Pharmaceutical and biotechnology companies, while still enjoying some of the largest profit margins of any industry, are becoming more cost-conscious as complaints about high drug prices and health-care costs grow louder. Product development, which can take 10 years and cost more than $1 billion, has to be simplified, even as drug testing and approval processes are under closer scrutiny since problems were discovered with Vioxx and other drugs after they won Food and Drug Administration approval.

"Across the pharmaceutical industry, all companies are looking to improve their productivity and cost-competitiveness," says Bruce Fadem, VP and CIO at Wyeth, a manufacturer of prescription drugs and over-the-counter medicines such as painkiller Advil and cough syrup Robitussin. Wyeth continues to consolidate its once-scattered data centers around the world into regional centers that operate on a shared-services model. Its Singapore center is coming online to serve the company's Asia operations, joining the Americas center in the United States and a center in Great Britain that serves all Wyeth operations in Europe, the Middle East, and Africa.

INSIDE BIOTECH & PHARMA Average portion of 2005 revenue spent on IT 4.3% Companies spending more on IT this year than last 33% Buying directly from foreign suppliers 48% Centralizing control of IT operations in past 12 months 52% Bringing outsourced functions in-house in past 12 months 24%

Improving the utilization, sharing, and analysis of data across disconnected operations was cited as the top business priority by 28% of the IT and business managers at 61 major pharmaceutical, biotech, and medical-device companies that AMR Research surveyed recently. The industry is making greater use of IT to capture, manage, and analyze clinical drug trial data. Eli Lilly and Co. and Schering-Plough Corp. are using software from Phase Forward Inc. to replace some of the paper-intensive steps of gathering and studying test data. The electronic-data-capture technology provides cleaner data, speeds up the data-review process, and helps researchers weed out ineffective drug prototypes and identify safety issues earlier in the testing process, said Stephen Ruberg, clinical data technologies and services director at Eli Lilly, in an interview earlier this year. "Certainly, I see the industry moving in this direction," he said.

Pharmaceutical companies also may step up their use of analysis tools to study data about drug usage after medications hit the market to spot potential problems, Raymond Bain, VP of biostatistics and research decision sciences at Merck & Co.'s research laboratories, said at SAS Institute Inc.'s user conference in April. Merck pulled its Vioxx arthritis drug from the market last year because of concerns that it increased the risk of heart attacks and strokes.

Complying with regulations--such as Sarbanes-Oxley, the Health Insurance Portability and Accountability Act, and the FDA's 21 CFR Part 11 rule governing electronic records and signatures --was the top business priority for 20% of those queried in the AMR survey. Following closely with 18% was operational excellence, including the adoption of lean-manufacturing practices and simplifying inefficient supply chains. Implementing global supply-chain-management systems will be a major IT investment area in the next year for pharmaceutical companies, AMR VP Roddy Martin predicts. Drugmakers lag consumer packaged-goods makers in implementing supply-chain-management technology by about two years.

	I.T. BUDGET BREAKDOWN Hardware purchases IT services or outsourcing Research and development 16% 18% 12% Salaries and benefits Applications Everything else 30% 11% 13% Data: InformationWeek Research

Illustration By Paul Watson

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	BIOTECHNOLOGY & PHARMACEUTICALS   Alaris Medical Systems Inc.   Alcon Inc.   Amgen Inc.   Applied Biosystems Group   AstraZeneca Inc.   BD Biosciences   Bristol-Myers Squibb Co. * Eli Lilly and Co.   Genentech Inc.   GlaxoSmithKline PLC   Mead Johnson & Co.   Merck & Co. Inc.   Merial Inc.   Ostsuka America Pharmaceutical Inc.   Pfizer Inc.   Pioneer Hi-Bred International Inc. * Roche Diagnostics   Schering-Plough Corp.   Solvay Pharmaceuticals Inc. * Wyeth * denotes a top 100 company