What's Trending in Pharma IT?

Operational transparency and optimized processes from lab to plant floor to executive suite and back are driving IT investments

By Steven E. Kuehn, Editor-in-Chief

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Challenging pharmaceutical manufacturers everywhere, every day are the myriad issues surrounding the acquisition, disposition and analysis of the huge amounts of data their operations create around the clock. Any Pharma producer worth its salt these days is likely investing a great deal of time, resources and effort to create or maintain a comprehensive information technology (IT) infrastructure to support compliant operations, process quality and efficiency, and ultimately assure product safety, effectiveness and affordability.

According to research firm Computer Economics, which provides benchmarking metrics to aid IT operations management, life science organizations have some unique attributes. In its study, “Comparative Analysis of IT Spending in the Life Sciences,” Computer Economics compared high-level spending metrics for life science companies against a broad sample of organizations in all industries. The study delivered four key findings:

1. Life science companies have high IT intensity. They spend considerably more than the composite sample, as measured by total IT spending per user and spending as a percentage of revenue.

2. Life science companies spend a higher portion of their IT budgets on data center and network infrastructure than the average company, and they spend a correspondingly smaller portion on business application software.

3. The size of the application support staff and spending on application software per user is typical, indicating that high data center and network infrastructure costs are the factors that drive IT spending in this sector.

4. The staffing mix for life science companies is similar to other organizations. IT staffing headcount, therefore, can be benchmarked against similar-size organizations from all sectors.

Within the context of a typical drug manufacturing environment and its incumbent data volume, it makes sense that Pharma’s spending may be proportionately higher than other industries to fund its high-capacity data handling needs. Recently, Gartner Benchmark Analytics released its “IT Metrics Data 2014” report which revealed that Pharmaceuticals, Life Sciences and Medical Products companies spend 3.2 percent of revenues on their IT infrastructure — a level higher than Industrial Electronics and Electrical Equipment (2.5 percent), Industrial Manufacturing (1.7 percent), and interestingly enough, Chemicals at 1.3 percent. What these figures seem to reflect is the reality on the ground; that is, Pharma is spending more (generally) now than peer counterparts because those industries are further along the curve when it comes to integrating a modern, enterprise-wide IT infrastructure to support operations and business goals.

SPENDING IN THE RIGHT DIRECTION

Where’s IT spending heading for Pharma and Life Science companies? Analytics firm Informa Ovum forecasts global life sciences technology spending to reach $40.8 billion by the end of 2017. According to Ovum’s research, spending will increase at a cumulative annual growth rate (CAGR) of 3.6 percent to reach the predicted figure. Ovum says its study reveals that “the increase in IT spending will be fueled in large part by the growth in data analysis and related technologies, the acquisition of systems to comply with new regulatory requirements, and increased spending on applications that advance operating efficiency and automation.” Elsewhere, Ovum’s findings show that “value chain fragmentation caused by new entities being spun out of Big Pharma and rapid growth in … emerging markets will see strong IT spending growth of 9.4 percent CAGR in the small pharma/biotech sub sector, totaling $10.5 billion in 2017.”

“The factors driving IT spending in the life sciences industry continue to be complex, with payers of healthcare demanding greater value in the face of increasing costs, technological advances enabling new types of research that are changing societal expectations, and opportunities arising from the emerging markets,” explains Andrew Brosnan, senior analyst, healthcare and life sciences at Ovum. “We expect much of this predicted growth to come from investment in business intelligence (BI) and analytics, as institutions look to collect, clean, manage and analyze the vast amount of data from sources such as social media, electronic medical records and genetic sequencing.”

Ovum expects total IT spending as a percentage of total revenues to decrease to 3.4 percent in 2017, even though overall IT spending will be higher as total revenue increases, largely due to IT-related cost efficiencies and the increased use of generics, which are less IT-intensive to develop than novel medications. “The improvement of IT-related cost efficiencies will be achieved through systems simplification and infrastructure consolidation, further cloud adoption, falling component prices and increased external sourcing,” explains Brosnan. “Greater externalization of what were once in-house resources and capabilities is occurring globally across all sub-sectors (biotech, small- to mid-sized pharma, and Big Pharma). The centralization of externalized services reduces the total cost of ownership by stripping out duplicate investments and realizing greater economies of scale.”

IT INVESTMENT FOCUS

Pharma manufacturers and prominent members of the pharmaceutical supply chain are certainly looking to make sure their IT investments yield value. The efficient flow of process/machine data and information from production line to executive suite and back is dependent on a well-organized, modern data/informatics infrastructure. This is also unflinchingly true for the reams of data streaming from laboratory operations — especially those in support of cGMP manufacturing and its incumbent quality regimes.

WITNESSES, FIRST HAND

In discussions with customers trying to integrate more functionality and value into their existing IT infrastructure, information technology suppliers and integrators are witnessing first hand where customers are focusing their IT investments as well as the priorities they assign with their spend. Prominent Manufacturing Execution Systems (MES) supplier Werum IT Solutions’ senior director Rolf Blumenthal explains, “Our customers are asking us to fill the gap between the business level and automation level. On this operational level, the first focus in pharma manufacturing is the replacement of paper batch recording with an electronic system.” Of course, this doesn’t just entail mere paper replacement, says Blumenthal, because customers are taking a broader approach to many business functions including material flow, quality control and process automation. Using this functionality across the complete lifecycle of a pharmaceutical product, from lab to market, he says, is positioning MES as a tool for process development, clinical trials production and commercial manufacturing. “During the last three years customers are looking more for strategic products in manufacturing than for customized [bespoke] software. Using an out-of-the-box product … with a strategic roadmap for the next decade, customers can achieve long-term investment protection and lower total cost of ownership.”

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