Title: BioIT Market Update
1Bio-IT Market Update
Debra Goldfarb Group Vice President, WW Systems
and Life Sciences dgoldfarb_at_idc.com
2Agenda
- 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
3Bio-IT Definition and Market View
4Big Themes
- Boom--bust cycle?
- We are taking a breath.
- Market is in nascent stagethere 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
5Global Biotechnology Trends
Global Biotech Investment Market Capitalization
have fallen off significantly since 2000
- Triggers
- Market-wide investor flight
- Product setbacks
Source BioWorld / Ernst Young
6Global Biotechnology Revenues vs. RD
Source Ernst Young LLP
7Biotech 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
8European RD Environment
- A significant percentage of RD dollars leave
Europe for US and ROW markets - 59 of EU RD stayed within European borders
- 34 US
- 7 ROW
- This trend is accelerating..
- In comparison, 80 of RD 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 RD into
North America
9Biotech 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
10Japan Bioscience Environment, 2002
- Pharma industry - RD 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 RD.
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 system for public sector research is
not well developed. Large amounts of money are
given out by a handful of senior scientists at
the large universities
11Regional Picture, Bio-IT Infrastructure
Development, 2002-2006
Public and Private Investment and Priority
Rate of Development
Source IDC 2002
12Worldwide Bio-IT Forecast by Sector
- 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
13Worldwide Bio-IT Forecast byCustomer 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
14Final Thoughts
- Stay the course
- The market will evolve in a chaotic mannerthose
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