Informa's Ovum forecasts global life sciences technology spending to reach US$40.8bn by the end of 2017
Global IT spending will increase at a cumulative annual growth rate (CAGR) of 3.6 percent to reach US$40.8bn by 2017, predicts Ovum. According to new figures from the global analyst firm, highest growth will be in the Asia-Pacific region, in the small to mid-sized enterprise sub-sector, and in the BI and analytics solution area.
In its latest Global Life Sciences IT spending forecast* Ovum reveals that the increase in IT spending will be fuelled in large part by the growth in data analysis and related technologies, the acquisition of systems to comply with new regulatory requirements, and increased spending on applications that advance operating efficiency and automation. Asia-Pacific will continue to be a fast-growing region for IT spending, driven by the transfer of drug discovery, development, and manufacturing to China and India. Elsewhere, value chain fragmentation caused by new entities being spun out of Big Pharma and rapid growth in the emerging markets will see strong IT spending growth of 9.4 percent CAGR in the small pharma/biotech sub sector, totalling US$10.5bn in 2017.
“The factors driving IT spending in the life sciences industry continue to be complex, with payers of healthcare demanding greater value in the face of increasing costs, technological advances enabling new types of research that are changing societal expectations, and opportunities arising from the emerging markets,” explains Andrew Brosnan, senior analyst, healthcare and life sciences at Ovum. “We expect much of this predicted growth to come from investment in business intelligence (BI) and analytics, as institutions look to collect, clean, manage, and analyse the vast amount of data from sources such as social media, electronic medical records, and genetic sequencing.”
Although overall IT spending will be higher as total revenue increases, Ovum expects total IT spending as a percentage of total revenues to decrease to 3.4 percent in 2017, largely due to IT-related cost efficiencies and the increased use of generics, which are less IT-intensive to develop than novel medications.
“The improvement of IT-related cost efficiencies will be achieved through systems simplification and infrastructure consolidation, further cloud adoption, falling component prices, and increased external sourcing,” explains Brosnan. “Greater externalization of what were once in-house resources and capabilities is occurring globally across all sub-sectors (biotech, small to mid-sized pharma, and Big Pharma). The centralization of externalized services reduces the total cost of ownership by stripping out duplicate investments and realizing greater economies of scale.”
NOTES TO EDITORS
*Global Life Sciences IT Spending Forecast through 2017: Analysis
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Ovum provides clients with independent and objective analysis that enables them to make better business and technology decisions. Our research draws upon over 400,000 interviews a year with business and technology, telecoms, and sourcing decision-makers, giving Ovum and our clients unparalleled insight not only into business requirements but also the technology that organizations must support. Ovum is an Informa business.