Market Analysis Supports LION's Focus on IT Solutions as the Primary Value Driver for Drug Discovery

Business Wire, July 8, 2002

Business Editors & Health/Medical Writers

BIOWIRE2K

R&D Informatics Could Add $165 Million in Value to

Each Drug Through Time and Cost Savings

In an announcement today, LION bioscience (Neuer Markt: LIO, WKN 504 350, Nasdaq: LEON), a leading supplier of IT solutions for the life science industry, unveiled market analysis that evidences the crucial role informatics will play in enhancing the productivity of pharmaceutical research & development. LION asked The Boston Consulting Group (BCG) to conduct the analysis in order to estimate the maximum value that informatics could deliver to pharmaceutical R&D. The analysis simulated the effect of IT on R&D -- specifically on the costs, time and attrition rates of the drug development process.

The analysis is based on the assumption that pharmaceutical companies can implement informatics solutions throughout their value chain optimally and comprehensively. Because this is a "best case" scenario, the results should be interpreted within the greater context of the industry. Although the demand for comprehensive IT solutions is there today, it will take time before these solutions are accepted and established.

High Anticipated Value

The results of the analysis, conducted earlier this year by The Boston Consulting Group, determine that pharmaceutical companies with optimally implemented informatics solutions could save as much as $264 million in R&D costs and as much as one year in development time for each new ethical drug. Today, pharmaceutical companies on average invest $880 million and 14,7 years to discover and develop a drug.

According to the analysis, R&D informatics can generate the greatest portion of the potential cost savings -- up to $149 million of the $264 million -- by integrating data and information across disciplines, pharmaceutical departments, processes and drugs. Of this amount, accomplishing basic data integration could account for up to $87 million. Using informatics to support R&D decisions, which takes the integration of data to a higher level by linking all the information gathered from clinical analyses, could generate a total of $62 million in savings.

The remaining potential cost savings of up to $115 million is expected to be generated by applying new types of R&D informatics analyses and tools. Pharmaceutical companies will need to incorporate these tools into their existing R&D processes in order to capture the full value of the integration solutions.

Further Validation of LION's Strategies in Life Science IT

With a core competence in integrating data and applications, LION is focusing on the potentially most valuable segments as well as the most pressing needs of its customers in the realm of R&D informatics, as indicated by the analysis. Furthermore, LION is uniquely positioned to participate successfully in disclosing and capturing value in this area, given its broad customer base of more than 60 industrial and 130 academic customers.

"The study further validates our focus on providing comprehensive integration and decision-support solutions to improve R&D performance and productivity for the life sciences. The theoretical value to be captured seems larger than we anticipated. The opportunity is very real, and we have the right technologies to fulfill it," said LION bioscience CEO Dr. Friedrich von Bohlen. "But while the results of the analysis reveal an astonishingly high potential value for in the industry, it also indicates that much of this value is currently untapped, and needs to be developed in the near future. To address this opportunity, we have adapted and optimized our offering to help our clients unleash and leverage the true value of life science informatics."

Helping Clients to Capture the Value

LION's extended offerings to its clients will include unique, custom solutions, which integrate optimally with existing legacy structures such as systems, processes, structures and capabilities. Solutions will be comprised of LION's integration platform, bundled applications, decision support functionalities and an optimized service package. These solutions for biological, chemical and preclinical work environments in R&D as a whole, will form a complete system for the industry. Each solution will be modularized and can therefore be easily scaled to each client's needs. In addition, LION offers extensive implementation support via its professional service task forces, ensuring speedy, successful creation of the informatics infrastructure as well as training of the involved client staff. Finally, LION will provide "open" solutions that allow for easy integration of third-party components (e.g., algorithms). In combination, these factors enable clients to establish a "state-of-the-art" infrastructure.

The key customer needs have been identified as:

- Data integration, including the integration of flat-file and

relational-file data as well as the integration of third-party

software and individual internal systems.

- Decision support, which elevates integration to a higher, more