Download the full study reports:
Qualitative report: Key
issues, case studies, conclusions
(Sept. 2005, pdf, 2.2 MB)
(July 2005, pdf, 2.1 MB)
This sector as studied by e-Business W@tch covers business activities specified by NACE 24.4 "Manufacture of pharmaceuticals, medicinal chemicals and botanical products" and NACE 24.5 "Manufacture of soap and detergents, cleaning and polishing preparations, perfumes and toilet preparations". The pharmaceutical industry is part of the chemical industry (NACE 24). However, it differs from most of the other sub-sectors of the chemical industry in two ways. First, its outputs are mostly produced for end use and not as inputs for other parts of the chemical industry. Second, the pharmaceutical sector is characterized by a high R&D intensity.
The statistical results by and large confirm a leading position of the pharmaceutical industry in the use of ICT and e-business technologies. In fact, for most of the e-business application areas covered in this report, usage shares for the pharma industry are either at or even above the weighted average of the 10 sectors covered by the e-Business Survey 2005. However, pharma companies are not per se intensive users of e-business technologies, while the statistical findings often indicate a significant gap between large and small companies. Therefore, it seems that the pharma industry’s position as forerunner in the field of e-business is mainly driven by the activities of large players in this sector. The following paragraphs highlight the main statistical findings about the e-business activities by pharma companies in key application areas.
ICT Infrastructure and skills development: Pharma companies turn out to be well equipped with basic infrastructure components (Internet accesses, Local and Wide Area Networks). Concerning Internet access technologies, the data confirm the success of DSL particularly among SMEs. Moreover, ICT outsourcing is of high relevance in the pharma sector, even though offshore outsourcing opportunities do not play an important role. Results on ICT skills development, finally, indicate a gap between large and small companies in the participation of employees in regular ICT training programs.
Integration of internal processes and collaboration with business partners: Deployment ratios for almost all applications supporting internal processes are equal to or above the weighted average of all 10 sectors surveyed in 2005. However, the share of pharma companies using knowledge management systems is – in light of the importance of this issue – relatively low. Moreover, the statistical results provide evidence on how important pharma companies consider RFID to be. RFID-based solutions have been discussed as e-business key issue by the previous sector report. However, the statistical findings reveal that the majority of pharma enterprises do not regard RFID yet as important for their company business.
Supplier-facing e-business activities: A significant share of pharma companies – irrespective of the company size – purchase online. In contrast, specific IT solutions to support procurement activities are mainly used by large companies. Therefore, the share of companies (including the smaller ones) using specific software solutions or Internet-based services for running online (reverse) auctions is insignificant. Finally, the survey findings provide some evidence on the use of B2B trading platforms by pharma companies, which was discussed as a further key issue in the previous sector study. It turns out that e-marketplaces as providers of procurement functionalities are not important. Rather, pharma companies prefer to use internally installed solutions.
Customer-facing e-business activities: Whereas company websites as important basis for marketing activities are widespread, online sales are only of minor importance in this sector. The usage of specific customer-facing IT solutions in this sector shows similar patterns as observed for supplier-facing IT solutions, particularly with respect to the gap between large and small companies as well as the minor importance of online auctions and e-marketplaces.
Use of CRM systems and mobile solutions: The survey results provide some statistical background for the use of CRM systems and mobile solutions, which have been discussed as key issues in the previous sector report. According to the statistics, CRM systems are important in this sector, but used much more in large than in small companies. In addition, pharma companies – particularly large players – are well equipped with remote wireless access as basis for mobile solutions. However, mobile e-mail and calendar dominate among mobile solutions in use today.
Altogether, the results in both sector reports (2005) reveal the high relevance of e-business for the pharma industry. Firstly, ICT and e-business technologies are important enablers of innovation. Although ICT is only of minor importance as integral component of new products, the use of ICT and e-business plays an important role for the process of discovery and development of new drugs and pharmaceutical treatments. In addition, ICT has a role to play for optimizing company processes in order to decrease costs. This is especially relevant for large pharma companies.
Secondly, ICT and e-business developments impact also the competitive situation in this sector. In fact, competitive pressure has significantly increased during the past years and leads to an increasing cost pressure. ICT and e-business tools may for example be used by research based pharma companies to increase the R&D efficiency and, thereby, to lower the competitive pressure. Moreover, the use of ICT and e-business technologies to streamline company processes (R&D, production, marketing) helps to tackle the increased cost pressure.
The findings (2005) highlighted two specific issues, namely the need for better IT-related business skills in SMEs and the ongoing development of an RFID infrastructure for the pharmaceutical industry. ICT and the Internet have changed the way certain business activities can be conducted, and there is some evidence that SMEs have not yet fully acquired the necessary business skills to make use of these changes. In this regard, there is a potential role for European policy, at least on three levels: the e-Business Policy Support Network, the eMarket Services portal, and the e-Skills Forum.
Furthermore, it would probably be beneficial for the European pharmaceutical industry as a whole to get an independent assessment of the opportunities and challenges of RFID in the pharmaceutical supply chain. Such an assessment could be conducted by establishing an expert group at the appropriate level(s) and/or by commissioning an independent study.
The sector is going to be covered as part of the "Chemical, rubber and plastics industry" in the upcoming sector study (expected April 2008).