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IBM EXTENDS LIFE SCIENCE ENDEAVORS

Just a few years ago, IBM executives decided that the company needed to have a larger presence in the life sciences sector. Though IBM had been doing research in the field, little gain was made selling equipment and services to companies entrenched in the field.

To combat IBM's stagnant position in the life sciences arena, executives developed a strategy to rake in $100 million in revenue the first year and garner a positive cash-flow by the third year. Expectations were surpassed when IBM increased revenue by $500 million in the first two years.

IBM is currently hoping to take part in the potential transformation of health care in the coming years.

Successful in its endeavors thus far, IBM's Life Sciences division generates around $1 billion and has participated in such historic developments like the human genome sequencing that took place in the summer of 2000.

However, IBM's success does not deter competition. Its slow speed in bringing lab technology to market has stopped IBM from surpassing competitors like Sun and HP. Strong partnerships between other companies and health care organizations further impede IBM's drive to lead in the life sciences industry.

In addition, IBM offers more hardware-based technology that may not be as necessary in the health care industry as software applications. IBM's potentially narrow offerings may cause the company trouble. Still, IBM does offer specialized services that could help secure a larger leadership position in the field.

IBM's focus on life sciences is a smart one, however. With the advancement of genome research in the past few years, companies and research centers are all hoping to take part in future life science innovations.

IT is important in companies' efforts to match chemicals to specific genetic areas and finding cost-effective treatments for personalized medical care.

IBM spent $150 million to $200 million creating partnerships and alliances by 2002. In addition, Big Blue spent $100 million in venture capital investments made to gain access to cutting-edge start-ups.

Still, IBM's advancement in life sciences was slow. The introduction of Blue Gene, the human genome analysis supercomputer, failed to help matters significantly.

Sun's computational biology research group helped the company secure its leading position in the field. IBM had some trouble landing big deals with biotech companies.

IBM has achieved success by partnering with large academic medical research centers, virtually overlooked by competitors. IBM has supplied centers like the Mayo Clinic, Duke University and the University of California at San Francisco with IT infrastructures to improve their positions in the post- genomic world.

IBM is looking to create an advanced clinical and genomic information program, allowing scientists from different disciplines to work with physicians in discovering genetic links implicating in their patients' diseases. Difficulties lie in giving physicians an accessible Web-based system to locate this information and securing the privacy of patient data.

IBM announced a $250 million health care initiative to create consulting practices, information resources and customized industry solutions to help hospitals identify "best practices." The effort includes partnerships with Duke and the H. Lee Moffitt Cancer Center at the University of South Florida.

An "on-demand information management system" at Duke will combine clinical data, such as patient records and lab tests, with genetic research to clearly indicate the best treatment for patients. At Moffitt, researchers are working with IBM to screen patients at risk for cancer and help place them in clinical trials.

IBM has customers outside its academic partnerships as well. Novant Health, for example, operates eight hospitals in North Carolina and have recently ordered three new IBM mainframes costing up to $7.1 million. Novant uses IBM desktops, servers and workstations to power their health care endeavors.

Accelrys, a San Diego software company, has also partnered with IBM to create the Discovery Studio, which helps to link companies' in-house research with outside data.

Though IBM's size and bureaucratic set up have caused some dissent among customers, its resources and influence have helped to propel the company to a stronger position in the life sciences market.