Analyst IDC bets on bio-IT boom

Spending on IT products and services by life science companies will reach $US38 billion by 2006, according to market analyst IDC.

The figure, based on a global compound annual growth rate of 24 per cent, from $US18 billion in 2001, is far greater than the company's estimates of just over a year ago.

And according to IDC's Asia-Pacific director of consulting, Phil Fersht, who will present on computing in the bioscience age at the company's Directions 2002 conference in Sydney on April 30, $US3.25 billion of that 2006 figure will be spent in the Asia-Pacific, excluding Japan.

Fersht agreed there was plenty of hype surrounding the sector, but said that it wasn't unfounded.

"It's based on actual whole countries trying to reposition themselves into the space," he said. "In Singapore, the government is putting $3.8 billion into public grants, private capital, start-ups, trying to create an ecosystem to make it work.

A key driver, Fersht said, was increased IT spend in the pharmaceutical industry.

"Companies are being forced to invest in IT," he said. "A lot of biotechnology companies and pharmaceutical companies will make a lot of unexpected investments in IT," and some found that they required petabyte-sized data storage capabilities.

Tailored products

The winners, he said, would be the companies that "don't only provide the products that will be required, but can also tailor those products to the needs of the life science community.

"There are people who are pushing out boxes, and that's OK in the short term, but life science needs end-to-end infrastructure support."

Big IT players, who would be successful in the life science market, he said, were those that were coming up with case studies and solutions tailored to the life sciences.

IDC's director of life science research, Mark Hall, told the Singapore Directions 2002 conference that the bio-IT had a number of characteristics that vendors needed to be aware of.

"IT has never been asked to participate in an endeavor which is literally about life and death," he said. "We are seeing the convergence of two colossal industries -- bioscience and IT science in a synergistic relationship. A new market has emerged for the IT industry."

The market includes pharmaceutical, healthcare, research and biotechnology companies, as well as government-linked institutions. "It is an extremely information-rich industry and the storage needs are huge," he said.

Requirements double

Hall quoted the case of a four-year-old life sciences start-up which has already installed 26 terabytes of storage, with the storage requirement doubling every nine months. Enormous processing power is required to manage that storage, with the start-up having already built a 1800-processor Linux cluster and a 500-processor Sun Solaris cluster.

Another company, with less than 50 employees, was generating 18 terabytes of raw data per month as it tries to discover new drugs, Hall said.

Storage for life sciences companies will be a $10 billion market by 2006, and the largest single market sector, according to IDC projections.

"Life sciences companies are high spenders -- around one-third of their overall spending goes on IT," Hall said. "Pharmaceutical companies are trying to radically change the process of finding new drugs and bringing them to market in a shorter time."

Several big vendors have done well in the bio-IT market already, including IBM, Compaq, Sun Microsystems, Dell, Silicon Graphics, Hewlett-Packard, EMC and Oracle.

But they are being chased by about 300 smaller IT vendors with inside knowledge of the bio-IT market, according to Hall.

"This market is changing very quickly and its complexity is going up," he said. "Scientists are not like the usual IT buyers and the bio-IT community is quite close-knit. You can't just throw technology over the wall, but have to offer products that align with the scientists' problem set."

Additional reporting by David Legard