SOMERS, NY -- May 5, 2004  -- Today IBM Business Consulting Services (BCS) launched a new industry report which identifies the seven key information technologies which will drive innovation and increase shareholder value in the pharmaceutical industry over the next decade.

IBM forecasts that these seven technologies will help the pharmaceutical industry reduce its pre-launch drug development costs to as little as $200m (a quarter of the current average cost per drug); cut average lead times from 12-14 years to between 3-5 years; dramatically increase success rates from first human dose to market; raise the quality of development and manufacturing processes, and allow companies to deliver bigger shareholder returns than ever before.

The report, Pharma 2010: Silicon Reality, maps the information technologies which will enable pharmaceutical companies to move away from the traditional 'one-size-fits all' model of medicine towards more effective and more profitable 'targeted treatment solutions' that will include diagnostics, drugs, devices, and support services for patients with a specific disease pathology.

"Information technology is at the heart of enabling the transformation of the pharmaceutical industry," said Steve Arlington, Global Pharmaceutical Industry Leader, IBM BCS. "Now is the time for the industry to capitalize on the huge scientific achievements of the genomic era. To do that, companies need to invest in new technologies which will truly drive breakthrough growth and help them to differentiate themselves. The technologies identified in the Silicon Reality report enable pharmaceutical companies to do things that were not possible before. To put it simply, they will enable Pharma to fundamentally change the way it does business. Companies that fail to respond to the market conditions that are now emerging will see their shareholder value continue to plummet."

The report notes that today the pharmaceutical industry spends circa $20 billion a year on information technology (IT), but rarely reaps the full rewards of the investment. Companies devote most of their IT resources to technologies that cut costs such as supply chain, transaction processing and support services - many of which are increasingly becoming outsourced to external providers.

The industry is already undergoing major changes with the advent of the molecular sciences. Genetics, genomics, proteomics will eventually enable Pharma to define diseases more accurately and create healthcare packages for patients with specific disease subtypes, rather than making one-size-fits-all drugs for patients with similar symptoms but essentially different diseases. Companies that learn how to make 'targeted treatment solutions,'as IBM calls them, could multiply their shareholder value by 2010. Key to this transformation will be information technology.

The IBM report shows how the following seven key technologies will be vital to this transition and provide the most significant return on investment to pharmaceutical companies over the next decade:

1. Petaflop and grid computing give the industry access to unprecedented levels of computing power. By 2006, a new generation of petaflop computers, including IBM's Blue Gene, will enable large-scale biomolecular simulations, such as protein-folding studies. Grid computing (which harnesses the idle computing power locked in companies' desktops and servers), will enable companies to undertake such tasks as screening for DNA sequence matches, and analyzing sales and marketing data in real-time. Several research grids have already been set up, one such example being the Smallpox Research Grid, which has screened 35 million drug candidates with processing power provided by two million PCs from volunteers around the world.

2. Predictive biosimulation is the use of sophisticated computer-generated models to simulate how a biological system works as a whole. Predictive biosimulation enables pharmaceutical companies to significantly reduce the number of wet lab experiments required to identify possible drug targets. 'In silico' modeling (as opposed to 'in vitro' - in glass or 'in vivo' - in life) also enables researchers  to predict the effects of drugs on the human body, including their efficacy and safety. Various academic institutions are building computational models, including Indiana University's Center for Cell and Virus Theory, which is exploring how cells react to chemical disturbances.

3. Pervasive computing - miniaturised individual tracking devices, mobile telecoms, and wireless technologies will ultimately transform drug development and healthcare delivery by facilitating the transmission and collection of biological data on a real-time basis outside a clinical setting. That, in turn, means it can be used to monitor patients and manage their health; to test new drugs in totally different ways; and to deliver healthcare anywhere, anytime. Several firms including Philips Medical are designing intelligent biomedical clothing; and Bang & Olufsen has devised a "pill box" that reminds patients when to take their medicine.

4. Smart tags or radio frequency identification (RFID) tags  - enable physical objects to be identified at any point during manufacturing and distribution. RFID will play a key role in eliminating typically slow and inefficient manufacturing processes, helping pharmaceutical companies to prepare for a future with greater numbers of more complex products produced in smaller quantities. It will also help companies to satisfy the increasing demands of regulatory compliance by enabling the monitoring of pharmaceutical products at all points in the supply chain, and will allow more innovative healthcare delivery.

5. Advanced storage solutions will provide the tools with which to manage and maintain the vast quantities of data now being generated. Sophisticated new storage servers, virtualized storage grids and transparently integrated record management and archiving systems will help the industry comply with the increasingly tough requirements imposed by the Food and Drug Administration, the Securities and Exchange Commission and other regulators.

6. Process analytical technology (PAT) lets companies monitor their manufacturing processes continuously and automatically in real time, rather than intermittently and historically via samples and post-manufacturing quality controls. PAT improves manufacturing quality and saves money, because it is cheaper to adjust a production line immediately than to discard goods that have fallen outside the agreed tolerances. The FDA's new rules on good manufacturing practice will have a significant influence on the investment in PAT.

7. Web-scale mining and advanced text analytics use intelligent algorithms to scan all the digital information on the Internet as soon as it becomes available. This new generation of data and text mining tools will enable pharmaceutical companies to quickly and efficiently draw meaning from huge quantities of research, marketing and patient data.  Web-mining will help the industry conduct research, select potential targets for further study, identify trends, perform more active pharmacovigilance, anticipate potential crises and gain better patient insights.

To download a PDF of the Pharma 2010 report Silicon Reality,visit:  http://www.ibm.com/bcs/pharma2010