IDC, IBM pour resources into exploding biotech industry

A booming life sciences industry has sparked an IT spending spree and the interest of more than one research firm.

According to Framingham, Mass.-based IDC, the sector it is calling the bio-IT market will expand at a compound annual

growth rate of 24 per cent, reaching nearly US$38 billion globally by 2006. In particular, high-performance computers, servers, storage, database technologies and application software will be in big demand during the next decade.

IDC estimates that by 2006, storage will amount to the largest element of spending in technology for biotech, totalling US$11.8 billion.

Those numbers, along with increasing demand for information about the IT requirements of life science organizations, prompted IDC to announce recently a company-wide initiative to address technology infrastructure issues and opportunities in the sector. The research firm’s work will give end users and IT vendors analysis of market dynamics, forecasts, user requirements and projections.

“Our client base has been vendors trying to serve and understand the market,” said Mike Swenson, senior research analyst with IDC. “There’s quite a difference from the traditional verticals like finance. It’s not as transaction-oriented, not so structured. It’s also new for biology and science to be so computational in any significant way. The field has become more data dependent.”

The biotech industry includes universities, government research and private companies such as the major pharmaceutical vendors.

IDC will offer a new research subscription and advisory service titled Bio-IT Infrastructure as well as custom research and consulting services in areas such as brand positioning, product channel and alliance strategy, and best practice implementation.

Another major research firm, Gartner Inc., has had a long-standing health care industry practice. Earlier this year its GartnerG2 division, which focuses on the business strategist, dedicated some people to focus exclusively on pharmaceutical and biotech companies.

According to Carol Rozwell, vice-president and research director with GartnerG2 in Boston, its research indicates life sciences firms are struggling with CRM solutions and other solutions that improve productivity and cost cutting. Also, Rozwell said it expects to see a very healthy outsourcing market — not only traditional application outsourcing, of which life sciences companies are big users.

The biotech space is heavily influenced by computers yet few life science companies have made the connection between the technology to do the science and the information technology infrastructure that also supports this new business model, said Rozwell.

“It will be interesting to see the melding of the pure science and the combination of the more traditional IT,” she said. “The technology is able to help them with collaboration in addition to the pure definition of one’s duties.”

While the industry is still in early days, according to Sal Causi, a professional engineer and business development executive for life sciences at IBM Canada Ltd. in Markham, Ont., the opportunity for vendors is now.

“We consider it an emerging business — we compare it to the plastics industry in the 50s. In the 50s very little plastic was produced but it’s pervasive in every part of life today and that’s what’s going to happen in the biotech industry. It will happen faster than in plastics,” said Causi.

Right now, life sciences amounts to just one per cent or less of total revenue for IBM, but the expectation is it will be significant down the road. In general terms, Causi said a biotech company will spend, per employee, three to four times more on computing and other networking and IT infrastructure than any other industry.

“It’s significantly more on average than any other industry,” he said. “So even though you are generally dealing with anything from five man operations all the way up to 100 or 200 at max, we’re not talking about large organizations.”

Causi says the largest super computer in the private sector right now in Canada belongs to MDS Proteomics, a proteomics-based drug company. with about 100 employees. IBM has installed a Linux super-computing cluster at the company’s Mississauga, Ont., location to assist it in research on human protein structure and function, which will lead to new drug treatments for diseases such as cancer, depression and AIDS.

As one of 23 business development executives at IBM working with the life sciences, Causi says IBM really began its life sciences work 18 months ago. IBM has gone outside the traditional research firms when it comes to finding information about biotech because the Gartner Group and IDC have not had any significant information on the industry.

A veteran of the telecommunications, banking, distribution and retail industries, Causi noted that biotech has a very high skill requirement.

The field force IBM calls on to develop solutions includes 55 PhD scientists — ranging from theoretical chemists, microbiologists, toxicologists to pharmacologists. They’re all being trained in bioformatics, the process of simulating chemistry and biology within a computer.


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