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.
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 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 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 company’s 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.
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.
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.
Sourabh Kankhar, Research Analyst Life Science Practice - Asia Pacific Frost & Sullivan Singapore.
