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Capex Project Procurement Analysis – Process Sectors – 2019

In this post, we take a look at some capex project procurement statistics from our MyProtel project database as we move toward 2020. Read the chart and analysis below to get our take on potential capex project procurement levels in the main processing sectors for the next year.

capex project procurement pharma food drink chemical energy gas uk ireland

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Pharmaceutical & Biotechnology

Compared to our previous post covering 2018, we are seeing a greater number of project schemes entering procurement in the next 12 months and an increased total investment value in pharma specifically.

Due to the need to ensure ongoing product integrity and the need to meet regulatory compliance, pharmaceutical and biotech manufacturers are constantly investing in capital equipment. 2018-19 showed the split of project sizes biased toward smaller schemes with political uncertainty impacting on larger-scale new build type projects. Despite the political uncertainty still remaining, there has been a shift in the pharma sector with a reduction of smaller schemes forecast and an increase in schemes within the £10-25 million bracket.

We are expecting a number of these projects to be placed on hold as they are impacted by the general uncertainty impacting the sectors (read more in our latest UK Pharmaceutical Industry Outlook here).

In Ireland, following a number of large schemes coming to fruition in 2017-18, the situation this year looks much the same as 2018-19, with a similar quantity and value of projects entering procurement.

Belgium bucks the trend slightly, with a larger potential capex value split across fewer schemes, the size of individual schemes reflecting larger-scale project activity in general.

Food & Drink

In the UK, the quantity of projects reaching the capex project procurement stage has decreased since the previous year but the investment value has increased despite this reduction in quantity.

Protel has begun food & drink project coverage in France, Belgium and The Netherlands since the 2018 update. Of these, Belgium has the highest capex predicted to reach procurement in the coming year which could represent an excellent opportunity for suppliers. You can view our recent webinar to learn more about how to target these regions.

Chemical, Energy & Gas

As previously mentioned, these 3 sectors are greatly linked across our coverage: over 80% of reported gas projects involve some form of chemical and/or energy related process. While project scale varies dramatically (especially compared to our other industries – see Fig.1), almost all reported Energy projects are new builds with a value in excess of £10m.

Chemical projects remain more varied: biased more toward the middle (£10m-£25m) and higher bands (>£50m). There are a good number of mid-scale chemical plant expansions entering procurement in 2019, full details of which are available to subscribers. As with the last period, total investment value across all 3 sectors is dominated by a relatively low number of big budget schemes.

Conclusion

The mix of projects entering procurement in 2019 has changed to that of 2018. A greater percentage of projects in all sectors are falling into the £10-25 million bracket with a reduction of smaller scale projects going to procurement. There is still a great deal of potential for suppliers of equipment and related services, across multiple regions. However, suppliers must be mindful of the changing investment landscape, in certain sectors shown as a greater number of smaller schemes, but in different sectors or regions the opposite is occurring, depending on the individual market conditions.

Overall, we’re tracking capex project procurement across a very consistent amount of investment this year, albeit across a different quantity of projects. As before, we would likely expect the ongoing political uncertainty (particularly in the UK) to mean that a proportion of these projects will experience delays as we’ve been tracking currently.

Fig 1. Split of Projects by Sector & Value Band – UK & Ireland

£0m-£5m £5m-£10m £10m-£25m £25m-£50m >£50m
Pharma 38% 19% 25% 14% 4%
Food & Drink 38% 19% 31% 9% 3%
Chemical, Energy & Gas 10% 17% 30% 13% 30%

For full details of any of the investment covered, including key information required to target specific projects, please contact us – we’ll help you to win new business.

This entry was posted in Analysis on May 08, 2019