"Made in Germany" is the World's Leader
The field of manufacturing and packaging machinery for pharmaceuticals is a small but highly specialized segment of German engineering, and very successful in international competition. The ACHEMA is the world's leading trade fair for this segment. All the leading international manufacturers attend this fair with their stands. Customers come to the ACHEMA from all over the world to see and inform themselves about the latest developments in production, filling and packaging technology for pharmaceuticals. This is not without good reasons: Because the supplier industry of once the world's apothecary is now the most sought-after supplier of production and packaging machines worldwide.
Pharma machinery "made in Germany" is the world's leader
There are no meaningful official production and foreign trade figures for this sector. The VDMA estimates that the German production volume of pharma production and packing machinery is around 1.7 billion euro. By far the largest proportion of production is exported. Parallel with the rising importance of so-called "Pharmerging Markets", these countries have gained significance over the past few years compared to the industrialised nations. The sector's leading enterprises are now represented with assembly and sometimes also production locations in China and India, especially with a view to competing successfully in the mid-market segment against the rising local competitors in those countries. Classical delivery business predominates in the high-end segment, and where the Europeans are still in command.
All in all, German pharma machine constructors managed to hold their market position in international competition. In terms of value, roughly one in four of every pharma machine comes from Germany. Measured by unit quantities or installed production capacity, however, China and India have captured significant market shares - albeit favoured by growth in their respective home markets and the growing, cost-sensitive Pharmerging Markets. The VDMA estimates that the total market has now reached a dimension of around 7 billion euro.
Sector set for growth
The sector has built up significant production capacities over the past years. This was its reaction to the consistently good sector economy and good structural framework conditions for the pharmaceuticals industry. The most important customer group, globally operating and researching pharmaceuticals corporations, has in the meantime navigated around the so-called 'Patent Cliff'. The research pipelines are well filled and new products can compensate for decreasing sales due to expiring patents. Factors such as the increasing over-ageing in the industrialised countries, increasing civilisation ailments in the emerging countries, rising populations with simultaneously better supply of medicines in emerging and developing countries, as well as costs pressure brought to bear by public health providers on pharmaceuticals manufacturers are stimulating the demand for pharma production and packaging machinery.
Loss of business with Russia slows down growth
Despite the loss of Russian business, the sector is still in good shape according to the latest spring survey by the VDMA. The sector's economic performance is supported by stable demand in the euro zone, which is running at a high level in a comparison over the years, as well as the reviving North America business. On the other hand, demand in the so-called emerging countries has continued to weaken, due partly to the installed excess capacities. VDMA members do not anticipate any significant changes in the most important regions (Germany, West Europe, North America and the Far East). Overall, it can be assumed that the sector's economic environment will remain good.
Since Russia has in the past produced only a comparatively small share of its pharmaceutical needs and tended rather to import medicines, especially in the premium segment, this market is less important for the sector than, for instance, the food processing machinery segment. Nevertheless, the sector places high expectations in the Russian market going on the basis of the ambitious Russian development programme 'Pharma 2020'. In view of political tensions at the moment and the current rouble and economic crisis, it is feared that ongoing projects will be reoriented to pharmaceutical machinery suppliers in India and China, and which could dampen long-term prospects in the Russian market.
Images: R. Eberhard, messekompakt.com, EBERHARD print & medien agentur gmbh