What Pharma Wants From IT Today

Indications that compliance and productivity issues reign over information technology (IT) budgets at pharma companies were verified in the 2005 Pharmaceutical Executive/Life Science Insights Information Technology Survey of nearly 850 US pharma companies. More than 70 percent of respondents named compliance and government regulations as important drivers of new IT purchases by their organizations. Interestingly, attitudes about compliance vary by company size and by function: A slightly higher percentage of small companies (100 to 499 employees) and very large companies (10,000+ employees) categorize compliance as important. Also, IT and corporate management see compliance as significant, more than sales and marketing respondents do. Companies are increasing IT investments related to compliance to preserve data integrity and standardize processes across organizations.

The life sciences sector, by nature, is highly regulated, and the past two years have seen a dramatic increase in the level of regulation. These regulations have implications for all IT systems, and as a result, pharmaceutical organizations are reviewing their compliance strategies, methodologies, and associated costs.

pharma organizations are investing in information technology across all functional areas

The majority of respondents say they spend an average of five to 10 percent of their IT budget on compliance-related issues, and they expect that spending to increase by more than five percent over the next two to three years. This expected increase has huge implications for spending on IT across large and small pharmaceutical organizations, causing many executives to wonder whether the compliance implementation backlog will dig into discretionary spending in the near term.

In addition to compliance considerations as a driver for IT spending, respondents rank the need for productivity increases as the most critical criterion when considering the adoption of a new technology. This is especially true for the sales and marketing functions, which are expected to do more with shrinking staffs.

Yet while all functional areas are banking on the results they will get from leveraging technology solutions to automate, systematize, and enhance workflows, fewer than half are actually measuring return on investment (ROI) of IT initiatives. This is primarily because management does not require it and there is not enough firm data on which to base calculations.

2005 Pharmaceutical Executive/Life Science Insights Information Technology Survey

METHODOLOGY

The 2005 Information Technology Survey provides an in-depth view of demand-side expectations regarding IT spending behavior, implementation plans, and acceptance of new technologies across major functional areas—R&D, clinical development, manufacturing/supply chain, sales, marketing, IT and corporate management.

The survey was conducted online in April 2005 and has a respondent base of 839 Pharmaceutical Executive subscribers. The sample is stratified by company size and respondents' functional areas. Respondents who participated in this research were screened to ensure that they have knowledge of, and decision-making roles in, IT investments and implementations made within their respective organizations.

The business size classes defined for this survey include less than 100 employees, 100 to 999 employees, 1,000 to 9,999 employees, and 10,000+ employees. The majority of respondents represented companies with more than 1,000 employees.

2005 Pharmaceutical Executive/Life Science Insights Information Technology Survey

FINDINGS BY FUNCTIONAL AREA

R&D

Adoption of biomarkers and bioinformatics is expected to increase more than the adoption of proteomics and genomics over the next two years—with biomarkers and bioinformatics cited by 25 percent and 20 percent of respondents, respectively, as the most important technology initiatives.

According to a separate study performed by Life Science Insights in December 2004, investment in biomarkers has increased 200 percent over the past several years as the industry devotes resources to new technology and research. Investment in molecular biomarkers will be results-driven and will continue to double in the next two to three years based on industry trends, technology innovations, implementation of past investments, and need. The FDA, as part of its Critical Path Initiative, wants the area of biomarkers to move forward at a faster pace.

Clinical development More than 57 percent of clinical trials respondents selected clinical trials management solutions (CTMS) as the most important technology initiative for their functional area. Electronic data capture (EDC) was noted as the second most important initiative, garnering 25 percent, with recruitment solutions, clinical trial supply management, and pharmacovigilance chosen as lower priorities. Other investments in clinical development noted by respondents include content management and data management.

2005 Pharmaceutical Executive/Life Science Insights Information Technology Survey

We expect the market for CTMS to increase at a 13-percent compound annual growth rate (CAGR), from 2004 to 2008, as current users of multiple CTMS and homegrown systems upgrade to CTMS from vendors like Medidata, Nextrials, Phase Forward and Oracle Clinical. A key driver of investment in CTMS and EDC is the optimization of clinical trial processes. In recent years, vendor offerings have matured to supply useful suites of functionality that meet the needs of clinical development teams, and are configurable enough to support the variety of business models employed by sponsors for managing clinical trials. Further, FDA regulations establishing electronic standards for clinical data, and submission formats for electronic drug applications, will drive funding for investment in CTMS and EDC.

Manufacturing/supply chain Supply chain management is the top priority, according to 53 percent of respondents in this functional area. This compares with 34 percent who cite process analytical technology (PAT) and 11 percent who cite radio frequency identification (RFID) as their top technology initiative. RFID is currently receiving attention because of commercial mandates (e.g., Wal-Mart, etc.), government initiatives (e.g., DoD, FDA, etc.), and technical advances. The pharmaceutical market represents a strong early-adoption marketplace for RFID-based solutions because these applications can assist with drug recalls, provide support for compliance with new manufacturing regulations, improve cold chain management, and enable more efficient clinical supplies management. While pilot projects around RFID are appearing at some major pharma companies, such as Abbott Laboratories, Barr Pharmaceuticals, and Johnson & Johnson, the horizon for significant adoption still lies several years out. Uptake remains limited due to remaining concerns about accuracy, reliability, and ROI.

Sales On average, half of those surveyed in the sales function said customer relationship management (CRM) was their top technology initiative. Mobile sales solutions and sales force automation were evenly split as top priorities. Business intelligence solutions also were noted as a priority.

CRM applications automate customer-facing processes within an organization: sales, marketing, customer support, and contact centers. Collectively, these applications serve to manage the entire lifecycle of a customer—including the conversion of a prospect into a customer—and help an organization build and maintain successful relationships. Increased competition in the pharmaceutical market and the need to retain existing customers have spurred many biopharmaceutical companies to adopt CRM. Data analytics capabilities derived from CRM applications are invaluable for pharmaceutical sales teams, enabling an understanding of all the activity that goes into securing a customer, as well as providing the ability to evaluate and respond quickly to changes.

Similarly, pharmaceutical sales teams are investing in mobile sales solutions and sales force automation tools to improve their speed and gain competitive advantage. The expansion of mobile infrastructures is improving and the appropriateness of the technology is slowly being demonstrated for sales teams. In general, mobile devices are becoming more popular than ever with sales teams, giving them flexibility in their choice of working environments and allowing them to use time more efficiently, increase productivity, and provide better customer service. However, lack of technology standards and concerns about security of data transmissions continue to be barriers to mobile sales solutions.

Marketing A lower percentage of respondents (12 percent) cite e-detailing and patient registries as key technology priorities. Technologies with greater importance are data mining/business intelligence (52 percent) and campaign management (23 percent). The use of data-mining and campaign-management solutions will grow as marketers continue to be pressured to do more with lean staffs. Each marketing activity will be systematized and customized, and the tracking of increased output will enable enhanced decision-making for future customer interactions.

We expect investments in patient registries to continue to grow as companies examine and update their pharmacovigilance capabilities. Post-marketing patient registries have risen in importance since the FDA finalized its "Premarketing Risk Assessment" guidelines in March 2005. E-detailing also persists as an area of focus for marketing teams as a way to cut costs and increase physician prescribing. Quality and timeliness of information continue to be barriers to wider e-detailing adoption.

IT and corporate management Information lifecycle management (ILM) and regulatory compliance are reported by the highest percentage of respondents as their top priorities, followed by security and data integration.

ILM enables the balancing and distribution of data across the right storage devices, over the right period of time, ensuring that archived data is accessible. ILM, compliance, and security issues have become intertwined because of the flood of measures—the USA Patriot Act, the Sarbanes-Oxley Act, Basel II, as well as SEC, NASD, and FDA guidelines—that mandate controls pertaining to records management, business continuity, and risk management. These regulations have caused company leaders to be held more accountable for good practices in information management, and have elevated ILM for compliance as a boardroom issue.

The major hurdle for ILM is the planning, development, and implementation of policies, processes, and skill changes. An ILM strategy involves a spectrum of issues, including the consideration of the value, protection, retention, availability, and cost of maintenance of information across a management lifecycle. Communication of what policies exist and who owns the policies and training on SOPs is critical to the success of an ILM strategy.

IT security remains in the forefront of IT and business concerns, and is one of the top IT-spending categories across industries. The data-sensitive business nature of the pharmaceutical industry makes it particularly vigilant about avoiding information security breaches, and security is perceived as a business necessity. The majority of IT and corporate management respondents currently invest in security. And while fewer invest in ILM at this time, they expect to increase their investments within the next two years.

Ellen Julian is a research director for Life Science Insights, an IDC Company. She can be reached at ejulian@lifescience-insights.com

Tips for Choosing IT Vendors

When it comes to selecting a vendor for IT products or services, respondents to the 2005 Information Technology Survey cite "knowledge and experience in our industry" as the top criterion. "Product/technology knowledge" follows close behind. Clearly, pharma companies are in search of IT vendors that understand their business, not ones that offer a one-size-fits-all solution. When planning a significant IT purchase, pharmaceutical and biotechnology companies should consider the following factors:

» Value, not price Select IT solutions that integrate best with your business strategy and can be implemented as quickly as possible; the low-cost option is not always the best choice.

» Customer service and support Pick vendors that offer a high degree of technical support and customer service.

» Customer knowledge Select vendors that demonstrate an understanding of your business and industry.

» Company viability Look at the long-term viability of both the product and the vendor. Is this an important product for this vendor, and will this vendor be around in the years to come?

» Architecture and ease of integration Look for service-based approaches to application architecture. Ensure that business processes can be easily changed or enhanced with service-based integration.

» Compatibility The philosophy and style of the individuals who will manage your account must match those of your company.

» Flexibility Vendors should offer customizable solutions that allow you to replace, override, or substitute if necessary.

» No vendor can do it all Technology is changing too rapidly for one vendor to offer one-stop-shopping and excel in all capabilities.

Recommendations for IT Vendors

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Know your buyer

It is critical that you understand which groups within an organization hold the primary responsibility throughout the acquisition and implementation process. Business unit managers play the greatest role in identifying the business need for the IT solution. The corporate IT department has the most influence in evaluating and recommending specific IT vendors, although local IT departments also play a role at this stage. Executives in finance and procurement approve the final purchase, and top IT management approves the vendor of choice.

» Demonstrate industry and product knowledge Buyers are looking for vendors with high-quality, reliable solutions, who also understand their business. IT suppliers that seek to be the vendor of choice should highlight their technical expertise and demonstrate an understanding of their business and industry.

» Offer top-notch technical support Respondents noted technology support as the number-three factor in their decision to use a specific vendor.

» Deliver best-of-breed solutions in certain categories In addition, partner with other leading companies that can deliver the optimal solution for your customers.