BioManufacturers Increasing Budgets for New Technologies

By Eric Langer, Managing Partner, BioPlan Associates, Inc.

Two-thirds Spending more for Improved Productivity

Almost two-thirds (64.2 percent) of biomanufacturers will increase their budgets for new technologies to improve efficiencies and costs for downstream production this year. Data from our newly released 9th Annual Report and Survey of Biopharmaceutical Manufacturers, include responses from 302 global biomanufacturers, and an additional 185 vendors to the industry. We find that budget increases this year are not just incremental changes: almost 1 in 10 will be making large increases (of 20 percent or more) in these areas, while a further 1 in 5 plan an increase of 10-20 percent.

Budget increases are not limited to technologies that can improve efficiencies and cut costs, though. Biomanufacturers are increasing spending on big ticket items, as well. This year we found that 15 percent of respondents are planning an increase of more than 20 percent in new facility construction. In addition, a clear sign of industry segment growth is that ‘New capital equipment’ is a focus of 12.3 percent, who are planning large increases, with a further 46% planning small to moderate increases. Compared with the past few years, these increases are substantial.

It is also encouraging to see that biomanufacturers are planning to increase their budgets for staffing-related causes. Roughly half of the 302 biomanufacturers surveyed forecast an increase in funding to hire new operations staff and new scientific staff.

Chart

Source: 9th Annual Report and Survey, Biopharmaceutical Manufacturing and Capacity, www.BioPlanAsociates.com, April 2012

In a sign that outsourcing growth is slowing, just one-quarter of biotherapeutic developers and CMOs said they would be increasing their funding for outsourced biopharmaceutical manufacturing. This year we also find that biomanufacturers are reserving their largest budget increases for new technologies for downstream (6.4 percent) and upstream production (6.0 percent), much the same as they were last year.

Vendors’ Increasing Budgets for Big Ticket Items

We separately measured 11 areas of budget changes among the 185 global vendors surveyed this year. Industry suppliers are also increasing their budgets in a number of key areas this year, according to our study. And these increases won’t be limited to smaller items, either: nearly half (44 percent) of vendors are planning to up their budgets for new capital equipment, including 6 percent who will be making large increases of 20% or more. This contrasts with just 11 percent planning any decrease in spending in this area, the majority of which are small decreases. Similarly, a third (33.3 percent) of vendors are forecasting greater dollars spent on new facility construction, including 8 percent making large increases.

This is a significant advance from previous years, when the economic downturn forced many suppliers to this industry to retrench and reduce spending. The increased budgets define a systemic optimism among the vendors to this industry that is likely a leading indicator of their expectations for long-term growth of their customers’, the biopharma manufacturers’, budgets.

Other indications are also signaling growth. Nearly half (45 percent) are boosting their marketing budgets, and over half (54.5 percent) will up their sales budgets. This may indicate short-term expectations for more rapid growth.

When shown as cumulative over the past three years, the budget increases (aside from new facilities construction, which has shown sluggish growth the past 3 years) have generally far outpaced the budget slashing that occurred during the economic downturn in 2009.

With budgets up across the board among both biopharma companies, and their vendors, and with increases showing in most all areas over the past 3 years, the industry seems to be on an optimistic trajectory.

References:
1. 9th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production: A Survey of Biotherapeutic Developers and Contract Manufacturing Organizations, BioPlan Associates, www.bioplanassociates.com

About the Author:
Eric S. Langer is president and managing partner at BioPlan Associates, Inc., a biotechnology and life sciences marketing research and publishing firm established in Rockville, MD in 1989. He is editor of numerous studies, including “Biopharmaceutical Technology in China,” “Advances in Large-scale Biopharmaceutical Manufacturing”, and many other industry reports. [email protected] 301-921-5979. www.bioplanassociates.com

Survey Methodology: The 2012 Ninth Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production in the series of annual evaluations by BioPlan Associates, Inc. yields a composite view and trend analysis from 302 responsible individuals at biopharmaceutical manufacturers and contract manufacturing organizations (CMOs) in 29 countries. The methodology also encompassed an additional 185 direct suppliers of materials, services and equipment to this industry. This year’s survey covers such issues as: new product needs, facility budget changes, current capacity, future capacity constraints, expansions, use of disposables, trends and budgets in disposables, trends in downstream purification, quality management and control, hiring issues, and employment. The quantitative trend analysis provides details and comparisons of production by biotherapeutic developers and CMOs. It also evaluates trends over time, and assesses differences in the world’s major markets in the U.S. and Europe.

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