The State of the Used-Equipment Market
Due to mergers and acquisitions, laboratory downsizing or upgrading, or outsourcing, many biopharmaceutical companies are opting to sell R&D or manufacturing equipment that they no longer need but are still in good working condition. Mainstream adoption of buying and selling used biopharmaceutical equipment has created an economical way for organizations to make and save money through the resale of surplus assets. In fact, more companies are taking a proactive approach in managing their surplus, causing a consistent year-over-year increase in the volume of inventory available on the secondary marketplace.
Fifteen years ago, however, it was unheard of for pharmaceutical companies to sell surplus equipment on the secondary marketplace. Instead, most equipment would end up sitting idle in a laboratory or would be disposed in a less than environmentally conscious fashion. Even 10 years ago, there would not have been a Fortune 500 biotech company selling a used device on the same platform as another Fortune 500 biotech, or one sourcing equipment from the other. So what has caused the gradual widespread acceptance? A few factors come into play; most notably, budget restrictions and the implementation of efficient business practices (e.g., companies can no longer afford to let assets lie idle or dispose them without additional thought to the process). Another factor is mainstream adoption, which has been a trickle-down effect as Big Pharma adopted polices of buying and selling on the secondary market, mid-size and smaller organizations followed suit, mirrored now by emerging markets. Today, there is a global adoption of buying and selling used equipment. This article reviews what organizations should look for when considering the purchase of used equipment.
For most purchases, the buyer should also consider the source of the asset as well as the credibility of the sales channel through which the asset is being sold. As long as the seller is reputable and the marketplace provides crucial asset information through written product descriptions, images, and oftentimes, video, the buyer should be able to make an informed purchasing decision without the need for an onsite, physical inspection. However, for very large and high dollar assets that are typically sold through private treaty, it is recommended that the buyer arrange for an inspection either during the preview period or by appointment.
Assessing current needs
There is plenty of used equipment at any given time available for purchase. As a result, buyers should only purchase a device or item that can be put to use immediately. Given the breadth of inventory hitting the secondary market each month, there is no need to make a purchase out of fear that it won’t be available, only to store the equipment for six months to a year.
Online auctions are typically held for high-demand products such as high-performance liquid chromatography (HPLC) devices and mass spectrometers; bulk lots of general laboratory and processing equipment including microscopes, centrifuges, mixers, and blowers; and facility and laboratory support equipment such as furniture and IT equipment. The benefit of purchasing through an online auction is that the buyer will know exactly what other bidders are offering and can, therefore, make a choice whether to pay more or pull out.
Private treaty sales involve direct negotiation between the buyer and selling agent. Typically, items for sale through a private treaty are big ticket or more unusual items such as nuclear magnetic resonance (NMR) spectroscopy units, and biopharma process and manufacturing equipment such as reactors, mixers, and blenders, that might require more time to sell due to the current market conditions. The benefit of a private treaty negotiation is that the buyer can have the item immediately after coming to an agreement with the seller, compared with having to wait for an online auction to open and close.
Expected savings and hidden fees
Buyers must be sure to factor in removal and shipping costs for everything they plan to purchase as equipment de-rigging and transportation will be the responsibility of the buyer. The larger the product, the more expensive it will be to transport.
Additionally, buyers must keep in mind that sometimes rooms are built around devices and they may have to knock through an exit wall to remove the equipment (e.g., an NMR spectrometer or a big chemical dryer mixer). Buyers must also take into account the installation costs at their facility.
Some secondary market sellers will recommend or help facilitate the services of specialty riggers or shippers. These sellers will usually have established partnerships, contracts, or negotiated terms with trustworthy removal and transportation companies who offer their services at reduced rates.
Tom Burton is executive vice-president and president of the Capital Assets Group at