By Scott Lundstrom
July 20, 2005 | Life science organizations expect an average 4.6-percent increase in their IT spending over the next 12 months. That’s one of the main conclusions from Life Science Insights’ 1Q05 Leading Indicators in Life Science IT Spending Survey. It marks the fourth consecutive quarter in which life science organizations expressed expectations for IT spending growth. The level of optimism towards IT spending is particularly strong among the smaller drug manufacturers and biotech companies (less than 1,000 FTEs) than among the large industry players.
Spending plans for basic research and clinical trials appear strong, with above-average spending increases forecasted in these areas. Basic research has an average anticipated IT budget increase of 7.5 percent this year. Software investments will be a major priority, especially around data management and archiving, with data integration spending also very important.
Top technology spending priorities for life science companies include research applications, database and data mining software, and data integration. Key trends indicated by this quarter’s responses include: (1) Software spending sentiment is significantly stronger than either hardware or services. (2) Spending momentum remains strong around industry-specific research/science applications, database and data mining software, data integration, and security solutions. (3) IT managers attribute significantly greater importance to data integration (36 percent named it among the top two priorities) and a somewhat greater importance to security solutions (22 percent named it among the top two priorities).
Company growth and the existence of new projects are the strongest drivers of IT spending in basic research. Furthermore, results show that individuals in the basic research function are much less likely than individuals from other areas to have spending influenced by market factors. These data support the notion that research is the very heart of most life science organizations. Although basic research IT spending is by no means exempt from cutbacks, findings suggest it is less vulnerable to the major swings that might be found in sales or marketing spending, for example.
The most commonly planned type of software investment is around data management and archiving (48 percent of respondents), although data mining and visualization, simulation and modeling tools, and data integration applications are also quite prevalent. LIMS and genomic/proteomics analysis tools are significantly less favored, due partially to the overinvestment made in these areas over the past few years without the attainment of corresponding returns on investment.
Basic research will also fuel investment in data integration. Approximately 40 percent of individuals working in basic research expect their data integration spending to increase in 2005, with projects commonly spanning different research departments as well as frequently cited projects between basic research and clinical or preclinical functions.
Regulatory requirements are gaining in importance as a driver of IT spending, with individuals working in the clinical trials and the manufacturing segments being the most likely to name regulatory spending as the major driver of IT spending in 2005. Nearly one-third of individuals expect compliance-related IT spending to increase this year, while no respondent anticipated any decrease.
Investments in good manufacturing, clinical, and lab processes are driving regulatory compliance IT spending. Interestingly, pharmacovigilance was on average the second-most-important aspect of compliance driving IT spending. Ongoing FDA enforcement and the finalization and publication of three new FDA guidances in March are expected to drive further drug-safety IT spending.
Life Science Insights believes that this attention to pharmacovigilance will continue, with companies seeking to meet and anticipate FDA guidelines. Not to be downplayed, data integrity and 21 CFR Part 11 are also central to many of the compliance-related IT investments being made.
Scott Lundstrom is vice president, research, with Life Science Insights. E-mail: firstname.lastname@example.org.