Right prescription for the Growth of Pharmaceutical Companies

The IT spending of companies reflects their strategies to introduce new drugs, enter
new markets, and be more competitive in the challenging Asian pharmaceutical
market.
Sourabh KankharResearch Analyst
Life Science
Practice - Asia Pacific
Frost & Sullivan
Singapore

The pharmaceutical market in Asia has undergone a paradigm shift in the past few
years. The major global pharmaceutical companies have shifted their focus to this
region to drive their revenue growth. Moreover, the domestic companies in Asia are
also actively participating in the global drug development process. At present, the
pharmaceutical market in the region is challenging due to changes in the
competitive landscape, increasing R&D costs, and the need to develop the right
marketing strategies.

In 2005, the pharmaceutical market in Asia was estimated to be around US$ 21

billion and is expected to double in value in the next ten years. The ten leading
Asian pharmaceutical markets namely China, India, South Korea, Hong Kong,
Indonesia, Malaysia, Philippines, Singa pore, Taiwan, and Thailand registered a
growth of only 3.6% in 2001. However, the market has recorded a consistent double
digit growth since 2002. In 2005, the Asian pharmaceutical market registered a
growth of over 11% as compared to the total world growth rate of around 7%.

The Indian pharmaceutical market is growing at a rate of 9% per year. This market
is the fourth largest in the world by volume and has emerged as the thirteenth
largest by value. The other giant, China on the other hand is the biggest
pharmaceutical market in Asia. The annual growth rate of pharmaceutical sales in
this country was over 20% in 2005. Singapore continues to be a global
pharmaceutical R&D and production hub. The pharmaceutical markets in its
neighbouring Southeast Asian nations such as Indonesia, Thailand, and Malaysia are
also showing tremendous growth potential.

The pharmaceutical value chain and IT applications

The major stages of the pharmaceutical value chain comprise drug discovery, drug
development, manufacturing, distribution, and sales and marketing. Improving

efficiency for a speedy ROI in every stage has become a critical factor to ensure the
success of the company. Strategic adoption of Information Technology (IT) is also
essential to speed up the process of research, development and sales of drugs.

Mounting focus on drug discovery has led to an exponential growth in creation of

intellectual property (IP). In such a scenario, pharmaceutical companies have come
to realise the importance of IT solutions. They have started implementing
knowledge management solutions for data management and security solutions to
protect their IP. ERP solutions are also being implemented for optimising the use of
resources and maximising returns. The pharmaceutical companies are using the
Internet technology for web-based data capture, mining, reporting for clinical trials,
eDetailing and eSampling for sales and marketing.

There are specific IT solutions for various stages of the pharmaceutical value chain.
Solutions such as electronic data capture for drug development, enterprise resource
planning for manufacturing and sales force automation for sales and marketing are
just a few examples to share. There are many other solutions such as business
intelligence, supply chain management and knowledge management that are
spread across two or more stages of the value chain.

IT adoption pattern for a pharmaceutical company

IT adoption in a pharmaceutical company can be characterised by four different
levels. The level 1 companies have only department- specific solutions, which
automate a single department and are not integrated. The implementation of IT
solutions in level 2 companies is pretty integrated into multiple functional areas. An
ERP solution which integrates the companys financial, manufacturing, sales and
human resources department is a typical example of level 2 companies. Solutions
such as business intelligence, data warehousing, data mining along with the
enterprise-wide solutions for instance SCM, form the IT set up of the level 3
companies. These solutions assist the company to make informed decisions after
extensive data analysis. The level 4 companies are totally automated with the help
of solutions such as enterprise application integration.

Asian pharmaceutical IT market - Current adoption and future potential

The pharmaceutical companies in Asia are slowly starting to adopt IT solutions in
their value chain. At present, majority of them are focusing on automating the
manufacturing, distribution and sales and marketing process. There is a major
demand for solutions such as ERP, SCM, CRM and sales force automation. In future,
as IT component becomes critical for pharmaceutical research, a major market for
drug discovery-related IT solutions is foreseen. Demand for enterprise-wide
solutions such as data mining, knowledge management and business intelligence

will be on a rise when companies realise the need to integrate and analyse data for
informed decision making.

Major drivers for the Asian pharmaceutical IT market

The booming pharmaceutical market in Asia

Growing competition between multinational and local pharmaceutical

companies in this market

Growing awareness of the advantages of IT adoption by the pharmaceutical

companies in Asia

Growth in the number of clinical trials as an increasing number of

pharmaceutical companies in Asia have started focussing on R&D initiatives

Major restraints for the Asian pharmaceutical IT market

Resistance to change by the business users of the IT solutions

Information security concerns

Lack of knowledge about the technology and not being articulate about the
benefits of the solutions

Conservative nature shown by Asian pharmaceutical industry towards

investment in IT solutions

Conclusion
Information technology is seen to be a very important factor for the success of the
pharmaceutical market in Asia. Many pharmaceutical companies are expected to
use IT to completely transform their business. The IT spending of companies will
reflect their strategies to introduce new drugs, enter new markets, and be more
competitive in the challenging Asian pharmaceutical market.

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