The internal and external challenges for a pharmaceutical company demand operation through optimization. Information technology has helped pharmaceutical companies to achieve the required optimal levels of operation. Pharmaceutical companies are now capable of operating efficiently and effectively. Information technology has also become a mandate for pharmaceutical companies to optimize their resources and improve efficiency. The role of IT starts with drug discovery and carries right through to the last stage: sales and marketing. Several information technology applications are implemented in the pharmaceutical industry.

Key areas include:

– Drug discovery

– Drug development

– Manufacturing and supply chain

– Sales and marketing

IT in Drug Discovery Value Chain

IT plays an important role in the drug discovery process. Various IT tools have evolved to become core components of the modern drug discovery process. Advances in IT enable researchers to screen drug candidates and predict drug responses quickly by lowering failure rates. IT has reduced the costs, increased the speed, and improved the productivity of the drug discovery R&D process. IT applications in drug discovery help pharmaceutical companies to increase their competitiveness in the global marketplace. The major benefits of IT-enabled drug discovery are as follows:

– Improves target identification and lead validation

– Reduces R&D costs

– Reduces attrition rates by predicting efficacy and toxicity accurately

IT in Drug Development

We find that pharmaceutical companies are increasingly adopting e-clinical trial solutions in the drug development phase. The economic downturn, increased competition, patent expiry and drying up of pipelines are pressurizing the biopharmaceutical industry to adopt e-clinical trial solutions and services that could optimize the drug development process and cut down costs.

IT in Manufacturing and Supply Chain

E-Pedigree systems help ensure the safety of medicines delivered to the patients through continuous tracking of the drug in a supply chain. Use of RFID technology facilitates a high level of automation and thus reduces time and costs involved in paper based pedigree transactions.

Track and Trace Solutions

Track and Trace systems are vital to a drug manufacturer for:

– The callback of drugs with manufacturing inconsistencies,

– The callback of drugs for which safety issues have arisen,

– Ensuring full supply chain visibility,

– Sample management,

– Inventory management,

– Securing the product from counterfeit drugs, and

– Observing and analyzing prescription behavior.

IT in Sales and Marketing

Information technology in sales and marketing is a segment with high investments. Pharma companies’ spending on sales and marketing is high and eventually more companies will boost investment in IT.

Outsourcing of Clinical Data Management

Outsourcing of clinical data management to cut down costs is being practiced over the last few years. Developing nations such as India and China have realized the benefits of tapping this market. Outsourcing helps a pharma company to reduce costs by 30% to 35% and this is one of the main reasons why pharmaceutical companies outsource non-core R&D operational work to IT companies. Outsourcing clinical data management functions to countries like India and China is to take advantage of low-arbitrage. This was one of the main reasons to outsource. However it will not serve as a differentiator much longer. While selecting a country to outsource clinical data management work, building the required competencies to tackle the client requirements has grown more important than the cost advantage it provides. High speed, improved quality of service and quick response rates are some of the other factors that are favored in the industry.

The prominent models that exist in clinical data management outsourcing are:

– Individual project outsourcing

– Full time equivalent

– Functional service provider

Individual Project Outsourcing Model

Many vendors have their operational base of data management activities in various countries. They are able to work on hybrid models whereby they have the best expertise from one country coupled with scalability options from another country. These vendors can provide high quality with low-cost services. Pharmaceutical companies select these vendors based on their individual project requirements.

Full Time Equivalent Model

In this model, the complete development of facility, offices and human resources is outsourced to a service provider. The service provider will be a CRO or an IT company with expertise in areas of clinical trial data management and biostatistics. Statistical programmers, data viewers, DB designers, statisticians and medical writers are the human resources.

Functional Service Provider Model

In this model, pharmaceutical companies provide the required hardware and software, install them and train the users. This model is an overlay of a contract staffing model. The vendor or the service provider provides human resources and the office. The vendor will be a functional service provider which would be pre-decided for a certain time frame.

The main reasons behind outsourcing of clinical data management are, in diminishing order of importance, the desire to reduce costs, access to special expertise, resource constraints, access to new technologies and focus on core competencies

A Full Time Equivalent ModelService Provider

All large IT companies and cross-providers provide the full time equivalent model. Large pharmaceutical companies prefer this model as they can easily handle multi-location clinical trials data with high-end infrastructure and technologies.

Cognizant’s Clinical Data ManagementContract with AstraZeneca

Cognizant technology solutions will offer centralized data management services to support the global clinical programs for AstraZeneca. The deal also includes data management planning, electronic data capture study set-up, clinical data management, medical coding, training for clinical sites and investigations. AZ has embarked on restructuring its R&D strategies to accelerate the drug development process and to increase efficiency. In this way AZ planned to create a more effective and efficient centralized clinical data management capability.

Outsourcing to India

India has been the preferred destination of most companies. The main reasons to follow the offshore-outsourcing model are cost savings and quality deliveries.

A pharmaceutical company directly outsources to a service provider in India or prefers outsourcing to global IT companies or CROs that follow the offshore-outsourcing model.

Operating costs in India are very low compared to other nations and quality of work is excellent. Cost effectiveness and a rich talent pool are the two main reasons why companies outsource to India. Credible quality and operational flexibility are the other two factors that have medium impact.

Cost of Setting up a Clinical Data Management Setup in India

The cost of setting up a clinical data management in India is such that one cannot expect a breakthrough in a year. The vendor/service provider should be able sign at least 13 international assignments of 100 patients, each agreeing to reimburse $5 per page of CRF. Each of the CRF covers 100 pages of entered data.

The cost of software depends on the number of users. It is understood that while $5 per page is acceptable in comparison to the global rate of $10-$12 per page to most of the sponsors, there is a chance to bargain still on lower rates for cost advantage. Hence, the charge-out rate per page may not increase over the years because of increased competition. Staff costs and other overhead costs might increase at a minimum level of 20% and now the unit breakeven will attract at least 20 studies in the first two years.

Case Study: Strategic Move by aLarge Pharmaceutical Company

Lilly had a multi-year strategic partnership with a data management company i3 Statprobe. As a result of this, some jobs at Lilly were lost. This was a strategic move by Lilly to reduce fixed costs and increase flexibility and consistency whereby oversight into third party management would minimize. For this, Lilly transferred its data management activities to the vendor, but ran an internal data science and solutions department specializing in strategies, improvements in process, technology and evolving standards. Through this, Lilly focused its internal expertise on data strategy supporting their pipeline of drugs.

This partnership is an example of a shift from a traditional CRO outsourcing model to a functional alliance model. Earlier, pharmaceutical companies were in favor of a CRO outsourcing model where a CRO will take the entire responsibility for all activities. Now the functional alliance model highlights the quality of the deliveries and improves their learning and continuous improvements in both organizations. Moreover, greater flexibility is achieved and companies are able to relate this flexibility to a more variable cost controlled-type service model. Developing seamless boundaries for the organization, establishing an extension and integrating standardized processes are the key advantages.

In the functional alliance model that Lilly followed, the critical aspect is how Lilly, the partnered CRO and the IT data management vendor worked together. In the process of conducting clinical trials, the data management results are to be communicated to the monitoring group. This will be a check on the monitor’s behavior and also allow monitors to correct the case report form errors and accelerate the database lock. Here, Lilly is the facilitator, mediating communication between the CRO and the IT data management vendor. Lilly played its role at a tactical level, ensuring that the study teams were well informed of the contact information for both internal and external resources.

Issues were escalated and resolved through in-house resources. The governance process of both the companies was in place. At a strategic level Lilly made sure of this and also made sure that the accountability remained with it.

GBI Research finds that outsourcing IT in the pharmaceutical industry will become a trendsetter, helping pharmaceutical companies to mitigate the current and evolving challenges. IT solutions utilized in the value chain of pharmaceutical companies helps them to operate effectively and efficiently. We expect an increase in IT investment by pharmaceutical companies to remain competitive in the marketplace.

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