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Paula Feldman: Good afternoon, everyone. I'm Paula Feldman, Senior Director of Business Intelligence. It's my pleasure to introduce Donna Ritson, president of DDR communications.
Donna Ritson: Now let's take a look at automation and digitization. This is certainly not unique to the pharmaceutical manufacturers, but the pharmaceutical manufacturers are taking a big role in this going forward. In the interviews that we did, 75% of those companies that we spoke with says they're increasing their level of automation in the coming year. And that's significant. That's automation. That includes robots and cobots. We'll take a look at that in just a minute. But 75% is a significant group that says, "Yes, we recognize we need to update or automate or somehow improve our operations going forward."
So when we look at that, how is that backed up by spending? We look at this from the standpoint of three out of five companies that we talked to either plan to increase their capital budgets at 40%, or at least maintain what they're spending now. And that was 20%. When we asked specifically, where do they see this happening—it really was across all areas of manufacturing and production, processing, primary packaging, secondary packaging, and end-of-line. So it's across their entire line, there was no place specifically that dominated over the other.
And we talked at length about their automation needs, what is actually occurring, and where are they at now? And where are they going in the future? And we see the contract manufacturer of over the counter drug product manufacturing, they said, "In the next five years, we have plans to have 80% of their end of line packaging being robotic." And we look at another large OTC manufacturer, and they've got about 20% of their secondary packaging now in robotics. And in the years ahead, they're actually looking to automate more case packing and palletizing. In the large brand and OTC manufacturer, looked at increasing robots and cobots in all areas of manufacturing, particularly looking for compliance to meet compliance. And we'll get to that as we go forward. And a large brand and generic manufacturer talked about advancing their level of packaging along the entire line. And really what's driving their focus is they want to rely less on labor as, as we mentioned earlier, certainly skilled and unskilled labor is getting more difficult to fill those positions. So automation is definitely taking up where they can't find people, and they can now automate a process.
And robots and cobots are on the rise. Three out of four companies we talked to that are using robotics now, over half of them predict certainly increasing more robots in the future. And just a shout out about this. The PMMI Business Intelligence Committee is now embarking on an entire industry-wide report far beyond just pharmaceuticals, in robots and cobots. And that should come out in probably the next 60 days. So something to look forward to. We'll update a report that we did three years ago, and get much more in depth as to the reasons why behind robots and cobots are on the rise across all industries.
So then one of the things we talked to the participants about is, "What improvements do they need on their next generation of equipment?" And now this list is certainly not something that we haven't seen before. Flexible and faster changeover remains at the top of the list. We heard from a large brand and generic manufacturer that says they really need machines that are easy to set the parameters so that it's designed so a semi skilled operator can operate that machinery more easily and achieve repeatability and quality.
So certainly at the top of the list, but preventive maintenance and predictive and robotic control. We know that's on the rise and vision inspection certainly for a while. level of quality. Cleanability is very important in this industry as it as it is in the food and beverage industries. They're looking for easier maintenance on machines. And of course, improved operator safety is always across the board.
And if we look at some of the technology advancements that automation is bringing in, AI certainly is one that brings many different advantages. We've heard in the pharmaceutical manufacturers from two different RX manufacturer and a generic manufacturer as well, both large leaders in the industry, they're using AI to help them with vision inspection, and want to ensure that the stem of the inhalers is adhered properly and that the label is adhered properly. And another one is using AI now for vision inspection, but they plan to more fully digitize their platform and will continue to grow in the advantages and benefits of AI.
So that really leads into digitally driven operations—from collecting that data to transfer that data and to analyze that data. And nearly half of the pharmaceutical manufacturers we spoke to certainly are collecting data digitally now along their line. And there's a handful of our leading pharma manufacturers, hey're further along that digitization process. But we talked to many who are moving along this path, they will continue to move along this path and they certainly look for help in doing that. I talked to one large OTC manufacturer and they had 15 lines, and only three of them at this point were integrated that they could collect data digitally, but their plan will be to continue until all of their lines are integrated and digitally collecting data. So the process is ongoing and the commitment is strong.
And then we asked about blockchain, because blockchain keeps getting more recognition to be a secure way to transfer data. We only heard about a fourth of the companies using blockchain right now. They're using it for a distributed ledger technology that is tracking their products with inventory management applications. But if we could imagine blockchain of the future, it could be something like a repository of information that could be accessed by all pharma industry players, and share data across that platform securely. So again, it's just imagining where the technology can take us into the future.