Research

Publication Date: 25 May 2001 ID Number: COM-13-5434

Pharmaceuticals: Concocting a New-Age Witches' Brew

Carol Rozwell

How does a potential revenue increase of $2.5 million/day sound? Leading-edge

pharmaceutical firms are exploring using technology to streamline the clinical-trials
process. The lure is increased revenue and decreased expenses.

© 2001 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form without prior
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WHAT YOU NEED TO KNOW

The real potential of e-business for pharmaceutical companies lies in applying technology to
revenue-generating processes. During the past few years, these companies have focused on
ways to improve the sales process — even going so far as to invoke direct-to-consumer
advertising to boost sales. It is now time for them to address the clinical-trials process. Better
management of the clinical-trials process provides pharmaceutical companies with an opportunity
to slice years off the process of bringing a drug to market, thereby significantly increasing
revenue without exposing the public to any increased safety risk.
This research is part of a broader article consisting of a number of contemporaneously produced
pieces. See COM-13-7435 on www.gartner.com for an overview of the article.

ANALYSIS

Pharmaceutical companies are experiencing a period of significant pricing pressure. In the United
States, mail order drug fulfillment and managed-care organizations mandate the use of generic
drugs. Throughout the developed world, an aging population whose medication is paid for using
public funds increases the pressure and presages that it will not lessen anytime soon.
Pharmaceutical companies must learn to better control the costs associated with each stage of
drug development and to get more revenue out of every drug that is brought to market by
decreasing the time to market. The next candidate for improvement: the clinical-trials process.
The Opportunity
“One of the most critical business drivers that keeps a 'C level' executive awake at night focuses
on how they can better manage the overall drug development process. The next significant push
for technology in the pharmaceutical industry will be one that harkens them back to the basics;
more efficient management of science and clinical trials.”
Paul W. Allen
Vice president, Life Sciences Vertical
Clarkston Group
Today, the clinical-trials process — actually a multistep process — is largely a paper-based and
an extremely manual effort. Parameters for the study are set, patients are recruited, and those
that pass the screening process are included in the study sample. As the study proceeds, data is
collected to be organized and scrutinized at the conclusion of the process, prior to submission to
the U.S. Food and Drug Administration (FDA). Whether the clinical trials are conducted in-house
or outsourced to a contract research organization (CRO), the process is similar. Despite the
pressure from the FDA to go paperless, in most instances information is collected and recorded
on paper.
Pharmaceutical companies have a significant opportunity to improve bottom-line results by
applying the leverage points — particularly digitization — to streamline the clinical-trials process
(see SPA-13-2093, "Fully Leveraging E-Business? Think Again").
Applying the Leverage Points to Streamline the Process
Once a compound with potential is uncovered, the key for the pharmaceutical company is to
instigate a valid test for each stage of the process, conduct it with consistency and thoroughness,
and then develop a credible report of findings. At any one time, a pharmaceutical company may

Publication Date: 25 May 2001/ID Number: COM-13-5434 Page 2 of 4

© 2001 Gartner, Inc. and/or its Affiliates. All Rights Reserved.
have as many as 4,000 to 5,000 patients participating in a single clinical trial occurring at as many
as 30 sites. Slowdowns are commonly encountered in the recruitment phase and at the
conclusion of the study when data is reviewed, scrubbed and prepared for submission to the
FDA. Technology can help improve the accuracy of the data collection process and shorten the
trial process itself, as well as the analysis and report preparation processes.
One opportunity lies in the ability to report site activity quickly and accurately so that costly
problems — such as too few recruits to constitute a valid study — are uncovered and resolved on
a daily basis as opposed to being uncovered later in the process. Interactions with patients could
be entered electronically into the clinician's PC or personal digital assistant (PDA) using a
standard, trial-specific program that will not allow the clinician to move on to the next item unless
the previous item has been entered appropriately. This would preclude the need to re-enter
information onto a paper form and potentially introduce errors that will need to be fixed later.
Similarly, electronic diaries can automatically question patients at prescribed intervals following
the administration of a treatment, rather than waiting for patients to record their notes at the end
of the day — if they remember (see Figure 1).

Figure 1. The Flow of Information in the Clinical-Trials Process

Drug Approval
Authorities
PDAs help physicians
keep good records
Reports
Drug Co.
Tracking
System
Cleaner data helps the
drug company prepare
reports more quickly
Clinical- Analysis
Trials System
Database

PDAs help patients

record complete diaries
Source: Gartner Research

Rigorously capturing information in real time from physicians and patients results in more
granular, consistent and accurate data. Automated transmission of study results into a database
provides the opportunity to reduce transcription errors even further and makes it easier to
uncover missing information, obvious mistakes and unexpected side-effects. Using technology, it
is possible to shave time off the process of report preparation without jeopardizing FDA approval
because of missing or inaccurate information.
Another opportunity afforded by technology is better analysis of test results. Why is this
important? Often, compounds that are tested for one purpose do not prove to be an effective

Publication Date: 25 May 2001/ID Number: COM-13-5434 Page 3 of 4

© 2001 Gartner, Inc. and/or its Affiliates. All Rights Reserved.
treatment for that ailment, but they may be found to be useful for another problem once the
results of the study have been scrutinized. The most well-known example of this is Viagra, a drug
that originally tested poorly as heart medication but subsequently was proved to be useful for
another medical condition.
The Math Behind the Opportunity
Each year, $300 billion is spent on legal drugs worldwide. Pharmaceutical companies must
determine as quickly as possible which compounds are useful and which they will bring to market,
and then move the process along rapidly to get the maximum number of years on the market
before the patent runs out.
Patents are issued for 20 years from the date of application, but the effective life for patents is
approximately 12 years when the time for pre-clinical and clinical trials is subtracted. Thus, the
pharmaceutical company that can streamline clinical trials and knock years off the development
process stands to increase its revenue significantly. If a drug stands to earn its maker $1 billion
per annum while it is on the market, then every day the clinical-trial process can be shortened
puts $2.5 million in the company's coffers.
It is estimated that only one in 5,000 compounds screened for possible medical application has
potential. For every 10 drugs created, only three will make it through all phases of clinical trial,
win FDA approval and reach the market. It takes anywhere from five to 10 years to bring a drug to
market, at an average cost of $400 million to $600 million per compound.

Key Issues
How should enterprises transform their businesses to exploit e-business?

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© 2001 Gartner, Inc. and/or its Affiliates. All Rights Reserved.