Can IT Save Big Pharma?

In the 1980s, when the pharmaceutical industry's currently flagging blockbuster business model was forged, a series of now-familiar breakthrough medications began to emerge that would confer the broadest medical benefits and amass the largest profits in the industry's history. For two decades, a series of enzyme-targeting therapies reduced unmet medical needs over a remarkable range of disease states or indications, such as high blood pressure, depression, AIDS, lipid-induced heart attacks and many others. Brand names like Prilosec, Prozac and Zocor vied with "me too" competitors, such as Zoloft and Lipitor, to maximize market share more through promotional, rather than medical, market strategies that included low-content, direct-to-consumer advertising and relationship-selling to doctors.

As that era comes to an end and is replaced by today's more fragmented and resource-constrained market environment, IT must move from a supporting role to a strategic role.

Until recently, the pharmaceutical industry's information model has been one of counting P's: pounds, pills, packs, price points, profits, physicians and prescriptions. These enterprise and line-of-business IT functions incorporated standard database and manual systems within corporate departments or the industry's notorious functional silos: discovery research, clinical development, manufacturing/supply chain, and sales and marketing. Until recently, most discovery research information existed in written lab books or rudimentary sequence, molecular and tissue databases (laboratory information management systems). Clinical development information, from kinetic/dynamic/toxicology data to clinical measurements, was recorded in written formats such as the hard-copy clinical record form and simple electronic data repositories. Although more technically sophisticated, most supply chain information management was essentially outsourced to vertical suppliers and distributors. Sales and marketing tools never got past sales force and basic marketing automation to reach the realm of real CRM.

In the past five years, however, there has been no dearth of new initiatives that incorporate IT. High-performance and clustered computing have greatly increased in research departments, especially those seeking to incorporate more computational disciplines, such as systems biology, into standard research processes. Drug company clinical operations have increasingly used technology-based solutions to improve productivity and reduce costs and time to market. Electronic data capture (EDC) of clinical trial patient information has enjoyed roughly 30% to 35% adoption in industry-sponsored trials. Clinical trial management systems have also sprung up to assist with trial site and investigator management. Supply chain and manufacturing operations have been the most aggressive adopters of IT systems in the industry, with most companies integrating their supply chains and at least some of their good manufacturing practice functions into their ERP systems. Finally, virtually all drug companies have some kind of sales force planning and management system, and many are either planning or implementing broader integrated marketing systems.

The gaps, however, between current point solutions within the industry's functional silos and the need for more integrated information both in and across the entire value chain highlight the industry's single biggest challenge. The entire list of problems plaguing drug companies -- from safety concerns, limited payer resources and confused customers to patent expirations and poor pipeline productivity -- can all be traced at least in part to the industry's lack of an integrated information strategy. Solving these problems will require more than faster adoption of EDC or high-performance computing. It will require the type of business transformation that puts information and IT at the center of company and industry reorganization. Such business transformations are under way in the banking and airline industries today.

Most new drugs emerging from industry pipelines will target diseases with high levels of unmet medical need, such as cancer and multiple sclerosis. With health costs rising at twice the rate of inflation and surpassing 20% of GDP in this decade, high-cost emerging therapies such as cancer and immune-modulating medications, which may account for as much as 40% of industry profits over the next decade, will come under intense scrutiny by private and government payers, as well as physicians and patients. The ability to demonstrate evidence of value measured in medical and economic benefits will determine the drug industry's future profitability and success. The source of such evidence will have to come from data and information repositories that are integrated across the value chain and with the rest of the health care sector. Those sources cannot be developed by drug companies without a complete transformation of the industry's business model to one that is grounded in an integrated information strategy.

Charles Firneno is a freelance writer in New York who focuses on the pharmaceutical industry. You can reach him at cfirneno@hotmail.com.

Copyright © 2006 IDG Communications, Inc.

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