IDC MarketScape: Worldwide Life Science Manufacturing and Supply Chain Strategic Consulting 2013 Vendor Assessment

Transcription

1 IDC MARKETSCAPE IDC MarketScape: Worldwide Life Science Manufacturing and Supply Chain Strategic Consulting 2013 Vendor Assessment Eric Newmark IDC MARKETSCAPE FIGURE FIGURE 1 IDC MarketScape Worldwide Life Science Manufacturing and Supply Chain Strategic Consulting Vendor Assessment Source: IDC Health Insights, 2013 Please see the Appendix for detailed methodology, market definition, and scoring criteria. November 2013, IDC Health Insights #HI244494

2

3 IDC OPINION Manufacturing and supply chain IT spending growth in 2013 is expected to grow at levels close to historical averages, 5 7%. Relative to last year and sliced by IT segment, the majority of companies expect budgets to remain roughly the same, but IT services are most likely to experience an increase in spend, followed by hardware and then software. Manufacturers are under increasing market pressure to improve enterprise agility, develop drugs faster, and eliminate waste from all manufacturing and supply chain related processes. Companies are also faced with increased regulatory pressure and increased competition, which is driving industry consolidation as companies look to capitalize on cross-company synergies and overlapping overhead structures. In today's manufacturing plant, for example, one area receiving increased attention is Process Analytical Technology (PAT), or quality by design (QbD), which has begun to receive acceptance among a number of pharmaceutical companies, and rightly so, given the efficiency gains they produce as well as the clear alignment with the belief of the U.S. Food and Drug Administration (FDA) that quality cannot be tested into products but should be built in by design. Manufacturing plants are also continually seeking ways to reduce lead time, increase asset utilization, reduce maintenance costs, increase efficiency in capacity planning, reduce waste, and improve overall profitability. Supply chain goals are similar, with improving demand visibility, forecasting capability, inventory management, and distribution and supplier collaboration all regarded as top priorities. As such, there is strong demand for skilled consulting partners that have strong life science specific industry expertise and can help achieve these goals through more innovative and efficient use of manufacturing and supply chain focused technology. While all three faces of IT-related outsourcing ITO, BPO, and strategic consulting services continue to grow, which vendors are best suited to deliver these services to life science companies can vary greatly, depending on a company's situation-specific needs and each vendor's respective strengths and weaknesses. To help life science companies better evaluate the vendors servicing this space, this report evaluates the top 13 leading IT outsourcing vendors that serve the life science manufacturing and supply chain space. For the purposes of this report, strategic consulting includes all process design, system design, platform design, system selection assistance, go-to-market strategy, management consulting, regulatory compliance consulting, enterprise technology strategy or transformation, and other types of related strategic services. When evaluating vendors, the key criteria companies should consider (all of which are discussed in this report) include: Breadth of life science manufacturing and supply chain services offered, depth of related project experience, and number of customers the vendor has served Geographical footprint and global delivery capabilities, level of priority and focus by the vendor on the life science manufacturing and supply chain sector, and the vendor's pace of investment in related life science capabilities Life sciences' industry expertise, corporate financial stability, and willingness to contract with clients under a risk/profit-sharing contract model Diligent vetting of customer references to examine vendor capabilities surrounding project management, IT technical skills, account management, and overall value delivery to clients 2013 IDC Health Insights #HI

4 IDC MARKETSCAPE VENDOR INCLUSION CRITERIA IDC frequently has unique visibility into vendor selection processes within life science companies through clients and contacts in the industry. For a vendor to be considered for inclusion in this study, the vendor's services must have been significantly evaluated for purchase within a recent deal with which IDC is familiar. Further research and due diligence were then conducted to narrow the list of vendors to only those that had won deals and that IDC viewed as legitimate contenders for future deals within the pharmaceutical manufacturing and supply chain space. Ultimately, 13 vendors were invited to participate in this study: Accenture Capgemini Cognizant CSC Deloitte EY HCL Infosys L&T Infotech PricewaterhouseCoopers (PwC) TAKE Solutions Tata Consultancy Services (TCS) Tech Mahindra ESSENTIAL BUYER GUIDANCE Outsourcing in the life sciences continues to expand as what is considered "core" to business slowly shrinks and more of everyday operations become fair game for externalization. However, conversely, while outsourcing continues to expand, the number of vendors that life science companies are contracting with is slowly decreasing. Companies are increasingly looking to consolidate vendors down from traditional levels of four or five firms to two or three vendors in a given area that have deeper industry expertise and greater potential for a closer-knit longer-term partnership status. Life science companies are interested in vendors with several specific proven attributes, including: Deep, proven industry-specific expertise, with a strong book of references Willingness to provide dedicated resources on an ongoing basis across sequential projects to maintain acquired best practices Capability to provide onshore/onsite resources 2 #HI IDC Health Insights

5 Proven understanding of industry regulations and compliance initiatives Additionally, when engaging with an IT outsourcing partner, items life science companies should keep in mind include: Clearly understand and document what problems you're trying to solve, both technical and business process oriented, to make certain your new outsourcing initiative is designed correctly to match your business goals. Make sure all functional requirements are signed off on by all stakeholders in your company that may be impacted by an IT outsourcing initiative. Involving all stakeholders early on in the evaluation process will also help encourage broader ownership and reduce any potential resistance. Observe whether vendors are vertically organized internally. This helps ensure their leadership is more in tune with industry-specific needs and increases the likelihood that future development will be closer aligned with your needs going forward. Consider each vendor's breadth of services offered (for future relationship expansion), depth of experience within the sales and marketing space in particular, pricing model flexibility (willingness to share risk), and whether the vendor's culture will be a good match for your company's societal order. VENDOR SUMMARY PROFILES This section briefly explains IDC's key observations resulting in a vendor's position in the IDC MarketScape. While every vendor is evaluated against each of the criteria outlined in the Appendix, the description here provides a summary of each vendor's strengths and opportunities. Accenture Established in 1989, Accenture has been serving the life science industry for nearly 30 years. The company, headquartered out of Dublin, Ireland, has offices in more than 120 countries and most recently attained annual net revenue of nearly $28 billion. IDC estimates that Accenture derives roughly 5% of its revenue from the life sciences, and we estimate that roughly 15% of this comes from the manufacturing and supply chain space. After a close evaluation of Accenture's offerings and capabilities, IDC has positioned the company in the Leaders category within this IDC MarketScape. Accenture has extensive experience working with life science companies across all three sections of the industry: pharmaceutical, biotech, and medical devices. Nearly all of Accenture's life science customers are large corporations with revenue over $1 billion, with a significant base of customers spread across North America, Europe, and Asia/Pacific. Accenture also has a considerable number of delivery centers located across these three regions as well as in Latin America. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, Accenture received high marks for its life science expertise IDC Health Insights #HI

6 Accenture has a strong track record of engaging with its clients under flexible pricing contracts (i.e., profit or risk sharing), which should provide it increasing opportunities as the life science industry continues to become more interested in these types of arrangements and migrates toward this model. Further harnessing its delivery centers in Latin America should help Accenture expand its Latin American customer base in the coming years as well. At the functional category level, offerings best positioned for further market opportunity development by Accenture include supply chain visibility/monitoring and customer/supplier portals. Capgemini Founded in 1967, Capgemini has been serving the life science industry for over 20 years. The company, headquartered out of Paris, France, has offices in nearly 40 countries and most recently attained annual revenue exceeding $11 billion. IDC estimates that Capgemini derives roughly 4% of its revenue from the life sciences, roughly 8% of which comes from the manufacturing and supply chain space. After a close evaluation of Capgemini's offerings and capabilities, IDC has positioned the company in the Major Players category within this IDC MarketScape. Capgemini has extensive experience working with pharmaceutical companies, though it also has a medium-sized customer base across the biotech and medical device industries. The vast majority of Capgemini's life science customers are large corporations with revenue over $1 billion, and the company has a significant base of customers spread across North America, Europe, and Asia/Pacific. Capgemini also has a considerable number of delivery centers located across the Americas and Europe. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, Capgemini received high marks for its account management and project management capabilities. With the life science industry becoming increasingly interested in risk-sharing and profit-sharing type contract models, expanding its pricing model flexibility in this direction should serve as a nice opportunity for Capgemini to expand business both outside and within its existing customer base. At the functional category level, one offering well positioned for further market opportunity development by Capgemini is product returns management. Cognizant Established in 1994, Cognizant has been serving the life science industry for almost 20 years. The company, headquartered out of Teaneck, New Jersey, has over 50 delivery and operations centers globally and most recently announced expected annual revenue to exceed $8.7 billion in IDC estimates that Cognizant derives roughly 13% of its revenue from the life sciences, and we estimate that 10 15% of this comes from the manufacturing and supply chain space. After a close evaluation of Cognizant's offerings and capabilities, IDC has positioned the company in the Leaders category within this IDC MarketScape. 4 #HI IDC Health Insights

7 Cognizant has extensive experience working with life science companies across all three sections of the industry: pharmaceutical, biotech, and medical devices. Roughly 90% of Cognizant's life science customers are large corporations with revenue over $1 billion, with the remaining 10% being primarily midsize companies. The majority of Cognizant's customer base is spread across North America and Europe, and the company has a considerable number of delivery and operations centers located across both of these regions as well as in Asia and Latin America. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, Cognizant received high marks for both technical skills and project management capabilities. With the life science industry becoming increasingly interested in risk-sharing and profit-sharing type contract models, further promoting its newer pricing model should serve as a nice opportunity for Cognizant to expand business both outside and within its existing customer base. At the functional category level, offerings best positioned for further market opportunity development by Cognizant include manufacturing and new product launch strategy and contract management services. CSC Founded in 1959, CSC has been serving the life science industry for over 25 years. The company, headquartered out of Falls Church, Virginia, most recently attained annual revenue exceeding $15 billion. IDC estimates that CSC derives roughly 5% of its revenue from the life sciences, roughly 20% of which comes from the manufacturing and supply chain space. After a close evaluation of CSC's offerings and capabilities, IDC has positioned the company in the Major Players category within this IDC MarketScape. CSC has extensive experience working across all three areas of the life sciences: pharmaceutical, biotech, and medical devices. The vast majority of CSC life science customers are large corporations with revenue over $1 billion, though the company does still derive roughly 25% of its revenue from midsize and smaller companies, with its customer base spread across North America, Europe, and Asia. CSC also has a considerable number of delivery centers located across those three geographical regions. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, CSC received the highest score among all vendors for life science industry expertise, and received very high marks for both its account management and project management capabilities. With the life science industry becoming increasingly interested in risk-sharing and profit-sharing type contract models, expanding its pricing model flexibility in this direction should serve as a nice opportunity for CSC to expand business both outside and within its existing customer base. At the functional category level, offerings best positioned for further development by CSC include warehouse management and supply chain transformation services IDC Health Insights #HI

8 Deloitte Established in 1845, Deloitte has been serving the life science industry for over 25 years. The company, headquartered in New York, has over 4,500 dedicated life science focused employees, and it is privately held, though IDC estimates its revenue to be well into the billions. IDC estimates that Deloitte derives roughly 15 20% of its revenue from the life sciences, and we estimate that 15 20% of this comes from the manufacturing and supply chain space. After a close evaluation of Deloitte's offerings and capabilities, IDC has positioned the company in the Leaders category within this IDC MarketScape. Deloitte has extensive experience working with life science companies across all three sections of the industry: pharmaceutical, biotech, and medical devices. IDC estimates that nearly two-thirds of Deloitte's life science customers are large corporations with revenue over $1 billion, with the remaining base of customers primarily in the medium-sized range. A significant base of Deloitte's customers are spread across North America, Europe, and Asia/Pacific. Deloitte also has a considerable number of delivery centers located across these three regions as well as in Latin America. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, Deloitte received the highest marks among all vendors for its account management capabilities and received strong reviews of its technical skills. Deloitte has a strong track record of engaging with its clients under flexible pricing contracts (i.e., profit or risk sharing), which should provide it increasing opportunities as the life science industry continues to become more interested in these types of arrangements and migrates toward this model. Further harnessing its delivery centers in Latin America should help Deloitte expand its Latin American customer base in the coming years as well. At the functional category level, offerings best positioned for further development by Deloitte to expand its market opportunity include PAT/QbD and supply chain analytics and business intelligence (BI) tools. EY While its oldest component was established in 1849, EY has been serving the life science industry for the past eight years. The company, headquartered out of London, England, has annual revenue estimated to be roughly $24 billion. IDC estimates that EY derives roughly 8% of its revenue from the life sciences, 30% of which comes from the sales and marketing space. After a close evaluation of EY's offerings and capabilities, IDC has positioned the company in the Leaders category within this IDC MarketScape. EY has extensive experience working with life science companies across all three sections of the industry: pharmaceutical, biotech, and medical devices. More than 80% of EY's life science customers are large corporations with revenue over $1 billion, with a significant base of customers spread across North America, Europe, Asia/Pacific, and Latin America. EY also has delivery centers located across 6 #HI IDC Health Insights

9 all four of these regions. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, EY scored the highest among all vendors for the overall level of value delivered to its clients, and it received high marks in life science industry expertise and technical skills. EY has a proven track record of engaging with its clients under flexible pricing contracts (i.e., profit or risk sharing), which should provide it increasing opportunities as the life science industry continues to become more interested in these types of arrangements and migrates toward this model. Further harnessing its delivery centers in Latin America should help EY expand its Latin American customer base in the coming years as well. At the functional category level, offerings best positioned for further development by EY include new product launch strategy and customer lifetime value analysis. HCL Founded in 1991, HCL has been serving the life science industry for more than 10 years. The company, headquartered out of Noida, India, has offices in 31 countries and most recently attained annual revenue exceeding $4.6 billion. IDC estimates that HCL derives over 11% of its revenue from the life sciences, roughly 33% of which comes from the manufacturing and supply chain space. After a close evaluation of HCL's offerings and capabilities, IDC has positioned the company in the Major Players category within this IDC MarketScape. HCL has extensive experience working with life science companies across all three sections of the industry: pharmaceutical, biotech, and medical devices. Nearly all of HCL's life science customers are large corporations with revenue over $1 billion, with a significant base of customers spread across North America, Europe, and Asia/Pacific. HCL also has a considerable number of delivery centers located across these three regions as well as in Latin America. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, HCL received high marks for its technical skills. HCL has a growing track record of engaging with its clients under flexible pricing contracts (i.e., profit or risk sharing), which should provide it increasing opportunities as the life science industry continues to become more interested in these types of arrangements and migrates toward this model. Further harnessing its delivery centers in Latin America should help HCL expand its Latin American customer base in the coming years as well. At the functional category level, offerings best positioned for further development by HCL include supply chain monitoring/visibility and enterprise mobility. Infosys Founded in 1981, Infosys has been serving the life science industry for more than 10 years. The company, headquartered out of Bangalore, India, has offices in 30 countries and most recently attained annual revenue exceeding $7 billion. IDC estimates that Infosys derives roughly 5% of its 2013 IDC Health Insights #HI

10 revenue from the life sciences, 25% of which comes from the manufacturing and supply chain space. After a close evaluation of Infosys' offerings and capabilities, IDC has positioned the company in the Leaders category within this IDC MarketScape. Infosys has extensive experience working with pharmaceutical companies, though it does have customers spread across all three sections of the industry: pharmaceutical, biotech, and medical devices. The majority of Infosys' life science customers are large corporations with revenue over $1 billion, with roughly 10% being medium-sized corporations. Most of Infosys' customers reside in North America or Europe, though the company does have several delivery centers spread across Asia and Latin America. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, Infosys received high marks for its technical skills and account management capabilities. With the life science industry becoming increasingly interested in risk-sharing and profit-sharing type contract models, further promoting its pricing model flexibility in this direction should serve as a nice opportunity for Infosys to expand business both outside and within its existing customer base. At the functional category level, offerings best positioned for further development by Infosys include customer lifetime value analysis and PAT/QbD. L&T Infotech Established in 1997, L&T Infotech has been serving the life science industry for the past 10 years. The company, headquartered out of Mumbai, India, has over 800 employees dedicated to serving the life sciences, and IDC estimates that the privately held company has revenue exceeding $500 million. IDC estimates that L&T Infotech derives roughly 5% of its revenue from the life sciences, and we estimate that 80% of this comes from the manufacturing and supply chain space. After a close evaluation of L&T Infotech's offerings and capabilities, IDC has positioned the company in the Major Players category within this IDC MarketScape. L&T Infotech has extensive experience working with a small number of life science companies across all three sections of the industry: pharmaceutical, biotech, and medical devices. Roughly 90% of L&T Infotech's life science customers are large corporations with revenue over $1 billion, with a significant base of customers spread across North America, Europe, and Asia/Pacific. L&T Infotech also has a small number of delivery centers located across these three regions as well as one in Latin America. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, L&T Infotech received high marks for its project management capabilities and technical skills. 8 #HI IDC Health Insights

11 With the life science industry becoming increasingly interested in risk-sharing and profit-sharing type contract models, further exploring pricing model flexibility in this direction could serve as a nice opportunity for L&T Infotech to expand business both outside and within its existing customer base. At the functional category level, offerings best positioned for further development by L&T Infotech include shop floor systems, PLM, and supply chain visibility/monitoring. PricewaterhouseCoopers PricewaterhouseCoopers has been offering consulting services to the life science industry for nearly 30 years. The company, headquartered out of New York City, New York, has annual revenue estimated by IDC to exceed $32 billion. IDC estimates that PwC derives roughly 7% of its revenue from the life sciences, and we estimate that 15% of this comes from the sales and marketing space. After a close evaluation of PwC's offerings and capabilities, IDC has positioned the company in the Leaders category within this IDC MarketScape. PwC has extensive experience working with life science companies across all three sections of the industry: pharmaceutical, biotech, and medical devices. More than 80% of PwC's life science customers are large corporations with revenue over $1 billion, with a significant base of customers spread across North America, Europe, Asia/Pacific, and Latin America. PwC also has delivery centers located across all four of these regions. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, PwC scored the highest among all vendors in terms of both project management capabilities and technical skills. PwC is willing to engage with its clients under flexible pricing contracts (i.e., profit or risk sharing) and has previously executed some deals under this type of model. Further exploring and promoting these types of engagements should provide PwC increasing opportunities as the life science industry continues to become more interested in these types of arrangements and migrate toward this model. At the functional category level, offerings best positioned for further market opportunity development by PwC include track and trace, serialization, drug pedigree, and enterprise mobility. TAKE Solutions Founded in 2001, TAKE has been serving the life science industry for more than 10 years. The company, headquartered out of Chennai, India; Princeton, New Jersey (in the United States); and Hampshire (in the United Kingdom) has additional global offices, and IDC estimates its annual revenue to exceed $100 million. IDC estimates TAKE derives roughly 50% of its revenue from the life sciences, 5% of which comes from the manufacturing and supply chain space. After a close evaluation of TAKE's offerings and capabilities, IDC has positioned the company in the Contenders category within this IDC MarketScape IDC Health Insights #HI

12 TAKE has performed the largest portion of its work in the pharmaceutical industry, but it also has experience with both medical device and biotech companies. Roughly 60% of its life science customers are large corporations with revenue over $1 billion, with the remaining 40% spread across midsize and small businesses. Most of TAKE's customers reside in the United States, though up to 30% are spread across Europe and Asia. With the life science industry becoming increasingly interested in risk-sharing and profit-sharing type contract models, further exploring and promoting pricing model flexibility in this direction could serve as a nice opportunity for TAKE to expand business both outside and within its existing customer base. At the functional category level, offerings best positioned for further development by TAKE include supply chain BI/dashboarding and track and trace technology. Tata Consultancy Services Founded in 1968 as a division of Tata Sons, Tata Consultancy Services has been serving the life science industry for the past 25 years. The company, headquartered out of Mumbai, India, has offices in 47 countries and most recently attained annual revenue exceeding $11 billion. IDC estimates that Tata Consultancy Services derives roughly 5% of its revenue from the life sciences, and it estimates roughly 25% of this comes from the manufacturing and supply chain space. After a close evaluation of Tata Consultancy Services' offerings and capabilities, IDC has positioned the company in the Major Players category within this IDC MarketScape. Tata Consultancy Services has extensive experience working with life science companies across all three sections of the industry: pharmaceutical, biotech, and medical devices. Nearly all of Tata Consultancy Services' life science customers are large corporations with revenue over $1 billion, though a small percentage of the company's customers are small and medium-sized businesses. Most of TCS' customers reside in North America and Europe, with a few scattered across Asia/Pacific and Latin America. Tata Consultancy Services also has a considerable number of delivery centers located across all four of these regions. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, Tata Consultancy Services received high marks for both its technical skills and overall level of value delivered to its clients. Tata Consultancy Services is willing to engage with its clients under flexible pricing contracts (i.e., profit or risk sharing) and has a track record of doing so. This should provide Tata Consultancy Services increasing opportunities as the life science industry continues to become more interested in these types of arrangements and migrate toward this model. Though its current Latin American base of customers is small, Tata Consultancy Services does have eight delivery centers in this region, which should help it in this region over the coming years. At the functional category level, enterprise mobility is the area best positioned for further market opportunity development by TCS. 10 #HI IDC Health Insights

13 Tech Mahindra Founded in 1986, Tech Mahindra has been serving the life science industry for the past 14 years. The company, headquartered out of Hinjewadi, India, has over 1,800 employees dedicated to the life sciences and most recently attained annual revenue exceeding $3 billion. IDC estimates that Tech Mahindra derives roughly 3% of its revenue from the life sciences, 21% of which comes from the manufacturing and supply chain space. After a close evaluation of Tech Mahindra 's offerings and capabilities, IDC has positioned the company in the Contenders category within this IDC MarketScape. Tech Mahindra has experience working with life science companies across all three sections of the industry: pharmaceutical, biotech, and medical devices. Roughly 90% of Tech Mahindra's life science customers are large corporations with revenue over $3 billion, with a significant base of customers spread across North America and Europe and a small number in Asia/Pacific. Tech Mahindra has delivery centers located across these three regions as well as in Latin America. Relative to other vendors discussed in this report, and based on feedback from multiple customer references, Tech Mahindra received high marks for its account management capabilities. Tech Mahindra has a growing track record of engaging with its clients under flexible pricing contracts (i.e., profit or risk sharing), which should provide it increasing opportunities as the life science industry continues to become more interested in these types of arrangements and migrates toward this model. At the functional category level, customer/supplier portals and PLM services are two areas well positioned for further market opportunity development by Tech Mahindra. APPENDIX Reading an IDC MarketScape Graph For the purposes of this analysis, IDC divided potential key measures for success into two primary categories: capabilities and strategies. Positioning on the y-axis reflects the vendor's current capabilities and menu of services and how well aligned the vendor is to customer needs. The capabilities category focuses on the capabilities of the company and product today, here and now. Under this category, IDC analysts will look at how well a vendor is building/delivering capabilities that enable it to execute its chosen strategy in the market. Positioning on the x-axis, or strategies axis, indicates how well the vendor's future strategy aligns with what customers will require in three to five years. The strategies category focuses on high-level decisions and underlying assumptions about offerings, customer segments, and business and go-tomarket plans for the next three to five years IDC Health Insights #HI

14 IDC MarketScape Methodology IDC MarketScape criteria selection, weightings, and vendor scores represent well-researched IDC judgment about the market and specific vendors. IDC analysts tailor the range of standard characteristics by which vendors are measured through structured discussions, surveys, and interviews with market leaders, participants, and end users. Market weightings are based on user interviews, buyer surveys, and the input of a review board of IDC experts in each market. IDC analysts base individual vendor scores, and ultimately vendor positions on the IDC MarketScape, on detailed surveys and interviews with the vendors, publicly available information, and end-user experiences in an effort to provide an accurate and consistent assessment of each vendor's characteristics, behavior and capability. Market Definition For the purposes of this report, strategic consulting in the life science manufacturing and supply chain space includes all process design, system design, platform design, system selection assistance, go-tomarket strategy, management consulting, regulatory compliance consulting, enterprise technology strategy or transformation, and other types of related strategic services. The following list of technology areas serve as the primary categories of technology assessed within this evaluation: supply chain visibility/monitoring, analytics/business intelligence, customer/suppliers portals, ERP, shop floor systems, data management, warehouse management, PLM, application integration, data integration, application/database consolidate and rationalization, contract management, chargeback reconciliation, rebate reconciliation, PAT/QbD, LIMS, track and trace/serialization/epedigree, RFID, infrastructure outsourcing, enterprise mobility, and system validation. Market Overview Life science companies are undergoing a technical paradigm shift that has been long in the making. Cloud technology, tablet-driven mobile capabilities, actionable analytics, and growing social media importance are four technological pillars of change that are influencing significant strategic and operational overhauls across the commercial life science landscape. While many of these technologies have existed for several years, various catalysts have caused each of these areas to "tip" only in the past few years. Industry comfort with the security of data living in the cloud has for the most part now been achieved. The advent of the tablet has completely revolutionized what companies refer to as a "mobile strategy." Making analytics more actionable has reinvigorated companies' appetite for further investment in analytics. And although social media is still very much in its infancy, pilot adoption and expanded interest are mounting. All of these advancements, coupled with continually growing government regulation and the compliance challenges that life science companies face, make the current industry environment ripe for expanded IT investment. The life science manufacturing and supply chain space in particular is under increasing market pressure to improve enterprise agility, develop drugs faster, and eliminate waste from all manufacturing and supply chain related processes. Companies are also faced with increased regulatory pressure and increased competition, which is driving industry consolidation as companies look to capitalize on cross-company synergies and overlapping overhead structures. 12 #HI IDC Health Insights

15 To manage all of these growing difficulties, companies are looking for partners that can help them innovate, optimize, and improve the efficiency of manufacturing and supply chain tasks. Strategies and Capabilities Criteria Tables 1 and 2 provide key strategy and capability measures for the success of life science manufacturing and supply chain strategic consulting vendors. TABLE 1 Key Strategy Measures for Success: Life Science Manufacturing and Supply Chain Strategic Consulting Vendors Strategies Criteria Criteria Definition Criteria Weighting Offering strategy The vendor's current development of offerings will be relevant and attractive to customers over the next three to five years. Offering road map Breadth of offerings are expected to match directly to current customer needs to deliver maximum customer benefit over the next three to five years Delivery Vendors are expected to have deep experience in each of the areas in which customers are currently seeking manufacturing and supply chain related offerings over the next three to five years Portfolio strategy The vendor is expected to attribute a significant priority level to its focus on the life science manufacturing and supply chain segment over the next three to five years Customer base The company is expected to have a substantial customer base over the next three to five years, including a number of pharma, biotech, and medical device customers Offering strategy total Go-to-market strategy The vendor's capabilities maximize the connection between offerings and customers, such as delivery, partnerships, pricing, distribution, marketing, sales, and service. Pricing model The vendor will be willing to demonstrate value through flexible pricing mechanisms, including profit sharing based relationships, over the next three to five years Sales/distribution strategy Over the next three to five years, the vendor's sales/distribution structure will be aligned with the way customers, especially those in high-growth market segments, want to buy as demonstrated by a global presence, large project experience, and location and number of delivery centers IDC Health Insights #HI

16 TABLE 1 Key Strategy Measures for Success: Life Science Manufacturing and Supply Chain Strategic Consulting Vendors Strategies Criteria Criteria Definition Criteria Weighting Marketing strategy The vendor's marketing organization, marketing messages, and account management structure are aligned with the priority customer segments and executing well over the next three to five years Engagement strategy The vendor's customer-facing technical skills, project management capabilities, and level of value delivered to customers are expected to satisfy market wants and needs over the next three to five years Go-to-market strategy total Business strategy Strategies to grow the business are aligned with market trends and future opportunities over the next three to five years. Growth strategy The company is knowledgeable on the life science market and has a manufacturing and supply chain focus. It will be heavily focused on the manufacturing and supply chain sector over the next three to five years Innovation/R&D pace and productivity The pace of continued R&D investment is expanding the company's life science manufacturing and supply chain offerings over the next three to five years Financial/funding model The company will generate, attract, and manage capital/funding well over the next three to five years to create market value Employee strategy The company is expected to hire highly qualified life science resources and employees with industry experience and to organize itself optimally to create market value for customers over the next three to five years Business strategy total Source: IDC Health Insights, #HI IDC Health Insights

17 TABLE 2 Key Capability Measures for Success: Life Science Manufacturing and Supply Chain Strategic Consulting Vendors Capabilities Criteria Criteria Definition Criteria Weighting Offering capabilities The offering's capabilities align well with current market needs and demands. Offering road map Current offerings match directly to current customer needs to deliver maximum customer benefit Delivery Vendors have deep experience in each of the areas in which customers are currently seeking manufacturing and supply chain related offerings, which is demonstrated clearly through things such as industry-specific project experience Portfolio strategy The vendor attributes a significant priority level to its focus on the life science manufacturing and supply chain segment as demonstrated by length of time in the market and breadth of project types Customer base The company has a substantial customer base as demonstrated through the number and type of customers Offering capabilities total Go-to-market capabilities The vendor's capabilities maximize the connection between offerings and customers, such as delivery, partnerships, pricing, distribution, marketing, sales, and service. Pricing model The vendor is willing to demonstrate value through flexible pricing mechanisms, including profit sharing based relationships Sales/distribution strategy The current sales/distribution structure is aligned with the way customers, especially those in high-growth market segments, want to buy as demonstrated by a global footprint, wide and varied project experience, and delivery centers Marketing strategy The vendor's marketing organization, marketing messages, and account management are aligned with the priority customer segments and executing well Engagement capabilities The vendor's technical skills, project management capabilities, and level of value delivered to customers satisfy market wants and needs Go-to-market capabilities total IDC Health Insights #HI

18 TABLE 2 Key Capability Measures for Success: Life Science Manufacturing and Supply Chain Strategic Consulting Vendors Capabilities Criteria Criteria Definition Criteria Weighting Business capabilities Financial, employee, partner, and R&D management, among other capabilities, are in agreement with current market opportunities. Growth strategy The company is knowledgeable on the life sciences and is heavily focused on the manufacturing and supply chain sector Innovation/R&D pace and productivity The pace of continued R&D investment is expanding the company's life science manufacturing and supply chain offerings Financial/funding model The company is generating, attracting, and managing capital to create market value Employee strategy The company will continue to hire qualified life science resources and employees with industry experience and organize itself optimally to create market value for customers Business capabilities total Source: IDC Health Insights, 2013 LEARN MORE Related Research Perspective: IDC Health Insights' Top Preferred Life Science Technology Vendors for 2013 (IDC Health Insights #HI239146, February 2013) Life Science Leading Indicators 1Q13 (IDC Health Insights #HI239160, January 2013) Synopsis This IDC Health Insights report provides an assessment of where the life science manufacturing and supply chain strategic consulting market is going, how the major vendors compare with each other, and what criteria are most important for life science companies to consider when selecting a vendor. Manufacturing and supply chain IT spending growth in 2013 is expected to grow at levels close to historical averages, 5 7%. Relative to last year and sliced by IT segment, the majority of companies expect budgets to remain roughly the same, but IT services are likely to experience an increase in spend relative to hardware and software. Part of this includes strong demand for external partners that 16 #HI IDC Health Insights

19 can reduce costs, improve process efficiency, increase automation, and provide strong life science specific industry expertise. Eric Newmark, program director of IDC Health Insights' Commercial Life Sciences research, noted, "Manufacturers are under increasing market pressure to improve enterprise agility, develop drugs faster, and eliminate waste from all manufacturing and supply chain related processes. Companies are also faced with increased regulatory pressure and strengthening generic competition, which is driving industry consolidation as companies look to capitalize on cross-company synergies and overlapping overhead structures. Within the life sciences, there continues to be strong demand for external partners that have strong life science specific industry expertise and can help achieve these goals through better, cheaper, and more flexible use of manufacturing and supply chain focused technology. If you are looking for assistance in selecting a third-party service provider for manufacturing or supply chain strategic consulting, the guidance provided in this IDC MarketScape is a great place to start." 2013 IDC Health Insights #HI

20

21 About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make factbased decisions on technology purchases and business strategy. More than 1000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 48 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Global Headquarters 5 Speen Street Framingham, MA USA idc-insights-community.com Copyright Notice Copyright 2013 IDC Health Insights. Reproduction without written permission is completely forbidden. External Publication of IDC Health Insights Information and Data: Any IDC Health Insights information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Health Insights Vice President. A draft of the proposed document should accompany any such request. IDC Health Insights reserves the right to deny approval of external usage for any reason.