Used processing equipment industry booming due to pharma M&A, say vendors

07-Oct-2014 - Last updated on 08-Oct-2014 at 08:44 GMT

Related tags Drug

Consolidation in the pharma industry is driving the second-hand processing equipment market but despite attempts to regulate the industry, a glut of online vendors means illegal drugmakers can buy such systems.

Search online for second-hand pharmaceutical processing equipment and pages of vendors offering used coating machines, liquid and powder fillers, granulators, pumps and tablet presses – to name just a few units – come up.

Last week, in-Pharmatechnologist.com was at Europe’s largest pharma processing show, TechnoPharm, in Nuremberg, Germany, and discovered that while the market for second-hand equipment is huge, issues with monitoring means machinery is sometimes ending up in the hands of illegal drugmakers.

“In the past 10-15 years there has been a huge amount of M&A in the pharma industry which has led to an over-capacity of processing equipment,” one maker of process systems told us. “Therefore there has been a rise in the second-hand market and an increase in vendors as it is possible with good engineering to put together a whole facility made up of second hand pieces.”

“Unfortunately,” he continued, “this also gives rise to unauthorized users as these sales are not strictly monitored or controlled. A number of years back there was an example of British Intelligence sting catching illegal drugmakers through a second hand vendor but now there are too many vendors selling second hand machinery worldwide due to the internet on sites including ebay.”

Buyer Screening Process

One vendor, Liquidity Services’ GoIndusty DoveBid marketplace, agreed that the industry for second-hand goods was increasing, telling this publication that “there has been a steady 15% increase in the amount of inventory coming into the secondary marketplace every two to three years,” mainly attributed to M&A (downsizing and lab closure) as well as mainstream adoption.

However, it takes the sale of equipment that could be used in illegal activity very seriously. “To prevent this type of activity, we have established buyer screening processes which includes having buyers fill out a USFDA form to certify that they are a healthcare professional, research institution or refurbisher of medical equipment.”

Equipnet, another vendor of second-hand equipment, added there is legislation in both the US and Europe that restricts the sale of equipment such as tablet presses, as well as additional legislation that restricts the sale of certain types of equipment, such as bio-reactors, to offer some protection against terrorism.

“US law requires that when a tablet press or capsule filler is sold from one company to another, proper documentation is submitted to the Drug Enforcement Agency (DEA) to confirm that buyer is legitimate,” the firm told this publication “EquipNet takes this process very seriously and always takes necessary precautions to ensure that second hand equipment isn’t sold to illegal drug manufacturers.”

Big Pharma interest

Furthermore, the monitoring and regulation of the second-hand industry could increase as the market for second-hand goods shift.

“In years past, demand came mostly from small contract manufacturers who could not afford to purchase new equipment,” Equipnet told us.

“However, big pharma companies are feeling more and more economic pressure from generic manufacturers as drug patents expire and more emphasis is being put on operational efficiency.”