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Pharmaceutical Technology's annual survey on equipment and machinery shows fewer companies increased spending in 2008 and still fewer will increase spending in 2009 as overall economic conditions affects purchasing decisions.
Declining economic conditions are having a chilling effect on the pharmaceutical industry's capital investment. The results of Pharmaceutical Technology's annual survey on spending and innovation trends for pharmaceutical equipment and machinery show that fewer companies increased spending in 2008 than in 2007 and still fewer plan to spend more in 2009. Overall economic conditions are the chief culprit behind the fall. When spending, however, the chief motivation for increasing spending is to facilitate regulatory compliance. Other key findings show more than a majority of respondents have implemented process analytical technology (PAT) in their manufacturing lines and are using disposables or single-use components in biopharmaceutical manufacturing.
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The results of the survey showed fewer companies increased spending on equipment and machinery in 2008 when compared with 2007 and less spending planned for 2009. More than one-third (35%) of respondents said that they increased spending on equipment and machinery in 2008, but less than one-quarter (24%) said they plan to increase spending in 2009 (see Figures 1 and 2). These levels are also down from Pharmaceutical Technology's previous survey in which almost half (47%) of respondents said that they increased spending in 2007 (1). Approximately 20% of respondents said they decreased spending in 2008, and more, nearly 28%, said they plan to decrease spending in 2009.
Figure 1 Compared with 2007, did your company 2008 spending on equipment and machinery
Uncertain economic conditions seem to be affecting purchasing decisions. More than two-thirds of respondents said that they postponed buying equipment and machinery in 2008 and will again in 2009 because of overall economic conditions (see Figure 3). Respondents also reported difficulty in securing financing for capital investments, reduced production, and a slight increase in outsourcing because of economic conditions. Twenty-two percent of respondents said that they had difficulty in securing financing for capital investments in 2008, and slightly more, 27%, said they had such difficulty for planned expenditures in 2009 (see Figure 3). About one-fifth of respondents said they face reduced production because of customers' financial difficulties, and a similar level reported that they did or plan to increase outsourcing to avoid capital costs (see Figure 3).
Figure 2 Compared with 2008, will your company 2009 spending on equipment and machinery
For those companies increasing spending, the level of spending as a percentage of sales, absolute spending, and the amount of spending increases are expected to be less in 2009 compared with 2008 levels. Respondents' companies' mean percentage of overall sales spent on equipment and machinery in 2008 was 4.3%; the median was 3.5%. For absolute spending, the mean expenditure in 2008 was $74.5 million; the median was $4.4 million. Planned expenditures for 2009 are less. Respondents' companies' mean percentage of overall sales that they plan to spend on equipment and machinery in 2009 is 3.9%; the median is 3.0%. For absolute spending, the mean expenditure planned for 2009 is $51.1 million; the median is $4.3 million.
Figure 3 Which of the following apply to your company because of overall economic conditions?
Spending increases on equipment and machinery were most prevalent in 2008 by generic-drug companies; 55.6% of these companies increased spending in 2008. Biotechnology and consumer healthcare companies followed, with nearly 43% of biotechnology and 42% of consumer healthcare companies reporting increases in spending in 2008. Approximately 30% of contract manufacturers and 24% of innovator pharmaceutical companies reported increases in spending in 2008.
For 2009, 50% of consumer healthcare companies said they plan to increase spending. Generic-drug companies were the second largest company type to increase spending (27% plan to increase spending in 2009) followed by contract manufacturers (23%), biotechnology companies (23%), and innovator pharmaceutical companies (19%).
For those companies that increased spending in 2008 compared with 2007, more than three-fourths (76%) said the increase was greater than their 2006–2007 increases; 21% said it was on par, and 3% said it was less. For 2008, the mean increase in spending was 8.7%; the median was 4.3%.
Lower spending increases are anticipated for 2009. For those respondents whose companies plan to increase spending from 2008 to 2009, 60% said their planned increase will be greater than their 2007–2008 increase; 36% said it is on par; and 2% say it is less. The mean planned increase for 2009 is 5.9%; the median is 3.7%.
Spending by equipment type
Figure 4 details how respondents spent in 2008 and plan to spend in 2009 in specific areas. In 2008, respondents' companies most frequently increased their spending on equipment for manufacturing and processing (37%), quality assurance and control (35%), and laboratory equipment (31%). For purposes of the survey, manufacturing and processing equipment includes clean-in-place and steam-in-place systems, hoppers and drums, materials handling and conveying equipment, pallets, pipes and fittings, robotic equipment, stainless-steel tanks and tubing, and other piping.
Figure 4 Year-over-year, how did or how will your spending change for the following equipment areas?
For 2009, respondents' companies most frequently plan to increase their spending on machinery and equipment for quality assurance and control (23%), manufacturing of biologic-based (active pharmaceutical ingredients (APIs) (21%), and machinery and equipment for packaging (21%).
Where was spending the highest? Respondents' companies spent the most on machinery and equipment in 2008 in manufacturing and processing equipment (17%), solid-dosage manufacturing (16%), and parenteral manufacturing/aseptic or sterile processing (11%). A similar pattern holds up for 2009. Companies responded that they plan to spend the most in 2009 on manufacturing and processing equipment (16%), solid-dosage manufacturing (14%), and parenteral manufacturing (9%).
The factors that most influenced purchasing decisions in 2008 were compliance with good manufacturing practices (GMPs) (57% of respondents reported as a high-impact factor), expansion of manufacturing facilities (41% reported as a high-impact factor), and other regulatory compliance (34% reported as a high-impact factor) (see Figure 5).
Figure 5 What was the impact of the following factors on your purchasing decisions for equipment and machinery?
Compliance again is the leading reason for planned spending on equipment and machinery in 2009. Forty-six percent of respondents report that GMP compliance was a high-impact factor in their planned expenditures , and 35% said other regulatory compliance was a key factor (see Figure 5). Unlike in 2008, when 41% of respondents said facility expansion was a strong influence for spending increases, only 27% said facility expansion will be a major influence on their planned spending for 2009 (see Figure 5).
Process analytical technology
The survey also examined the importance of PAT in the manufacturing activities of respondents. More than half (56%) said that their companies do not incorporate PAT into their manufacturing lines, and nearly 44% do (see Figure 6).
Figure 6 Does your company incorporate process analytical technology (PAT) into your manufacturing line?
Innovator drug companies lead in PAT implementation. Approximately 55% of innovator pharmaceutical firms said they have incorporated PAT into their manufacturing lines, and roughly 49% of biotechnology companies and 46% of consumer healthcare companies have. Thirty-two percent of generic-drug companies and 23% of contract manufacturers have implemented PAT.
Among respondents whose companies use PAT in their manufacturing lines, the most common benefits PAT has brought to their production process are better process understanding (71% said so) and increased efficiency or reduced waste (57%). For those companies not using PAT, the most common reason why they do not use it is that the benefits do not justify the necessary effort (49% said so) and that it is expensive (31%).
Stainless steel versus disposables
The survey also examined the spending and interest in the use of disposables or single-use components in biopharmaceutical manufacturing compared with stainless-steel systems. More than half (55%) of respondents said their companies used disposables or single-use components in their biopharmaceutical manufacturing (see Figure 7). The penetration of disposables use was greatest among biotechnology companies (87% of biotechnology companies use disposables), followed by innovator pharmaceutical companies (62%), contract manufacturers (46%), consumer healthcare companies (18%), and generic-drug companies (15%).
Figure 7 Does your company use disposables or single-use components in your biopharmaceutical manufacturing?
Although more than a majority of companies use disposables, 44% were undecided whether they would buy a single-use or stainless- steel bioreactor for future purchases (see Figure 8). Only 6% said that they had a preference for purchasing single-use bioreactors and nearly 18% had a preference for stainless-steel bioreactors (see Figure 8).
Figure 8 For future purchases of bioreactors, are you more inclined to purchase
Disposables or single-use components and equipment for biologic-based APIs were high on the innovation curve. Thirty percent of respondents rated product innovation high for disposables or single-use components in biopharmaceutical manufacturing, and 22% ranked innovation in equipment for manufacturing biologic-based APIs as high. Also receiving strong marks for innovation were laboratory equipment (23% of respondents ranked it as high) and machinery for quality assurance and quality control (17%).
Innovation is significant when making a purchasing decision. Fifty-eight percent of respondents said innovation was "extremely" or "very" important in influencing their decision to buy equipment and machinery. Respondents also said that they were generally satisfied with the level of product innovation in 2008. Eighty-two percent of respondents said there were not new product innovations that they had anticipated for 2008 but were not commercialized. Seventy-two percent said there were not innovations in existing equipment that they had hoped for, but were not made.
1. P. Van Arnum, "Pharmaceutical Technology's Equipment and Machinery Trends Survey," Pharm. Technol.32 (3), 64–70 (2008).