New or Used?

By Matt Hicks, Federal Equipment | March 6, 2013

Is “risk” causing your firm to miss opportunities with used equipment?

Pharmaceutical manufacturers often rely upon two reasons to justify the purchase of used equipment for their operations: lower prices and faster delivery. These reasons are not a secret; used pharmaceutical process and packaging equipment can usually be purchased at prices that are 50% to 80% cheaper than new equipment. The equipment is typically available immediately, cutting lead-time for delivery by months. Even with this simple value proposition — save time and money with used equipment — many pharmaceutical manufacturers have never considered used equipment or simply refuse to consider used equipment as an option.
Pharmaceutical firms generally cite “risk” as the primary reason they refuse to consider used production equipment. “Risk,” in the pharmaceutical manufacturing context, can be interpreted in many ways: regulatory risk, validation risk, project risk, supply risk, and so on. If your firm refuses to consider used equipment due to “risk,” a conversation discussing the specific risk involved may prove worthwhile. A firm’s expertise in dealing with such risk may substantially mitigate — or, in some cases, eliminate — concerns involving used equipment.

Pharmaceutical contract manufacturing organizations (CMOs) have a great deal of in-house expertise in product transfer, technology transfer, and new product launches. CMOs consider and complete many technology transfers in any given year, while most captive pharma-manufacturing facilities consider relatively few new product launches per year. A CMO’s new business development cycle depends upon assembling competent technical transfer teams to quickly assess drug products and manufacturing processes, provide competitive offers and then deliver product to their customers. CMOs have teams, processes, and, most likely, “product launch” or “technology transfer” departments in place to manage a high volume of new products and processes. A risky project for a manufacturer accustomed to launching only a few new products per year may actually carry very little risk for a CMO with robust technology transfer and validation teams in place for launching multiple new products every year.

With multiple products from many different product sponsors, there can be a great deal of variation in manufacturing processes from one product to the next. CMOs must have equipment expertise in order to reliably deliver a diverse product mix according to each product’s master batch record. CMO engineering, maintenance, and operations staff rarely see the same product manufactured day in and day out, and they may see certain products only once or twice per year. These personnel are generally well trained and well versed in their equipment’s capabilities as well as new equipment needs. With an inspection that generally lasts less than one day, they will be able to evaluate whether a piece of used equipment is a good fit for operations within their portfolio of equipment as well as what remediation steps are necessary to bring the equipment up to speed. The validation and regulatory staff should be able to develop a validation plan based upon remediation of an older piece of equipment versus a validation plan for a completely new piece of equipment.

CMOs often have a great deal of validation and regulatory expertise. A competent CMO delivers products to multiple markets around the world and is therefore open to inspection by a diverse group of regulatory agencies and auditors. Regulatory expertise within your organization will help overcome any perceived risks associated with a given piece of equipment’s pedigree. These challenges are faced and met by CMOs every day, thanks to the wide variety of products made and increased regulatory scrutiny. A CMO can further reduce this risk by working with reputable equipment dealers that only source equipment from other reputable pharmaceutical companies and develop strong relationships with original equipment manufacturers.

A dealer with strong relationships within the pharma manufacturing industry as well as with the OEMs means that a buyer is truly getting high-quality equipment that will impress customers and inspectors. Leveraging the inventory available at a used equipment dealer can enable one’s new business development team to reliably source additional equipment needed to win new projects. Additionally, the equipment dealer should be able to provide affordable back-up equipment fast or equipment for additional capacity when a customer demands additional supply.

Most of the “risk” associated with the purchase of used equipment is easily managed by the in-house expertise possessed by pharma manufacturers and CMOs, allowing firms to take advantage of the simple value proposition provided by used manufacturing and packaging equipment: saving time and money.

Matt Hicks is chief operating officer at Federal Equipment Co., a seller of used processing equipment. He can be reached at matt.hicks@fedequip.com.

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