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Survey: Part 11 Compliance Fuels Regulatory IT Spending

Life sciences industry spending on IT is rising rapidly and poised to accelerate more than 15 percent each year through 2011, in part due to Part 11 compliance and legacy system remediation projects, says a new survey from Frost & Sullivan.

“The life sciences industry is now in a period of transition, as it seeks to use IT in resolving the process inefficiencies that cause a lot of dollars to be wasted across the spectrum, from R&D to post-marketing,” said Raghavendra Chitta, an industry analyst with Frost & Sullivan. “These companies are now witnessing a sharp uptake of IT tools, which is not limited to the drug discovery process in the life sciences industry.”

Regulatory requirements are now one of the main drivers of IT spending in the life sciences industry, the survey said. The recent drug withdrawals have brought about an increased focus on pharmacovigilance and related regulatory compliance. There have also been huge investments to achieve Part 11 and other related compliance.

“There is a tremendous rush towards compliance-related IT spending, something similar to what was witnessed during the Y2K days, which has been garnering greater proportions of IT budgets,” notes Chitta. Buoyed by these trends, IT spending in the life sciences industry, which totaled $17.10 billion in 2004, is likely to reach $49.30 billion in 2011, registering a compound annual growth rate of 16.3 percent.

While big pharma companies hold potential for IT vendors because of their more mature, predictable and large IT budgets, they are also more complex customers, the survey said. The recent drug recalls and pricing pressures have triggered rationalization of operational costs. The larger pharmaceutical companies have already replaced legacy systems or are replacing them, thus leaving little chance for increased IT spending.

For information on Frost & Sullivan’s survey “Strategic Analysis of World IT Spending in Life Sciences Industry” (B658-55), send an e-mail to Radhika Menon Theodore at — rmtheodore@frost.com rmtheodore@frost.com. Include your name, company, title, telephone number, fax number and e-mail address.