Simon’s Blog

Life Science IT has been a tough nut for IT companies to crack. They all want to do a lot better than they have historically. What is life science IT? Well, it involves such disciplines as bioinformatics, cheminformatics, chemometrics and clinical informatics, amongst many others. These subjects lie at the interface between computing and science. Today - in an environment where 90% of drugs that enter clinical trials don’t make it to market, and of those that do, only a fraction give a useful return on investment – IT is more important than ever. And yet, the big players (e.g. IBM, Sun, Microsoft, HP, Oracle, Apple) never seem to get even close to reaching their potential in these areas. Why? The short answer is – because they don’t yet understand the area well enough. It’s not surprising - the fundamentals behind these industries are extraordinarily complex.

How complex? Well the answer, I would assert, is that it’s sufficiently so, that most people who work even inside the industry don’t really understand it. That’s a bold statement to make, you may say; but, the truth is, the evidence supports my position overwhelmingly. As I said above, 90% of products that enter clinical development (that means, humans being treated with a drug on a test basis) fail to reach the market. And, if you take the biotech industry as a whole, it’s actually loss-making - if you add up the total amount of money that has been invested in biotech, and add up the total revenues that have flowed into biotech companies, the revenues are less than the investment.

This is not a pretty picture, because with payers for drugs exerting a downward pressure on drug prices, the biotech/pharma industry is slowly becoming unsustainable. However, while I assert that most people, even inside the industry don’t get it – I’m not suggesting they’re lacking in intelligence. On the contrary, there are many, exceptionally smart people working in biotech, pharmaceuticals, and healthcare. The problem is that the solutions to many of the key problems facing these companies (which are all based on the Life Sciences) are outside their area of expertise; the problems are (complex) software problems. And very few of the key people in biotech/pharma – or in the life sciences departments of universities - have anything close to a deep understanding of software.

Now, if you talk to many of the smarter executives in biotech and pharma, you will find that they acutally have a gut feeling that software is a big part of the solution to their problems. However, biotech and pharma companies are simply not going to make the investments to solve these software problems themselves - software is not their focus; which is why there’s such a massive opportunity for companies focussed on IT.

Over the years, I’ve met with several senior executives at some of the IT big players, to discuss their life science strategies; and I’ve seen more than a few talk at conferences and meetings. And, whether they’re talking about drug development, “data explosions”, personalised medicine, pharmacogenomics or proteomics, there’s no doubt about it: they really don’t understand the problems. Almost always, this is because they’ve been rather poorly educated about what the criticial issue facing of biotech/pharma actually are - remember, most people inside the industry don’t get it. So, typically, they have set off down unproductive paths; with these paths ranging from the naïve - “it can work, but it isn’t going to be useful” - to the rather more embarrassing – “this has zero chance of working, and you’re going to burn $300M finding out. Wow!” The IT companies aren’t alone. The usually well-informed venture capitalist community has suffered from the same problem, and has made a ton of poor investments, losing many hundreds of millions of dollars on life science IT companies that hadn’t a chance in hell of succeeding. Not surprising then, with so many failures, words like “bioinformatics” have been regarded as pretty dirty by all categories of investor over the last few years.

All of which leaves us where we are today; with software (hardware will follow, but it’s the software that’s needed first) being the solution to many problems facing healthcare; and yet the companies in healthcare not being close to having the computer systems they need to solve their problems. That’s one hell of a market opportunity…