innovation and excellence drive life science technology

Innovation and Excellence Drive Life Science Technology InvestmentsScott Lundstrom, VP ResearchHealth Industry Insights – an IDC companyslundstrom@healthindustry-insights.com

Health Industry Insights

An IDC Company

Premier global research and advisory firm in the health industryproviding integrated coverage of the life sciences, healthcare providers, and health plan payers.

Focus on the convergence of IT, business and science

Staff of life science and healthcare specialized analysts, researchers & consultants

Target audience includes:– Pharmaceutical & Biotech companies– Healthcare Providers– Payers– Health Industry Vendors– Technology Vendors

MarketAssessment

TechnologyDirections &

Trends

Outsourcing Strategies

Best Practices &

Benchmarking

BusinessPlanning &

Strategy

Health Industry Insights Portfolio

ClinicalDevelopment

Strategy& Technology

Healthcare Provider

IT Strategies

Healthcare Payer

IT Strategies

R&D Approval Mfg / SC DistributionSafety

CareDelivery

Care Management

ClinicalManagement

PopulationHealth Mgmt

Life ScienceBusinessSystems Strategy

WW Healthcare IT Spending Guide

IT Opportunity: Healthcare

WW LS IT Spending Guide

IT Opportunity: Life Science

Personalized Health

Worldwide Healthcare RFID OpportunityWorldwide Life Science RFID Opportunity

Life Science Leading Indicators Healthcare Leading Indicators

CIS MCS Future Products

Life Science IT Spending by Category

$0.0

$2,000.0

$4,000.0

$6,000.0

$8,000.0

$10,000.0

$12,000.0

$14,000.0

$16,000.0

2003 2004 2005 2006 2007 2008

SoftwareHardwareIT Services

$ M

illio

ns, U

SD

Total 2006 Life Science IT Spend$33,916,400,000

Source: Health Industry Insights, 2005 2nd Half, Worldwide Life Science IT Spending Guide

Life Science IT Spending by Region

0.0

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

30,000.0

35,000.0

40,000.0

2003 2004 2005 2006 2007 2008

Rest of WorldAP excluding JapanJapanWestern EuropeUnited States$

Mill

ions

, US

D

Source: Health Industry Insights, 2005 2nd Half, Worldwide Life Science IT Spending Guide

IT Budgets are GrowingExpected Change in Organizational IT Budget over the Next 12 Months by Segment

0

10

20

30

40

50

60

Overall IT Hardware Software Services

IncreaseStay the sameDecrease

Source: Health Industry Insights' 1Q06 Leading Indicators in Life Science IT Spending Survey

Budget Growth Drivers

0

10

20

30

40

50

60

70

80

1Q06 3Q05 1Q05

Replacing old technology

New projects

Company growth

Expanding installed base

Keeping pace with industry

Regulatory requirements

Company financialperformanceIndustry/economicperformance

Reasons for Expected Functional Area Budget Increase

Source: Health Industry Insights' 1Q06 Leading Indicators in Life Science IT Spending Survey

Technology Arc

Innovation Efficiency

Grid ComputingMobile ComputingService Oriented Architectures

Molecular ImagingSystems BiologyBiomarkersSafety SystemsSemantic WebRadio Frequency IdentificationProcess Analytical Technologies

Regional Health Information OrganizationsPersonal Health Record / Electronic Medical RecordRemote MedicinePay for Performance

StorageKnowledge ManagementAdvanced Analytics

Clinical Trial Management SystemsElectronic Data CaptureFDA E-SubmissionsLean Supply ChainSales and MarketingSix Sigma Manufacturing

Portals / Consumer Directed Health PlansHealth e-BusinessComputerized Physician Order EntryClinical SystemsCare ManagementPerformance Management

Business Process OutsourcingHigh Performance ComputingServer ConsolidationVirtualizationData Center Outsourcing

ERPClaims ProcessingPatient Billing

Excellence

Top Priorities

0 5 10 15 20

Research/science applications

Database/data mining

Data integration

Server and storage hardware

Clinical trials software

Security solutions

Network Equipment

Enterprise application software

Content/knowledge management

Project-oriented services

Server and storage software

Outsourcing services

Source: Health Industry Insights' 1Q06 Leading Indicators in Life Science IT Spending Survey

Basic Research: Planned Software Investment 2005 - 2006

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Datamanagementand archiving

Data miningand

visualization

Simulationand modeling

tools

Dataintegration

applications

Electronic labnotebooks

(ELN)

'Omics'analysis

LIMS None

Source: Health Industry Insights' 2Q05 Leading Indicators in Life Science IT Spending Survey

Systems Biology

Current use of computational biology/systems biology software

0 10 20 30 40

Don’t know.

Widespread adoption

Limited adoption

Evaluated, but not adopting

Evaluating

Aware of this technology, but isnot evaluating itNot aware of this technology

Source: Life Science Insights' 3Q05 Leading Indicators in Life Science IT Spending Survey

Molecular Imaging

Current use of molecular imaging technology in clinical trials

0 10 20 30 40 50

Widespread adoption

Limited adoption

Evaluated, but not adopting

Evaluating

Aware, but not evaluating

Not aware of this technology

Don’t know.

Source: Life Science Insights' 3Q05 Leading Indicators in Life Science IT Spending Survey

Data Integration Project Objectives

0%

5%

10%

15%

20%

25%

30%

35%

40%

Informationavailability for

enhanceddecision-making

Increasedcollaboration

Regulatorycompliance

requirements

Reduced timefor one or more

process(es)

Reduced costfor one or more

process(es)

Long-Term Storage and Data Archiving Strategy: Basic Research Sector

Rearchitect storage strategy to take advantage of new technologies

(50.2%)

Continue to add capacity to our existing source

solution (43.4%)

Increase outsourcing of our

storage (2.6%)

Not applicable (3.8%)

Compliance Drivers of IT Spending

0 5 10 15 20 25 30 35

Other/don't know

CDISC, SDTM, andother data standards

EMEA regulations

E2B compliance (AEs)

Sarbanes-Oxley

International regulations

Adverse event reporting

eSubmissions

Standardizing platformsand processes

Pharmacovigilanceand drug safety

Data integrity

New FDA regulations

21 CFR 11 compliance/data security

GMP, GCP, or GLP

(% of respondents)Source: Health Industry Insights' 2Q05 Leading Indicators in Life Science IT Spending Survey

Infrastructure Areas Planned for Investment in 2005 - 2006

0 10 20 30 40 50 60 70

Don't know

Other

Security

Networking

Server

Storage

(% of respondents)

Source: Health Industry Insights‘3Q05 Leading Indicators in Life Science IT Spending Survey

Use of Web Services Currently and in 12 Months

0 10 20 30 40 50 60 70 80

Don't know

No

Yes

(% of respondents)

CurrentlyIn 12 months

Source: Health Industry Insights' 3Q05 Leading Indicators in Life Science IT Spending Survey

Clinical Trials: EDC Use Now / In 12 Mos.Percentage of your organization's clinical trials that use electronic data capture (EDC)

0%

5%

10%

15%

20%

25%

30%

35%

40%

None less than25%

25% -49%

50% -74%

75% -90%

Essentiallyall

CurrentlyIn 12 Months

Source: Health Industry Insights' 2Q05 Leading Indicators in Life Science IT Spending Survey

RFID AwarenessPlease indicate your company's current use of RFID

Source: Health Industry Insights' 1Q06 Leading Indicators in Life Science IT Spending Survey

0 5 10 15 20 25 30 35 40

Don’t know.

My company has widespread adoption

My company has limited adoption

My company has evaluated it forpossible adoption, but not adopting

My company is evaluation it

My company is aware of thistechnology, but is not evaluating it

My company was not aware of thistechnology

%

RFID Planned Usage

05

101520253035404550 Biospecimen tracking

HTS experimentmonitoringHazardous wastetrackingRestricted materialmonitoringSample inventorycontrolCritical reagentmonitoringChain of custodysample managementNone of the above

%

Source: Health Industry Insights' 1Q06 Leading Indicators in Life Science IT Spending Survey

RFID Adoption Timing

00.5

11.5

22.5

33.5

44.5

5

ContainerPalletCaseUnit

How many years will it be before your company tags all products at the following levels?

Source: Health Industry Insights' 1Q06 Leading Indicators in Life Science IT Spending Survey

Top 10 IT Vendors in Life Sciences

$0

$500

$1,000

$1,500

$2,000

$2,500

Total Life Sciences Revenue

IBMHewlett-PackardCanonDell Microsoft FujitsuSun MicrosystemsCisco Systems Inc.NECSiemens

Source: Health Industry Insights

Questions?

For additional inquiry or to discuss research cited in this study, please call or email:

Scott Lundstrom508-935-4767slundstrom@healthindustry-insights.com