Life Science Leading Indicators 2010 (July - December)
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1 Life Science Leading Indicators 2010 (July - December) Eric Newmark, Research Manager July 20, 2010
2 Methodology Health Industry Insights' Leading Indicators in Life Science IT Spending Survey is a bi-annual research effort that probes enduser opinions throughout the life science value chain on planned IT spending, technology adoption attitudes, perspectives on leading vendors, and other IT-related topics. Data is gathered via a Web-based survey. Health Industry Insights' 3Q10 Leading Indicators in Life Science IT Spending Survey yielded 135 participants, 70% of whom are manager level or above within their respective organizations. Recruitment Panelists for this survey were recruited from a number of sources. Their inclusion was based on both the organizations to which they belong and their influence in the IT purchase decision-making process. Sources of recruitment include: Existing panelists from the last quarter of Health Industry Insights' Leading Indicators in Life Science Survey were used. Special recruitment was done among the end-user relationships of Health Industry Insights. Panelists received incentives for participation. The survey was administered via a Web interface, with unique ID URLs that linked respondents back to their recruitment data. The demographics sections profile the respondents to this survey and their organizations. Note: All numbers in this document may not be exact due to rounding. Weighting Methodology The results of this report were weighted to reflect the relative influence of companies by industry segment (pharmaceutical, biotech, government organizations, academic organizations, and research hospitals) in the overall life science industry. The weights were determined by using data from Worldwide Healthcare IT Spending Guide, which records spending by all life science companies globally. Use of weighting allows the conclusions presented in this report to more accurately reflect industry realities by correcting for segments that are over-represented or under-represented in the sample of companies surveyed Health Industry Insights, an IDC company Page 2
3 Demographics: Organization Type and Company Revenue Health Industry Insights, an IDC company Page 3
4 Demographics: Respondent Function and Responsibility Health Industry Insights, an IDC company Page 4
5 Expected Budget Change By IT Category Database software/data mining ranked as the IT category most likely to see a spending increase, with 44% of life science companies expecting to do so during An improving economy has reduced spending fears, which is reflected in general up-ticks in most IT categories. Server/storage hardware placed second (40%), followed by analytics with 35% of respondents expecting to increase IT spending in these categories. Project-oriented services, and support & training services are most likely to experience budget decreases, each with 17% and 16% of companies respectively expecting to reduce spend. Health Industry Insights, an IDC company Page 5
6 Vendor Preferences For Planned IT Spend Microsoft continues to lead all software companies with 54.8% of life science companies planning to purchase their software, though this is largely desktop based applications. Oracle leads all companies for enterprise software, with 25.2%, followed by SAP with 12.6% and Symantec with 11.9%. Dell maintains a large lead in hardware vendors, with 42.2%, followed by HP with 23%, and Cisco and Apple both with 14.8%. HP secured the #1 spot this year for anticipated IT services spend. IBM placed second with 7.4%, followed by Accenture with 6.7%. Health Industry Insights, an IDC company Page 6
7 Business Outlook: Current and 6 Month Outlook A total of 63% of respondents believe that current business prospects are very positive, positive, or somewhat positive. This is similar to the 60% six months ago, and 60% from 12 months ago. Slightly higher expectations exist for business 6 months from now (69% with positive expectations) Health Industry Insights, an IDC company Page 7
8 Business Outlook: Current and 6 Month Outlook Overall, 50% of respondents expect IT spending to increase over the next 12 months. 13% expect a decrease and 37% expect spending to remain unchanged. This is up slightly from six months ago when 47% expected an increase, 35% expected a decrease and 13% expect spending to remain unchanged. Spending expectations around software (54% expect growth), hardware (47% expect growth), and IT services (49% expect growth), up from our previous survey stating 39%, 39%, and 35% respectively. This is a clear indication of perceived economic recovery. Health Industry Insights, an IDC company Page 8
9 Reasons for Expected Budget Increase Replacing old technology remains the top reason companies are increasing IT spend. Updating / expanding installed base and New projects and company growth also provide significant motivation for increase spend. While regulatory requirements do contribute, their impact has slowly been diminishing as companies focus spend on ROI-proven areas. Merger/acquisition activity ranked low, but will likely increase as today s market should drive more of this behavior. Health Industry Insights, an IDC company Page 9
10 Reasons for Expected Budget Decrease Negative outlook for the economy was the top reason that some companies are looking decrease IT spend, followed by IT redundancy reduction Lack of company growth is also causing reduced IT requirements and providing less profit for investment in IT. Recent IT investments still being absorbed, which had previously ranked higher in previous surveys, has become less significant. Health Industry Insights, an IDC company Page 10
11 Expected Compliance-Related IT Budget Change 40% of individuals expect compliancerelated IT spending to increase over the next 12 months, while 48% expect it to stay the same., and12% expect a decrease. The numbers are unchanged from the previous survey Health Industry Insights, an IDC company Page 11
12 Compliance Drivers of IT Spending 21 CFR Part 11 compliance, followed by GMP/GCP/GLP are the top drivers of compliance related IT spend. However, data integrity (previously ranking 1st 12 months ago) remains a high priority, followed closely by FDA regulations and Standardizing platforms (previously ranking 3rd). CDISC/SDTM and other data standards, as well as E2B, have dropped in importance and remains low level contributors to compliance spend. Health Industry Insights, an IDC company Page 12
13 IT Budget Priorities Respondents were asked about their top spending priorities for the next 12 months. Analytics ranked first (placing in top 3 consistently for 3 years), with data mining and data integration ranking second and third as top priorities for IT spend during After climbing significantly last survey from twelth to fourth place, outsourcing services fell back down eighth place. Channel management software, which previously had never made the list before last year, has secured its spot as a priority area for 4 consecutive surveys and remained among the top 10 areas for the second time. Health Industry Insights, an IDC company Page 13
14 Life Science Item Level Serialization The pharmaceutical industry continues to push forward toward item-level serialization, though it remains a slow moving process. Currently, only 23% of companies have more than one product line fully serialized, and only 7% have one product complete. Nearly 45% of the industry has not started any significant item-level serialization efforts. Health Industry Insights, an IDC company Page 14
15 Life Science E-Pedigree Adoption Similar to serialization progress, epedigree progress has been even slower moving. Currently, only 10% of the industry has a system in place that can handle epedigree, and only 7% more expect to have a system in place in the next year. 60% of the industry has made no significant effort toward epedigree Health Industry Insights, an IDC company Page 15
16 Life Science RFID Adoption RFID adoption has essentially stalled in the industry. Most companies are now looking at alternative technologies like 2D bar codes, etc. momentum. Only 20% of companies have adopted RFID in some limited or widespread fashion, and this percentage has not experienced growth in nearly 2 years. Health Industry Insights, an IDC company Page 16
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