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Bio-IT Market Update. Debra Goldfarb Group Vice President, WW Systems and Life Sciences Agenda. Bio-IT Infrastructure Practice Overview Overall Biotech Market Trends Global EMEA Asia/Pacific Bio-IT Forecast Update and General Trends By sector By customer type

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Bio it market update l.jpg

Bio-IT Market Update

Debra Goldfarb

Group Vice President, WW Systems and Life Sciences

Agenda l.jpg

  • Bio-IT Infrastructure Practice Overview

  • Overall Biotech Market Trends

    • Global

    • EMEA

    • Asia/Pacific

  • Bio-IT Forecast Update and General Trends

    • By sector

    • By customer type

  • Final Thoughts

  • Q & A

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  • Biotechnology

  • Informatics

  • Genomics

  • Proteomics

  • Monoclonal antibodies

  • Protein engineering

  • Target gene therapy

  • Healthcare

  • Disease research & management

  • Diagnostics

  • Regenerative biology

  • Clinical research


The use of information technology to create, organize, analyze, store, retrieve and share genomic, proteomic, chemical and clinical data in the life sciences.

  • Academic Research

  • Basic research

  • Education

  • Training

  • Government

  • Military

  • Research/R&D

  • Funding

  • Regulation

  • Intellectual Property

  • Bioterrorism

  • Environment

  • Waste management

  • Environment clean-up

  • Agriculture

  • Disease resistant strains

  • Novel therapeutics

  • Genetically modified stock

  • Chemical

  • Manufacturing

  • Petroleum

Bio-IT Definition and Market View

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Big Themes

  • Boom--bust cycle?

    • We are taking a breath….

    • Market is in nascent stage…there will be casualties

  • Business models remain fluid

    • Companies are struggling with the right model/mix

    • High profile forays into market were not well received

  • Complexity of industry should not be underestimated

    • Web of interdependencies is growing and will continue to grow over time

    • Industry disaggregation will create turmoil and opportunities for new companies, business models, skills etc…

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Market Capitalization

Total Investment

GlobalBiotechnology Trends

Global Biotech Investment & Market Capitalization have fallen off significantly since 2000

  • Triggers …

  • Market-wide investor “flight”

  • Product setbacks

Source: BioWorld / Ernst & Young

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Global Biotechnology Revenues vs. R&D

Source: Ernst & Young LLP

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Biotech Market Conditions: EMEA

  • EMEA

    • $49 billion (57%) drop in Biotech market capitalization since market-wide slump began in 2000

    • Sector will remain soft through mid-2003

    • Public equity investments have shut down, while private investment is still flowing (rate of $1 billion/year)

    • Important for investors to appreciate the time frame

    • U.K. and Germany still dominate, followed by France, Denmark and southern Sweden

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European R&D Environment

  • A significant percentage of R&D dollars leave Europe for US and ROW markets

    • 59% of EU R&D stayed within European borders

    • 34% US

    • 7% ROW

      • This trend is accelerating…..

      • In comparison, 80% of R&D spending by the US Pharma industry stayed in the US

  • Data suggests key trends:

    • The European industry is losing competitiveness as compared to the US

    • There is a growing concentration of R&D into North America

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Biotech Market Conditions: Asia/Pacific

  • AP Biotech market is very young, particularly outside of Japan

  • Over half of the AP Biotech market is public sector

  • Private sectors are being “jump started” by government decree

  • Tens of billions of dollars are being invested in the Asia/Pacific biotech economy

  • Expect a very different picture in 5-10 years

Source: IDC 2002

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Japan Bioscience Environment, 2002

  • Pharma industry - R&D spending in the industry is lower than in the US or Europe; companies are mostly family owned and have cash in the bank

  • Biotech industry - during 1980s was focused on process technology, not life sciences R&D. Emphasis now changing now, but developing a strong domestic biotech industry will take time ( recent 30 million deal between daiichi pharmaceuticals and celestar lexico sciences)

  • Linkages between medical and biological research need improvement for large pharmacogenomics research in Japan

  • Funding systemfor public sector research is not well developed. Large amounts of money are given out by a handful of senior scientists at the large universities

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Regional Picture, Bio-IT Infrastructure Development, 2002-2006

Public and Private Investment and Priority

Rate of Development

Source: IDC 2002

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Worldwide Bio-IT Forecast by Sector 2002-2006

  • Hardware is the largest sector today. (includes servers, clients, storage, networking, accelerator boards, etc.)

  • End user spend on services will overtake hardware in 2003.

  • By 2006, services will account for 42% of the total market.

  • Total market growing from $12.2B in 2001 to $30.3B in 2006.

  • Five Year CAGRs

    • Hardware: +15.8%

    • Software: +25.4%

    • Services: +21.2%

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Worldwide Bio-IT Forecast by 2002-2006Customer Type

  • Large Pharma is the biggest and fastest growing customer segment, accounting for $3.6B in 2001.

  • Biotech accounted for $3.3B in 2001, but is growing slightly slower because of a contraction in VC investment.

  • Five Year CAGRs

    • Large Pharma: +24.3%

    • Medium Pharma: +18.3%

    • Small Pharma: +12.6%

    • Biotech: +21.1%

    • Gov/Academic: +15.1%

    • Agribusiness: +17.1%

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Final Thoughts 2002-2006

  • Stay the course

    • The market will evolve in a chaotic manner…those suppliers who stay in the game will dominate

  • Continue to build out your alliances and partnerships

    • Key strategic imperative

  • Investment and commitment remain challenging

    • Huge pressure for biotechs to perform

      • Inflection point vs. continued infrastructure investment

  • Be aware of Pharma Y2K

    • In the next few years, FDA approval must be submitted via a fully electronic process