The Average IT Budget as a Percent of Sales will show a Slight Decline in 2006 and a Further Slight Decline in the 2007-2009 Timeframe to 3.61%

Business Wire, Jan 17, 2006

DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c30970) has announced the addition of IT Spending Study At Major Pharma Companies to their offering.

Seven of the "Top-20" pharma companies participated in this just completed 2005 IT spending study. Given that the combined revenues of these seven companies represent almost 25% of the total worldwide sales of the "Top-20" pharma enterprises, it is believed that the results of this study reflect a reasonable sample of IT for this sector.

Senior level IT executives were interviewed at these companies. The study covered their IT expenditures as a percentage of Pharma sales and allocations by various categories for 2005 along with planned changes for 2006 and an outlook through 2009. Other topics covered, which would be of interest to IT executives, include responsibilities for global standards and IT architecture, procurement responsibilities, top IT priorities and Pharma's perceptions regarding IT vendors.

Topics of interest to IT vendors would be the allocation of $2.8 billion of projected IT expenditure by expense category in 2005 and 2006, along with the reasons and drivers for significant increases through 2009. The IT Pharma executives also rate and explain their perceptions of IT vendors' understanding of pharma company needs.

The following specific questions are answered in this study:

- IT expenditures as a percentage of enterprise sales revenues
- The allocation of IT spending among significant IT categories
- Changes in the allocation of IT expenditures projected for 2006
- Projected IT budget for the 2007-2009 timeframe
- Top IT priorities for the next three years
- Procurement responsibilities and decision process
- Responsibilities for global standards and IT architecture for each
  enterprise
- Perception of IT vendors and their sensitivity to Pharma's needs

In considering comparisons of IT budgets among Pharma enterprises, variances exist as to which categories of expenditures are identified as IT budget expenditures. However, in the main, the major categories of IT expenditures can be grouped fairly consistently (e.g., Hardware / storage / servers / middleware, application software, networking / communications / security, In-house staffing, consulting and other outsourcing).

--The IT budget as a percentage of sales averaged 3.66% (well below many other industries), ranging from 2.4% to 5.5%.

--The average IT budget as a percent of sales will show a slight decline in 2006 (from 3.66% to 3.64%) and a further slight decline in the 2007-2009 timeframe (to 3.61%). However, the actual IT expenditures are increasing but not at a comparable rate to Pharma sales, resulting in the percentage decline. The increase in IT spending is expected to be between 2% and 3% for 3 of the companies, flat for 2 and decreasing for the remaining 2. One respondent is projecting an IT budget growth between 5% and 7% annually, but since they are projecting a 10% annual increase in pharma sales their IT budget as a % of sales will actually decline.

Standards are generally set by Corporate IT, but IT purchasing is split between centralized and decentralized control.

None of the respondents believed that IT vendors understand their problems very well with one respondent believing that the vendor understood them poorly.

For more information visit http://www.researchandmarkets.com/reports/c30970