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Saha: Drug discovery and development for growth of the pharmaceutical value chain – novel strategies through information technology

The information technology (IT) spending of companies reflects their strategies to introduce new drugs, enter new markets and be more competitive in the challenging Asian pharmaceutical market. The pharmaceutical market in Asia has undergone a paradigm shift in the past few years. The major global pharmaceutical companies have shifted their focus to this region to drive their revenue growth. Moreover, the domestic companies in Asia are also actively participating in the global drug development process. At present, the pharmaceutical market in the region is challenging owing to changes in the competitive landscape, increasing research and development (R&D) costs and the need to develop the right marketing strategies. Annual global spending on medicines will reach nearly $1.2 trillion by 2016, as the pharmerging markets, biologics and generics, contribute more to spending. Growth is expected to be in the 1–2% range throughout 2016, compared with 3.8% in total for 2007–2011. The 10 leading Asian pharmaceutical markets, namely China, India, South Korea, Hong Kong, Indonesia, Malaysia, Philippines, Singapore, Taiwan and Thailand, registered a growth of only 3.6% in 2001. However, the market has recorded a consistent double-digit growth since 2002. In 2005, the Asian pharmaceutical market registered a growth of > 11% as compared with the total world growth rate of around 7%.

The Indian pharmaceutical market is growing at a rate of 9% per year. This market is the fourth largest in the world by volume and has emerged as the thirteenth largest by value. However, the other giant, China, is still the biggest pharmaceutical market in Asia. The annual growth rate of pharmaceutical sales in that country was over 20% in 2005. According to the Paris-based Organisation for Economic Co-operation and Development, we can expect that Asian middle-class spending will surpass that of the USA, the European Union (EU) and Japan combined in 2022; China alone will exceed the USA in 2020 and pass the 28-country EU in 2027, and India will move ahead of the USA in 2021 and the EU in 2026.1 Perhaps more striking is that the bulk of the pharmaceutical market is from two countries only: India and China. In 2009, those two nations accounted for just over 5% of global middle-class consumer spending and in 20 years they will account for 41% of global middle-class consumer spending.

Singapore continues to be a global pharmaceutical R&D and production hub. The pharmaceutical markets in the neighbouring South-East Asian nations, such as Indonesia, Thailand and Malaysia, are also showing tremendous growth potential. Owing to the rise of the internet, consumers can purchase non-prescription drugs directly from the producers. In addition, nutritional supplements and alternative medicines are increasingly popular, which has introduced new competition into the industry. Pharmaceutical companies need to be constantly innovating and developing new products in order to remain competitive; however, the industry is very high risk, with associated high rewards, and the risk is derived from the time-intensive and costly process of R&D for producing a new drug. From 1999 to 2004, the pharmaceutical industry dramatically increased the amount of outsourced R&D owing to the high costs of the required clinical trials. Furthermore, the risk involved with R&D can be costly if the high-reward results are not produced. According to the Pharmaceutical Research and Manufacturers of America, a pharmaceutical research and biotechnology trade group, out of 250 drugs that are tested, only five will enter clinical trials and only one will receive the right to be produced and marketed to the public. The cost of discovering, developing, marketing and launching a new drug (factoring in the cost of all those that fail to make it to market) has risen to a high of $1.7 billion according to a study by Bain et al.2 in 2003. The major stages of the pharmaceutical value chain comprise drug discovery, drug development, manufacturing, distribution, and sales and marketing. Improving efficiency for a speedy return on investment at every stage has become a critical factor to ensure the success of a company. Strategic adoption of IT is also essential to speed up the process of research, development and sales of drugs. Mounting focus on drug discovery has led to an exponential growth in creation of intellectual property.

There are specific IT solutions for various stages of the pharmaceutical value chain. Solutions such as electronic data capture for drug development, enterprise resource planning for manufacturing, and sales force automation for sales and marketing are just a few examples. There are many other solutions, such as business intelligence, supply chain management and knowledge management, which are spread across two or more stages of the value chain. IT adoption in a pharmaceutical company can be characterized by four different levels.

The pharmaceutical companies in Asia are slowly starting to adopt IT solutions in their value chain. At present, the majority are focusing on automating the manufacturing, distribution, and sales and marketing process, but there is a major demand for solutions such as enterprise resource planning, supply chain management, customer relationship management and sales force automation.



National Intelligence Council. Global Trends 2030: Alternative Worlds. URL: (accessed 31 May 2014).


Bain J, McLauchlan H, Elliott M, Cohen P. The specificities of protein kinase inhibitors: an update. Biochem J 2003; 371:199–204.

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