Winds of change

By Pete Young
Tuesday, 29 April, 2003

As the winds of change whistle through the life sciences industry in Australia and overseas, some bio-IT trends are also changing, a poll of the major vendors reveals.

One of the major shifts ion Australian life science is being caused by a push for collaborative research efforts to become ever-larger, generating the need for better integration of disparate data sources and processing platforms.

Among the promising avenues for meeting this need is the information technology world's development of grid computing.

There has also been a noticeable sharpening of effort among bio-IT vendors in the commercialisation phases of drug development as opposed to the drug discovery phase.

Another obvious change in the biotechnology scene, the slump in share market valuations of the listed biotechs, does not appear to have dampened the spirits of bio-IT suppliers in Australia.

That is probably because the listed biotechs have never formed a significant slice of their customer base even before the valuation decline.

And as always, there is market pressure to deliver bio-IT tools and systems which are more cost-effective and flexible in the hands of the end users.

All this is happening in the context of an Asia-Pacific bio-IT market which rates as among the most vibrant on the planet, according to market research firms like IDC.

It sees the regional bio-IT market (leaving aside Japan) increasing at a compound annual growth rate of 55 per cent to hit $US3.39 billion by 2006.

Any list of the multinational information technology vendors reaping substantial returns from selling their hardware, software and services to the life sciences sector in Australia would include IBM, Oracle Corp, HP/Compaq, SGI, Sun Microsystems, storage vendor EMC Corp and probably Apple.

Head and shoulders

Not surprisingly, the IBM behemoth stands head and shoulders above the other members of that group when judged by the scale of its efforts in Australia and elsewhere to service the life sciences industry sector and further its growth.

It has established a dedicated life sciences division in Australia and is busily expanding a range of partnerships, alliances and co-operative programs with Australian bio-IT suppliers and users at a pace that outstrips competitors.

Tony Palanca, IBM's regional manager for life sciences in Australia and New Zealand, talks in terms of building an "ecosystem" to support the Australian biotech community and says IBM is investing in partners who can help further than effort.

More specifically it is developing channel partners, building relationships with bio-IT application providers and strengthening ties with customers.

The channel partners are traditional IT organisations that IBM has trained and certified to participate in opportunities in the life sciences market.

Recent examples are Sydney company Synergy Plus in the high-performance computing environment for agri-science, and Victorian IT supplier Advent One.

On the applications front, as well as earlier alliances with Australian bioinformatics players Proteome Systems and Cytopia, IBM recently has entered into a pact with Sydney company BioLateral, which is headed by one of Australia's more enthusiastic champions of bioinformatics, Dr Tim Littlejohn.

The new alliance will make more widely available BioLateral's training services and its bioinformatics tool sets, I-Biostation and I-Biopad.

Among customers with whom IBM has forged close ties is the Victorian Partnership for Advanced Computing (VPAC) a high-performance computing centre whose services are used by bioscience researchers.

VPAC mirrors a major IBM bioscience website in the US, and provides training in IBM-supported biocomputational tools and applications.

"VPAC provides a very powerful environment where we are putting up a number of applications so companies can come in and see how they can be applied prior to investing in them, " says Palanca.

More recently, IBM has signed a memo of understanding with Queensland's premier biotech research centre, the Institute for Molecular Bioscience.

It creates a formal collaboration between the centre and IBM's major bioscience research labs in New York to work on new approaches to data mining and data integration.

The ability to integrate disparate sources of data and generate meaning from the result is looming ever-larger as a challenge for life science researchers and the new partnership will address that problem.

An early outcome of the collaborative agreement will bring a senior IBM researcher in computational biology, Dr Prasad Kodali, to Australia next month for several weeks to work on specific projects involving data integration

All the above relationships are compatible with IBM's concept of nourishing a bio-IT ecosystem in that they involve more than "simply putting a product onto the market," says Palanca. "They also support training and services which let organisations generate value out of their bio-IT investments."

Meanwhile, IBM is breaking fresh ground in the area of clinical trials with the addition of application provider Phase Forward to its stable of multinational partners.

As Australia's biotech community matures, clinical trials are becoming an area of increasing importance, Palanca points out. So it is working with Phase Forward's Australian operation to provide an on-demand IT infrastructure service aimed at organisations carrying out clinical trials.

"Rather than organisations attempting to build their own IT infrastructure when they conduct trials, we will provide that as a hosted service out of IBM."

As well as bringing outside ideas into Australia, a component of IBM's partnership program is aimed at spreading Australian innovation around the globe.

An example is Sydney's The Brain Resource Co, which has been invited into IBM's world partnering program on the strength of its Integ Neuro offering, a diagnostic tool for brain function which could be useful in treating Alzheimer's Disease.

"We have integrated some IBM product into Integ Neuro and are working to bring it into the global market," says Palanca.

The Brain Resource Co, which is based on research done at Sydney's Westmead research hub, joins more than 30 device and diagnostic companies in the global IBM Partner World program.

"Traditionally, IT companies got involved after the data was generated,' says Palanca.

"These device and diagnostic companies add real value back into life sciences by generating data and by working with them we are moving up the value chain."

On IDC figures, IBM can claim to be the bio-IT market leader and the size of the pie is growing, not shrinking.

"Our view is that the life sciences market is an information-rich business that is being propelled by the technology to manage that information," says Palanca. "The Asia-Pacific region is the fastest growing region in the global life science market and is very dynamic. What we focus on is our ability to respond to changes in the market very quickly."

Rising star

In the spectrum running from academic research to healthcare, IBM's principal targets are drug discovery, regulatory compliance and clinical development and the rising star of information-based medicine.

The IT industry's rising investment in grid computing, in which networks of different devices can be yoked together to work in unison, fits nicely with life sciences research trends which calls for exactly that type of technology.

"Especially with the centre of excellence programs in Australia, we see research teams growing larger as increasing numbers of researchers collaborate in programs which address increasingly large amounts of data," says Palanca.

Enter grid computing, a technology which networks many different processors together to achieve shared results that would be beyond the scope of individual systems in the network to produce.

Grids have been set up for smallpox research and mammography projects and IBM Australia is looking at establishing a grid initiative with Queensland's IMB and other participants, according to Palanca.

Another bio-IT trend concerns managing the security of the vast volumes of data being generated by research teams.

"Storing and accessing that information securely is a key issue in life sciences and many of the skills IBM has learning the finance industry over the past few decades are now relevant in life sciences."

Significant shift

A major forward focus for IBM in drug discovery is the information-based medicine movement which targets treatment of individuals rather than development of one-size-fits-all blockbuster drugs.

"The shift toward better understanding of individual genotypes and phenotypes and targeting them directly as individuals is going to change the pharmaceutical sector significantly over the next decade," says Palanca.

"It will impact on how research and clinical trials are conducted as well as the entire drug development process. A whole range of organisations will need to invest in technology that analyses individual genotype and phenotype data, rebuild databases with this information and integrate data from disparate sources which can be interrogated using single queries."

Palanca cited the example of a Mayo Clinic data integration project late last year which enabled researchers to search on all males between 45 and 55 with a certain protein expression and a specific reaction to a particular drug.

"We believe this type of technology will fundamentally change clinical trials and drug development," says Palanca.

IBM believes the strong performance of the Asia-Pacific region in bio-IT presents the company with opportunity to act as a midwife helping different countries to leverage their relative strengths.

"Proteome Systems, for example, is very active in the Japanese market while partners from Singapore and India can provide value back into the Australian marketplace. This is an interesting development where as the bio-IT community in the Asia-Pacific grows, there are increasing opportunities for cross-border trade."

Of major bio-IT vendors, database and software company Oracle, like IBM, takes the regional Asia-Pacific life sciences market seriously enough to create executive positions dedicated to the sector.

The company regards life sciences as a continuum stretching from gene research and drug discovery through the commercialisation phases of drug development to product manufacturing and distribution.

Says Oracle's Asia-Pacific director of life sciences industries, Scott Dawes: "We view that whole value chain as our target and have solutions for different aspects of it."

Drug discovery and traditional bioinformatics processes fit well with Oracle's bread and butter products -- the database software and toolsets which securely manage large amounts of data.

While Oracle still pays attention to those markets, "I wouldn't say there is massive growth going on in them," says Dawes. Where Oracle sees the promise of new growth lies in the applications needed to manage drug testing and commercialisation phases.

They embrace adverse event reporting systems, clinical trials management systems and thesaurus management systems (which correlate the varying standards and definitions used by different national regulatory agencies).

To take advantage of what it sees as an opportunity, Oracle has created the Pharmaceutical Application Suite, which was launched with minimal fanfare in Australia last month.

Oracle plans "to find a couple of early adopters for the product and then launch it in a bigger way in a few months," says Dawes.

According to Oracle, the new suite is attracting interest in Australia among mid-sized contract research organisations plus university and hospital research arms.

Devaluation discounted

Although Australia has dozens of start-up and listed biotech companies, collectively they have not yet emerged as a hot target for bio-IT goods and services. Some observers believe the share market devaluation of listed biotechs in the past 18 months make them even less promising as prospective customers of bio-IT vendors.

That devaluation argument is rejected by Dan Stevens, the US-based manager responsible for high-performance computing, storage and visualisation solutions for the life and chemical sciences at high-performance systems vendor SGI (Silicon Graphics).

SGI has been in the chemical and biological research space for at least 16 years -- well before the explosion of genomic data and accompanying market expectations in the late 1990s.

"We saw the change at that time in the valuation on companies doing this type of research and from our perspective, what has happened now is not devaluation but a more realistic revaluation of these companies," says Stevens.

"In other words, the valuations are just coming back to a more realistic and stable environment which we think is more valuable in the long term for the industry because it means it won't pop like the internet bubble."

SGI's push to develop an open source version of its high performance computing line is exemplified by the launch of its Linux-based Altix system.

It is in line with a general bio-IT trend to recast sophisticated proprietary tools in the open source environment that is familiar to nearly all life science researchers.

Early this year, Queensland's Parallel Supercomputer Foundation, a facility whose user base holds computational chemists and bioinformaticians, took delivery of the first 64-bit Altix supercomputer clusters in Australia.

SGI in March underscored its desire to collaborate closely with the domestic life science sector by appointing as its Australia and New Zealand science director the former South Australian minister for health and information economy, Michael Armitage.

The primary focus of Armitage, who is also a medical practitioner, is "to help scientific organisations in all fields of research from areas as diverse as drug discovery to marine biology establish the capabilities that will increase their international competitiveness," according to a company press release.

Another of the leading bio-IT suppliers, Sun Microsystems, is concentrating on three key areas, according to national manager for education and research Andrew Boulus.

They are data mining and data integration (which Sun describes as its sweet spot), data security and visualisation. Predictably for a company whose motto is "the network is the computer", Sun sees grid computing as a significant trend in bio-IT.

And it has introduced systems such as its Sun Blade platforms which allow users to mix and match operating systems more freely than ever and a new graphics accelerator board which boosts visualisation capabilities. Both products illustrate the traditional goals of more flexibility, higher performance and increased cost-effectiveness which in the past have guided the thinking of bio-IT vendors and are likely to do so far into the future.

Targeted solutions

The 'new business model' of information-based medicine which IBM believes could deliver a surge of new growth to the pharmaceutical industry is summed up by an IBM Business Consulting Services report entitled 'Pharma 2010: The Threshold of Innovation'.

In it, IBM claims pharmaceutical companies that switch from the traditional 'one size fits all' approach to healthcare, to a biologically-based targeted treatment solutions business model could treble shareholder value by 2010.

"By understanding and defining diseases, pharmaceutical companies will be able to develop targeted treatment solutions for patients with a specific disease pathology," the company claims.

"These solutions will serve as the basis for diagnosing, treating, monitoring and providing healthcare support to the benefit of patients, payers, physicians and the industry itself."

The payoff from this new model of drug discovery and delivery, according to IBM, could reduce time to market from 10 to 12 years to between three and five years.

It could increase success rates from first human dose to market by a factor of four and it could slice R&D costs to a quarter of their current average of $US800 million.

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