January 15, 2005
| Part of an analyst's job is to predict which trends in the industry, especially with regards to technology, will have the greatest impact on how business gets done in the coming year. Life Science Insights' 2005 predictions for the life science industry focus on the impact of information technology on drug discovery and development.
Despite the industry's disproportional investment in R&D compared to the number of new drugs released in the marketplace, our outlook for 2005 is one of cautious optimism, with an increased emphasis on compliance, pharmacovigilance, outsourcing, and the expanding role of the pharma CIO.
These are the major trends and disruptive events in the industry that we believe will affect business decisions in the next 12 months:
1- Technology growth later in the value chain. Technology spending will increase in later stages of the pharmaceutical value chain, in areas such as clinical trial management systems, electronic data capture, and electronic lab notebooks. Spending on technology for classic discovery and development will remain flat.
2- Disaggregation happens. Big Pharma IT divisions are moving away from the "mother ship" model. Individual business units are making more and more IT decisions, and those units (genomics, medicinal chemistry, preclinical development) are willing to pay for informatics technologies that will enable innovation or enhance productivity.
3- Innovation will happen — somewhere else. Pharmaceutical companies are increasingly looking for a low-cost edge. R&D is a good place to look, especially as countries such as China and India ramp up their R&D capabilities. Academic institutions will play a more significant role in commercial drug discovery.
4- The line between IT and drug discovery will continue to blur. Computational biology as a discipline will fade away as most biology becomes computational. The controversial art of in silico property prediction will become more acceptable over time. Core versus noncore IT functions will be further divided, and noncore IT will become increasingly outsourced.
5- Thus, the rise of the pharma CIO. This position will have a larger seat at the R&D table. While CIOs managing noncore businesses will be spending more time in Asia, funding sources will increasingly come from both corporate IT and the business unit itself.
6- Data standards will help drive a fragmented industry. Although not required, a growing number of standards including SDTM (study data tabulation model), SAFE (secure access for everyone), and SEBIX (secure electronic biopharmaceutical information exchange) for submitting and managing clinical data will become "de rigueur."
7- The curse of Eliot Spitzer. IT organizations are scrambling to comply with a growing list of regulatory mandates, and meet deadlines. Pharma lawsuits by states' attorney generals will drive a new market for compliance software, and make Sarbanes-Oxley look like a picnic. Look for biopharmas to hire CCOs — chief compliance officers.
8- Pharmacovigilance. The buzzword for the next few years. Pharmacovigilance is a problem of data integration, and includes toxicogenomics, adverse-event reporting, and regulatory compliance. The FDA will want it; regulators will demand it; pharmas, biotechs, and the NIH will struggle to build it; and the first vendor to offer a comprehensive solution, probably within the next 18 months, will own the space.
9- Lost on the NIH Roadmap. The 2002 NIH Roadmap could lead to a dramatic but welcome reduction in the number of NIH institutes, with other government agencies looking to fill the void. We see a growing role for venture philanthropists such as the Bill and Melinda Gates Foundation.
10- Venture capital comes back. We've missed you. The pendulum of funding is slowly swinging back to tools and platforms, and the rush to revenue is decreasing. Technologies that enable the drug discovery and development process will see increased funding in the near term.
Thoughtful spending should lead to intelligent product development. Remember that the pharma CIO is your customer, and understand how this role is changing. Don't fear commoditization, and look to cheap technologies to develop new business models.
Jim Golden is vice president of research at Life Science Insights. E-mail: firstname.lastname@example.org.
ILLUSTRATIONS BY CHRIS MCALLISTER