IT Integration A Major Issue For Globetrotting Pharmas

A recent study by McKinsey reported that the Indian pharmaceutical industry is expected to touch $20 billion by 2015, with a compounded annual growth rate of 12.3%. As the Indian pharma companies spread their wings across the globe, IT could play a much larger role in the days to come.

Biztech2.0 spoke to Ruediger Dorn, director, Worldwide Life Science Group and Debashish Roy, industry sales director - Manufacturing from Microsoft to get an insight into how IT adoption is gathering momentum in the pharma industry. Excerpts:

What kind of operational efficiency can IT solutions bring to a pharma company?

A proper IT infrastructure for operations will help the overall business to act faster. IT will help in inventory management, WIP reduction, meeting regulatory standards, maintaining product quality, sharing and retaining knowledge between plants and system etc. The cost of production will go down due to lower inventories and lower downtime of machine. IT helps in being more agile and achieve aggressive growth strategy.

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How far has the Indian pharma market matured in terms of IT investment?

IT implementation is fairly matured from an Indian pharma perspective. However, the majority of investment has happened in terms of standard processing, financial accounting, inventory management, sales and marketing and to some extent in manufacturing. The next round of IT investment for sure is going to happen at the shop floor. As India is getting more and more integrated with global pharmaceutical regulatory market and standards, the manufacturing process needs to be continuously tapped and monitor.

It is difficult to predict the exact size of IT market for the pharmaceuticals industry. However if you look at the top seven Indian pharma companies, IT investment has been fairly aggressive and large. Usually 1 to 1.5% of annual revenue goes in to IT spending. The companies concentrating on generic and innovative ethical products are bound to have higher IT spending which may even reach up to 3 to 5%.

What are some of the prominent issues and challenges when it comes to IT implementation in pharma and life science industry?

Compliance to regulation is one of the major issues especially if a company already has some old system in place. The second biggest obstacle in putting IT at pharma industry is the heterogeneity of environment and complexity of implementation. The typical real time information systems of pharma companies like production control systems and Manufacturing Information System (MIS) exists at the shop floor. If suppose the ERP systems of companies, which provide general information on production plan and budget exist somewhere else than it is imperative to unify this information. This situation becomes graver particularly when you have the plant and headquarter at different locations.

The rapidly growing pharma companies also need to manage this growth in a seamless and least disruptive way. Most of the pharma companies are adopting inorganic growth route to expand themselves globally. With mergers, acquisition and buyouts, companies are bound to face cultural and IT clash. They suddenly acquire plants with far more sophisticated and regulated IT system which they will now have to align with plants that are not part of those standards. In this scenario integrating the bought out entity in to common sets of business processes, systems and standards, is where IT integration will play a major role. Depending on how effectively and holistically companies plan out the integration process, will determine whether IT becomes a bottleneck or acts as an enabler to help grow the business.

Could you highlight some of the latest trends in this sector?

Information technology is now becoming very critical for the quicker submission of products for approvals and to shave off couple of years of R&D cycle. For example Novartis has very sophisticated IT driven portfolio on project management system that helps them to fast trek certain drugs, what they believe can be blockbusters. It also has very sophisticated information sharing capabilities to manage the transition from drug discovery to clinical development and to pick the right compounds. IT is gaining significant role in analysis and portfolio management.

What kind of a future do you foresee for IT in the pharma industry?

We see a cultural shift happening in the management in terms of utilisation of IT and expectation towards IT. In next five to ten years, we will have new generation of managers who will be more familiar with IT and will demand IT to provide them right information at their fingertips. IT will become far closer to the business unit to support businesses in a faster and better way. It will also be more fluid in outsourcing instead of having their own IT business. There will be more partnerships between pharmaceutical and IT companies.

There will be a significant shift in the way information currently resides within the walls of the enterprises. There will be a stage where more transparency will be required in terms of the process and the products that were used for a particular treatment. So you will see mandatory integration among the conglomeration of consumers, the insurance companies, healthcare service providers and the drug manufacturers.