The Benefits and Savings of Purchasing Used R&D Equipment

In this interview, AZoM speaks to the experts at Equipnet about the benefits & savings of purchasing used R&D equipment.

The market for used scientific equipment is continuing to strengthen, can you give us a brief introduction to Equipnet and your services for the Scientific and Medical markets?

EquipNet is celebrating its 15 year anniversary in 2014 as the leader in surplus asset management specializing in the pharmaceutical, biotechnology, and R&D industries.  We provide comprehensive asset management programs for leading corporations such as; Merck, Johnson & Johnson, Sanofi, Bayer and many more.  Our Asset Redeployment Management System (ARMSTM) is the most widely used asset tracking software in the world; deployed in over 3,000 facilities with over 9,800 users.  These individual “ecosystems” are the basis for the largest online MarketPlace in the world for buying and selling lab instrumentation, EquipNet.com.   Companies from small startups, contract labs and manufacturers, and large multi-national organizations take advantage of excellent pricing for premium, late model assets.

Have you found that there has been a shift in confidence in purchasing used equipment as opposed to new?

The market for second hand equipment has always had a strong foundation with small labs and contract manufacturers, but in the last five years, there’s been a significant increase in large, multinational organizations purchasing pre-owned machinery and instrumentation.  Advances in technology have allowed these companies to see the real value and time savings that purchasing pre-owned assets can bring.

Typically, what are the implications and key points to consider when purchasing used R&D Equipment?

The most successful programs have several elements in common. These include:

They make sourcing pre-owned equipment a formal process. Because it is likely to meet resistance, the best way to ensure internal users consider second-hand alternatives is to require them to do so. This can be done by integrating pre-owned procurement into multiple phases of the capital budgeting, approval and procurement processes.

They make sourcing pre-owned equipment easy for their people. Another way to overcome resistance is to make the process so easy that it actually saves time. For example, an outsourced supplier can do most of the searching legwork and can pre-qualify assets, thus minimizing time spent internally on research and on evaluation of dead-end opportunities.

They create clear governance and policies which support pre-owned procurement. Because the used equipment market functions differently from new procurement, successful companies review their internal practices and develop strategies to adapt. In some cases, this means targeting specific procurement channels which are more friendly to their capital approval process. In other cases, this means adapting their internal practices – or developing creative new practices – that allow them to be more nimble in pursuing second-hand procurement opportunities.

They formally manage change. Successful pre-owned procurement programs are continually reinforced by an internal public relations program which publicizes success stories. Such programs also work to continually build awareness, educate users about opportunities and options, and build trust in the process.

Important points to consider when buying new include whether or not the OEM still supports the item and if there are software licensing issues.   In addition, time is a critical factor.  If the company needs to get the asset up and running quickly, used equipment definitely has the advantage over a new model where lead time to use is significantly longer.

One question from our readers surrounds the issue of technical support, do you get the same level of technical support when purchasing used R&D equipment?

Unless explicitly implied, there is no direct technical support from the sources of used equipment.  Some will offer limited warrantees.  However, the buyer can also purchase extended warrantees and maintenance agreements directly through the OEM.  EquipNet has partnerships with specific OEMs as well as third party service companies that provide support.

Typically, what kind of savings can you expect over the RRP of these products?

Pre-owned equipment sourcing strategies are delivering significant benefits. Many companies have found that, using alternative sources, they can save 25% to 75% off the cost of new.   In addition, there is a significant time savings which can equate to significant reduction in costs.

What kind of guarantee can you expect to receive when purchasing used R&D equipment?

Most used R&D equipment is sold “as is, where is,” which is why the buyer can see up to 75% cost savings over a new purchase.  The majority of our clients sell their R&D equipment from working labs, where the equipment is being used right up until the sale, so the buyer can see the item(s) work prior to a purchase.  There are certain asset classes such as HPLCs, Mass Specs, and GCs that are offered with limited warrantees and maintenance agreements.

Are there any other benefits to purchasing used equipment?

Not only does buying used assets save cash, but it also improves their cost structure by reducing depreciation – making them more cost competitive year after year.  In addition, when companies buy new assets, they typically have to wait for months before taking delivery, due to OEM lead times. By contrast, most second-hand equipment is available immediately. This means companies can get their projects up and running faster – increasing the speed to market, and/or reducing production downtime.  Finally, it allows them to pursue projects that would not otherwise have been economically feasible – and to get those projects up and running more quickly.

What is the typical procurement process?

When sourcing capital equipment, the very first place that a company should look is inside its own facilities. By redeploying surplus equipment it already owns, the company can avoid the need for a new equipment purchase altogether.  Setting up such a program with internal resources can be a challenge. Most companies do not have the experience, knowledge, or resources needed to build a robust, successful redeployment program. For this reason, the vast majority of companies that have set up formal redeployment programs have done so with the help of an outsourced partner.

If redeployment is not an option, there are many avenues for purchasing second hand equipment.  EquipNet offers two primary channels for buying equipment, Managed Sales and Auctions.

Managed Sales is exactly like a real estate model.  EquipNet runs the largest MarketPlace in the world for buying pre-owned lab instrumentation and manufacturing machinery.  Sellers work with our project management team to establish pricing.  Buyers work with our sales representatives to make sure that the equipment meets there specifications, schedule inspections, negotiate a final price, and arrange logistics.

Our auction channel allows buyers various types of events to find and purchase premium assets at significantly discounted prices.  These events include; online auctions using EquipNet’s proprietary SmartAuctions™ Technology, Live and Webcasted Events, FirstBidTM Auctions, and Sealed Bid Events.  To find out more about each of these options, go to http://www.equipnet.com/services/auctions/

For all the online technology out there, however, a critical part of the buying process is information gathering and the best method for that is to talk directly to the people who know the most about the equipment.  We encourage all our buyers to call into one of our sales offices around the world and have one of our experts help find the best solution to their equipment challenges.  A major advantage that EquipNet has can be found in the private redeployment websites also known as ARMSTM (Asset Redeployment Management System) that we create for our corporate accounts such as Johnson & Johnson, Merck, Novartis, GE Healthcare and many more.  Assets that do not get redeployed in these systems eventually funnel into EquipNet’s MarketPlace.  If a buyer cannot find what he or she is looking for on our site, EquipNet can access all of the ARMS sites, locate the right equipment, and work with the sellers to release those assets for sale.

Many companies use EquipNet as an extension of their procurement department to source used equipment because of our wide variety of sales channels and because we have a vast network of supply at our disposal.

Where do you see the market for the buying and selling of used R&D equipment going next?

We see increased acquisition activity in the Biotech & Pharmaceutical Industries.  There has also been an increase in funding of start-ups and mid size R&D organizations recently which we anticipate will continue over the next few years.  With the competitive Biotech and Pharmaceutical Market as it is, there is a call to increase efficiencies yet reduce costs and spending.  As a result, there is no question that there will be growth in the secondary equipment market and increased opportunity for both the buying and the selling of used R&D equipment.    

About Ben Potenza

As EquipNet’s Vice President of Marketing, Mr. Potenza oversees a world-class team that specializes in inbound and outbound marketing and has coordinated hundreds of successful surplus equipment marketing campaigns for major corporations in the pharmaceutical, biotech, chemical, and consumer products industries.  

Mr. Potenza has been with EquipNet since the early development stages of the company and has been a pioneer in bringing technology solutions as well as cutting edge marketing techniques to the asset management industry for 15 years.