Pharmaceuticals companies are being pressured to rein in operating costs and cut prices even as they work to maintain the flow of new lifesaving and life-enhancing medications. Not surprisingly, they're using business technology to make it all happen.

"We're clearly seeing demand for faster innovation," says Mike Heim, VP and CIO at Eli Lilly & Co. "Most innovations are impossible without an IT component." But there are also "relentless cost pressures" for predictable returns on IT investments, Heim says. And that will be a challenge.

"There's literally millions of dollars of waste in pharmaceuticals production and distribution operations," AMR Research analyst Roddy Martin says. Drugmakers, for example, often use production capacity inefficiently and lose money through poor tracking of contract-compliance issues, he says.

It doesn't help that pharmaceuticals companies have historically had decentralized IT infrastructures, says Bruce Fadem, CIO at drugmaker Wyeth. But that's changing: Wyeth is centralizing its IT, Fadem says. And, Heim says, Eli Lilly consolidated its global infrastructure in the late '90s.

Systems for developing drugs, conducting clinical trials, and making and distributing products are often poorly integrated, Martin says. Integration and use of collaboration technologies could cut up to 30% off the $1.2 billion average cost of bringing a drug to market, he estimates.

To their credit, drug companies are using IT project-portfolio-management practices to align projects with business goals. At Wyeth, where business units often initiated their own IT projects, the number of projects was reduced by 60% this year compared with last year using centralized project-portfolio management, Fadem says. Portfolio management has helped cut costs at Eli Lilly by improving infrastructure standardization, increasing reuse of IT, and reducing complexity, Heim says.

Execs recognize that IT is critical to their companies' success. Wyeth's IT spending is up 4.5% this year, Fadem says, and Heim expects significant increases in Eli Lilly's IT budgets in the next few years. Lilly is in the early stages of assembling a network of portal, collaboration, identity-management, and content-management applications collectively known as the Integrated Collaborative Environment. The multiyear proj- ect will give employees, suppliers, customers, and channel partners information access and sharing capabilities, everything from letting researchers share clinical trial data to helping vendors keep Eli Lilly offices stocked with office supplies.

Eli Lilly and Wyeth each have business-intelligence IT projects under way to provide sales reps with more information about drug markets, competitors, and sales to customers such as physicians and health-care organizations. Wyeth also is cutting costs by outsourcing to India the majority of its clinical data-management chores.

INDUSTRY LEADERS
Company	Revenue in millions	Income (loss) in millions
Wyeth	$15,851	$2,051
Eli Lilly & Co.	$12,583	$2,561
Amgen Inc.	$8,356	$2,260
Monsanto Co.	$3,373	($23)
Merial Inc.	$1,800	--
Applera Corp.	$1,701	($41)
Financial data is from public sources and company supplied. Revenue is for latest fiscal year. Dashes indicate companies requesting financial information not be disclosed.

SNAPSHOT INSIDE COMPANIES Average portion of revenue spent on IT 6% Companies using radio-frequency identification -- Companies globally sourcing products and supplies 67% HOW COMPANIES DIVIDE THEIR I.T. BUDGETS Hardware purchases 10% IT Services or outsourcing 24% Research and development 6% Salaries and benefits 34% Applications 10% Everything else 16% INDUSTRY FINANCIALS Average year-over-year revenue change 11% Average year-over-year net income change 66% DATA: INFORMATIONWEEK RESEARCH See year-over-year shifts in business-technology practices for this industry. Compare and contrast this year's data with last year's.

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