Avoiding The Headaches Of Asset Management In Pharma

By Matt Hicks

Idle pharmaceutical manufacturing and packaging equipment costs money to maintain, depreciates in value, takes up valuable footprint space, and incurs insurance costs. Selling that unused equipment can generate significant cost savings opportunities.

Repurposing idle equipment can add both hard and soft value to a company. Hard-value savings can be realized by putting good equipment back into service in another department or another site, avoiding the cost of new machinery and lowering overall production costs. This results in a cost avoidance on the capital expenditure budget for the receiving site, meaning the site planned to purchase new equipment, but instead opted for used equipment with as little as $0 net book value. The decrease in capital spending lowers overall production costs.

Additionally, the sending site eliminates soft costs such as wasted storage space and hard costs associated with removal, leased or rented storage space, as well as financial-related issues such as net book value and personal property taxes. Managing these assets effectively requires an investment recovery program. A pharma company should consider outsourcing this program to a third-party asset management company that has knowledge of the secondary equipment marketplace and the capacities to manage removal projects, store and keep track of equipment, market machinery to the best possible buyers, and manage the sales process.