Figure 4: Percentage of respondents that plan to add equipment and machinery in 2012 in various regions. (SCOTT HEINER/INGRAM PUBLISHING/GREGOR SCHUSTER/GETTY IMAGES)
Areas of spend
2011 levels. The survey also examined the types of equipment and machinery purchased. Companies spent the most in 2011 on solid-dosage manufacturing equipment and machinery, with 35.6% of respondents reporting this area as the highest source of spending in 2011. Equipment for biologic-based API manufacturing and equipment for quality assurance/quality control (QA/QC) were tied for the next two leading areas, with 16.1% of respondents each spending the most in those two areas. Equipment for parenteral/sterile manufacturing was the next highest area of spend for 11.9% of respondents, and equipment for small-molecule API or chemical manufacturing was the next highest source of investment at 7.6%.
The survey showed that tablet presses, capsules-filling machines, equipment for biopharmaceutical production, and analytical instrumentation were areas of active spending in 2011. A specific breakdown showed (see Figure 5):
Figure 5: Spending trends for various equipment types for purchases made in 2011 (percentage of respondents). (SCOTT HEINER/INGRAM PUBLISHING/GREGOR SCHUSTER/GETTY IMAGES)
The areas with the largest decline in spending in 2011 were batch reactors for chemical API manufacturing and cleanrooms or other high-containment equipment. The survey showed that 15.6% of respondents decreased spending on batch reactors and 10.3% decreased their purchases for cleanrooms or other high-containment equipment (see Figure 5).
2012 planned levels. For 2012, companies plan to increase purchases of tablet presses and capsule-filling machines at commensurate levels in 2011. The same is true for equipment for QC/QA and biopharmaceutical production, both downstream and upstream, as well as disposables. The survey showed, however, a fall in spending for 2012 for environmental-control equipment, equipment for process control and automation, and analytical instrumentation and an uptick in spending for vial or syringe-filling equipment (see Figure 6).
Figure 6: Spending trends for various equipment types for planned purchases in 2012 (percentage of respondents). (SCOTT HEINER/INGRAM PUBLISHING/GREGOR SCHUSTER/GETTY IMAGES)
For companies planning to add equipment and machinery in 2012, the survey showed (see Figure 6):
The area of largest decline for planned expenditures in 2012 is for tablet presses or capsule-filing machines as more companies to plan to decrease spending than to retain it at current levels. The survey showed that 18.9% of respondents plan to decrease spending in 2012 .Other areas of reduced spending for 2012 are equipment for environmental control (19.0% of respondents plan to decrease spending), packaging equipment (14.0%), and analytical instrumentation (11.3%) (see Figure 6).
2011 results. Overall economic conditions influenced purchasing decisions. Eighty percent of respondents said that overall economic conditions had either a high impact (39.2%) or medium impact (40.8%) on their purchasing of equipment and machinery in 2011. The survey showed various responses:
Other companies, however, were not as affected by economic conditions. The survey showed that 16.3% felt that their business conditions improved and increased capital investments, and 9.8% of respondents felt that they were not affected and left their capital investments unchanged. Although economic conditions affect purchasing, GMP compliance is the leading factor influencing spending. Eighty percent said GMP compliance had a high impact (55.6%) or medium impact (24.2%) on the types of machinery equipment purchased and the size of their purchases.
2012 levels. The macroeconomic environment is again playing a significant role in planned expenditures for 2012. The survey showed that 86.7% of respondents say that economic conditions are affecting their purchasing decisions in 2012, slightly higher than the 80% in 2011, with 58.9% saying overall economic conditions are a high-impact factor and 27.8% saying they are a medium-impact factor. Slighter fewer companies plan to delay purchasing equipment in 2012 compared with 2011, but slightly more are planning not to buy equipment. For 2012, the survey showed:
Other companies, however, were not as influenced by the macroeconomic environment. The survey results showed that 16.9% of respondents felt that they have improved business conditions and will raise capital investments in 2012, and 14.6% feel that they are not affected by a change in business conditions and plan to leave capital investments unchanged.
Survey respondents were fairly evenly divided about the importance of innovation in influencing their purchasing decisions for equipment and machinery. More than half (54.5%) said that innovation was "extremely important" or "very important" in their purchasing decisions and 45.6% said it was "somewhat important."
Respondents felt that innovation was highest in equipment for biologic-based API manufacturing, QA/QC, and parenteral/sterile manufacturing (see Figure 7). Innovation was considered the lowest in equipment for small-molecule or chemical API manufacturing (see Figure 7).
Figure 7: Industry’s level of product innovation in various equipment types during the last two years (2010 and 2011). (SCOTT HEINER/INGRAM PUBLISHING/GREGOR SCHUSTER/GETTY IMAGES)
The survey also showed that purchasing equipment to support newer technologies, such as process analytical technology (PAT), is expected to increase in 2012 although the adoption of PAT is somewhat lagging. More than 60% of respondents said that their company does not incorporate PAT into its operations. For those companies that do incorporate PAT, about half (51.4%) increased expenditures for PAT-related equipment in 2011, and another half (48.6%) did not. In 2012, slightly more plan to increase spending on PAT-related equipment, with 60% projecting to raise expenditures in this area.
The adoption of continuous manufacturing also is proceeding slower. Approximately two-third of respondents do not use continuous manufacturing in finished product manufacturing, and 81.9% do not use continuous manufacturing in API manufacture. For the one-third of respondents that do use continuous manufacturing for finished drug products, 31.6% of respondents plan to increase spending for equipment in this area in 2012, and 68.4% will not increase spending. For the roughly 20% of respondents that use continuous manufacturing in API manufacture, only 20.4% plan to increase spending for equipment in that area in 2012, and 79.6% will not increase spending in 2012.
About 60% of respondents use disposables in biopharmaceutical manufacturing, with about half (48.1%) planning to increase spending in 2012. For future purchases of bioprocessing equipment, respondents are fairly evenly divided on their approach: 30.6% plan to use stainless-steel equipment; 30.6% plan to use single-use or disposable equipment; and 38.8% plan to use a hybrid of disposables and stainless-steel equipment.
1. P. Van Arnum, Pharm. Technol. 35 (3), 50–62 (2011).