• Business intelligence and related information management are leading categories of technology spending increases in 2008 across all segments.
• Outsourcing seen as instrumental as the focus on cost reduction continues to increase.
• Drug safety will remain front and center as a primary concern in 2008.
• SaaS (software as a service) will spur adoption of EMR’s for small providers.
• Healthcare/financial services interface and competition will heat up in 2008 as healthcare payers shift costs and payment responsibilities to consumers.
• “Extra-enterprise” investments become mainstream as over 40 percent of healthcare payers report technology investments for use by consumers and providers.
• Retail clinics and their technology will proliferate, increasingly disrupting healthcare delivery. 

Who needs product lifecycle management?

The need for Product Lifecycle Management (PLM) can be gauged from the fact that the Food and Drug Administration (FDA) approved just 16 new molecular entities (NMEs) in the year 2007—the lowest single year total since 1983, when there were 14 NME approvals. This has come coupled with a decline in R&D productivity over the years. As journalist and pharma commentator Mr Michael McCaughan noted: The total R&D spending by brand-name companies in 1983 was $3.2 billion, compared to $43 billion in 2007. In other words, the industry spent $228 million per NME approved in 1983, compared to $2.7 billion each in 2007. Or, if you prefer, the extra $40 billion in R&D spending brought with it a total of four additional therapies.

Studies suggest that the challenge confronting the industry is two-fold: Drying pipelines and reduced returns from new products. This has made it imperative to build strategies for deriving the maximum benefit from the existing drug portfolios. Declining R&D productivity is one part of the issue. Pharmaceutical companies are also facing increasing competition from other branded products and from generics. The result is a diminishing market exclusivity of less than one year for some drugs, what with “fast followers” entering the market to capture a greater share of sales. The global generics market may seem modest compared to the total pharmaceuticals market. However, on account of price differentials, the generics market-share in prescription terms is much greater than what the value comparison suggests.

This underscores the relevance of product lifecycle management (PLM) and the reason why the life sciences industry is turning to leading industry service providers such as Cognizant, HP and IBM for thought leadership and solutions addressing product lifecycle
management.

The right approach to product lifecycle management is to put together the right decision-support framework and couple it with a customized product lifecycle management solution. We at Cognizant work closely with our clients to assess the requirements and then propose the framework that maximizes the benefits to the client organizations, based on their current technology set-up. Some of the solution frameworks that we have successfully deployed in leading life sciences companies and that have helped them reduce cycle-time and improve productivity significantly include:

• In-silico methods for ADMET profiling
• Integrated clinical operations platform
• Integrated safety management
• Integrated product supply

• Absence of organization-wide buy-in for the implementation, resulting initially in multiple approaches and finally in integration problems.
• Unclear responsibility matrix.
• Need for appropriate metrics or key performance indicators to measure success.
• The time required for solution adoption.

Managing process complexity

Growing regulatory pressure, management of process complexity, the need to reduce drug development costs, and competition drive adoption of product lifecycle management (PLM) software and services in the pharmaceutical industry

A report titled “Streamlining Information in the Pharmaceutical Industry with PLM” by market research firm, Datamonitor, estimates spend on product lifecycle management (PLM) by the pharmaceutical industry in Europe, North America, China and Japan will total $460.2 million by the end of 2007 and forecasts that this will more than double by 2012.

Product lifecycle management (PLM) technology is one of the most rapidly growing markets due to its inherent focus on time-to-market and product development, which are key business priorities in the pharmaceutical industry.

PLM software and services solutions are still a nascent market for the pharmaceutical industry. Although the industry is starting to recognize the potential benefits of PLM in drug development, unless pharmaceutical companies adopt a strategic mindset about PLM, with all the process management changes and cultural adaptations it requires, PLM will remain a tactical solution whose potential is not maximized.

Pharmaceutical PLM technology gains momentum

PLM aims to support product lifecycles through better data management, compliance monitoring and collaboration. The technology links product information to people and processes and offers increased visibility into the internal and external functions and decisions related to managing a specific drug candidate.

Pharmaceutical companies constantly strive to accelerate drug development processes, and decrease the time it takes to bring a drug to market, since the window from discovery to launch is both lengthy and costly. As competition from generic drugs grows, the industry has an additional motive to shorten the time it takes to bring a drug to market. Furthermore as mergers and acquisition (M&A) activity continues, companies are in need of tools, such as PLM, to harmonize their product portfolios and enhance visibility across the entire pipeline.

PLM addresses the challenges of managing a portfolio of tens or hundreds of drug candidates, from disparate research and development (R&D) facilities and manufacturing plants spread across the globe. Adding to the business drivers for investing in PLM is the increasing pressure by regulatory bodies that emphasize compliance to ensure drug safety. As a result, the industry is in need of sophisticated tools that automate research processes and create electronic trails that can help reduce non-compliance errors. PLM supports regulatory compliance by including applications that track adherence to regulation codes and identify risks of non-compliance.

That new PLM software products directed towards pharmaceutical product and process development will advance significantly in the next few years, and will open the door to potentially significant productivity gains for those companies that adopt and fully use the technology’s capabilities. Datamonitor anticipates the PLM pharmaceutical market to grow significantly over the next five years, at a 19.8 percent CAGR.
(See Figure 1)

PLM is successful when handled as an enterprise, strategic initiative
In a data-rich industry such as pharma, knowledge tends to be diluted quickly unless each organization adopts an effective methodology for transferring knowledge and for ensuring visibility and access to critical information when and where it is needed. In addition to being a data-rich environment, the pharmaceutical drug development process is characterized by heterogeneity and fluidity. Here, scientists, compliance staff, and engineers work with multiple protocols, materials, internal and external partners, constantly adapting their workflows according to experimental results. Although the degree of variability tends to decrease as the drug lifecycle progresses, a flexible PLM system that can keep up with this iterative process is crucial in supporting the development needs of the drug lifecycle.

Datamonitor believes that only an enterprise-wide system will maximize the value of PLM in a pharmaceutical company by offering the visibility, and flexibility the organization needs across its otherwise isolated functional departments. Furthermore, recognizing the value of an enterprise PLM solution indicates that the organization has a strategic view of PLM, rather than a tactical and merely technical view. In fact, a strategic approach to PLM necessitates an enterprise-wide system.

Japan, China will experience the fastest growth in PLM
While North America is currently the largest market in terms of pharmaceutical PLM spending, China and Japan are projected to grow at 24.5 percent CAGR over the next five years, faster than any other market. With Japan being the second largest pharmaceutical market in sales worldwide, Datamonitor estimates that the pharmaceutical market in Japan spent $47 million in 2006 on PLM software and services (Figure 2). China is also experiencing fast growth primarily due to growing outsourcing activities in that country, spending $7 million in PLM software and services that same year. APAC’s strength in pharmaceutical manufacturing will continue to grow and so will PLM spending. Instead of simply operating as contract manufacturers, pharmaceutical companies in countries such as China and Japan will seek to increase their level of innovation through R&D. While Japan stands out somewhat as an advanced country in terms of pharmaceutical manufacturing, the majority of the region lags behind Western Europe and North America when it comes to new product development as a whole.

Partnering with a technology vendor may be a necessary PLM strategy
Today, PLM solutions have been slow in adoption by the pharmaceutical industry primarily because implementation takes anywhere between six months and two year. This indicates that current PLM products sold to pharmaceutical and biotechnology companies require tremendous amount of customization and configuration before they can be used within that type of environment. PLM technology for the pharmaceutical industry will be widely adopted once vendors are able to offer configurable packages rather than customized PLM projects or horizontal packaged solutions that may lack the necessary applications needed for the industry.

In the meantime, partnering with a vendor may be a necessary strategy for pharmaceutical companies. Some of the most successful and innovative pharmaceutical companies have partnered with a technology vendor to pursue a customized enterprise PLM implementation. Partnerships can ensure that the technology fits the company’s needs. Partnerships also provide technology vendors with a longer-term success than simply selling PLM products and services. By working collaboratively with the organization to develop the solution, vendors can gain the organization’s loyalty, trust and business for years to come. Partnerships can be most successful when vendors fit the following four criteria: a long-term commitment to the project, a flexible and innovative mindset for conducting business, an efficient implementation strategy, and a track record of success.

For maximum advantage PLM must begin earlier and be more comprehensive than it has been in the past. Only those PLM technologies that are aligned with business processes will maximize value within the organization. Organizations which do not make the necessary transition to PLM, either alone or through partnerships, will shortly find themselves lagging behind their more forward-thinking competitors who will be enjoying the benefits of their new knowledge-based centralized resources.