New York, NY – August 27, 2010 – Global life sciences industry’s spending on technology, especially from pharma and biotech companies, is projected to grow over the next five years, according to Ovum. Emerging markets, particularly China, India, and Brazil will join North American markets in becoming dominant players.
A new report* by the independent IT analyst firm, Ovum, states that spending on technology by the global life sciences industry* will grow by a compound annual growth rate (CAGR) of 3.3% over the next five years, with spending nearly $33.7 billion in 2015. The biggest investment will come from the Big Biotech and Small Pharma/Biotech sectors, which are expected to grow by a CAGR of 6.7% and 7.2% respectively. Reaching nearly $17 billion in 2015, Big Pharma will continue to spend the most on IT, but the overall CAGR of mere 0.9% will be the lowest of the life sciences sectors.
Ruchi Mallya, pharmaceutical technology analyst at Ovum and report author, said, “Known to be conservative when using IT, the life sciences industry is turning a new leaf. Technology, particularly commercial solutions, has become a high priority for executives who are currently battling low R&D productivity, the patent cliff, increasing regulations and rising R&D costs. Pharma and biotech companies are increasingly turning to IT to increase efficiencies within the drug lifecycle, reduce costs, and bring safer and more effective drugs to market faster, while maintaining regulatory compliance.”
The price tag for bringing a new drug to market is approaching $1.3 billion. As many firms face dwindling product pipelines, they are increasingly investing in IT solutions that foster and enable drug discovery, such as in silico technologies, genomic technologies, laboratory information management systems (LIMS), and electronic laboratory notebooks (ELNs). In addition, adoption of eClinical technologies, such as electronic data capture (EDC) and clinical trials management systems (CTMS) will be high over the next two to three years as companies move to reduce costs within their most expensive business process – clinical trials – and increase efficiencies by becoming more paperless. China and India are prime markets for eClinical solutions due to the abundance of contract research organizations (CROs) in these countries. Due to the patent cliff of 2011, investment in customer relationship management solutions (CRM) will also be high in 2011 and 2012 as Big Pharma companies attempt to increase their market share in the emerging markets, competing with generics drug manufacturers, but will quickly decrease after.
According to Ovum estimates, the North American market will continue to be a leader in IT investment, accounting for an average of 46% of the total spending. However, Mallya recommends that vendors focus on the emerging markets, particularly China, India, and Brazil, as companies in these countries are beginning to invest heavily in IT as they join the global pharmaceutical market and strive to become dominant players.
The Chinese pharmaceutical technology market is set for the greatest growth, with an overall CAGR of 10.6% and a projected $7.2 billion in IT spending over the next five years. India is also a strong contender, with a CAGR of 8.5%. Ovum predicts that the Big Biotech and Small Pharma/Biotech sector will have the greatest growth in India, in large part due to the government’s support for the rapid expansion of the biotechnology sector.
Thus far, the US and Western European markets have commanded the development of pharma-specific IT solutions, however as the industry expands out to the emerging markets, China and India will have a much greater voice in deciding which technologies are most important to the global pharmaceutical and biotechnology sectors.
* ‘Global Life Sciences IT Spending Forecast Model through 2015’ - A global IT spending forecast for pharmaceutical and biotechnology companies through 2015. Sectors covered are Big Pharma, Mid Pharma, Big Biotech, and Small Pharma & Biotech.
Ruchi Mallya, pharmaceutical technology analyst at Ovum and report author, is available for comment. To arrange an interview or for further details regarding this release please contact Rosaline Bang in the Datamonitor press office on + 1 212 652 5329, or email us_pr@datamonitor.com
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