The State of R&D: Pharma, Biotech, CRO’s
Allison HsiehFriday, July 31st, 2009
The whole is greater than the sum of its parts - unless you’re talking about the pharma industry. Evidence of the industry’s deconstruction are everywhere, as pharma companies struggle to increase efficiencies and cut costs. Gone are the days when R&D, manufacturing, clinical trials, and sales/marketing were all done under one roof. Instead, companies are realizing the economies of scale that come with specialized services that do one thing. Outsourcing to these companies is on the rise. Will this outsourcing wave eventually cycle back to a wave of consolidation? Possibly. But one thing at a time…
We are in the golden age of the Contract Research Organization (CRO), as the role of companies like Covance, Charles River Laboratories, and WuXi in China becomes more concrete. The breadth of work being sent to CRO’s is expanding, as primary chemistry, synthesis, and purification are being outsourced, among other assays. In addition, as pharma companies are forced to reduce headcount, the talent pool is ripe for the picking from qualified scientists who know what pharma companies need. CRO’s are also benefiting from the divestiture of pharma’s research labs, as exemplified by Covance’s acquisition of research labs from Merck and Lilly in the past year and the ensuing research contracts that were signed. The future of the industry is becoming clearer.
Where does biotech fit into all of this? They are still a source of compounds for in-licensing by big pharma - particularly when large resources are needed for their development. In other words, pharma is still the sugar daddy of the industry. Everyone is more cost conscious, though, and many biotech companies have figured out the benefits of outsourcing the majority of their R&D and preclinical work. The trend is likely to continue, again to the benefit of CRO’s.
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Tags: biotech, contract research organizations, pharma
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Money Talks - Healthcare IT Financial Incentives
Renita ShahFriday, July 24th, 2009
President Obama has initiated a new era for healthcare technology. Through the enactment of the American Recovery and Reinvestment Act (ARRA), the President is committing approximately $19 billion to healthcare IT with the goal of facilitating the adoption of an Electronic Health Record (EHR) for every American by 2014. While these goals are daunting (and questionably unattainable), the legislation and funding is sure to have an accelerating impact on the purchase and implementation of EHR systems across the nation.
By offering financial incentives and imposing financial penalties, the ARRA will compel healthcare providers to urgently rethink their information technology strategy. Early adopters of electronic health records that meet the standards set forth by ‘meaningful use’ will receive more in reimbursement dollars over time, beginning 2011 and lasting through 2016. Later adopters, those that delay implementation until after 2014, face Medicare reimbursement penalties up to -3%.
With approximately $19 billion in grants and incentive payments available to providers who demonstrate meaningful use, ARRA says loud and clear that it pays to be an early EHR adopter.
Tags: electronic health records
Posted in Renita Shah | No Comments »
…There Is No Spoon
Unni NarayananFriday, July 24th, 2009
In the “Matrix” movies, human-kind was fed a sensory virtual reality while in actuality serving as a giant, multi-celled battery to run a post-apocalyptic world ruled by machines. It was an entertaining two-hours and you’ll recall the “Aha!” moment in the first film when the bald kid with the spoon schools Keanu Reeves about manipulating the virtual world. “Do not try to bend the spoon. That’s impossible. Instead, only try to realize the truth…”
Come with me now to Matrix4, where a company that produces server virtualization software – call it VMW – undertakes to impose its own virtual reality onto the marketplace via an earnings conference call. You be Neo. I’ll be Morpheus. Remember how it goes? I say, “I’m offering you a choice. Take the Blue Pill and stay in the manufactured reality. Take the Red Pill and…” (more…)
Tags: VMW, VMware
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More MSFT vs. GOOG – And What’s YHOO Got?
Laxmi PoruriTuesday, July 21st, 2009
So the big battle of words begins. MSFT vs. GOOG and their war for the desktop. Does anyone know why Ballmer is still CEO? I don’t get it.
We have been hearing that GOOG has had some chinks in the armor of late. Its datacenters that house GOOG apps were hacked and caused some issues last week with Twitter. Could this be a sign of weakness?
Not without its flaws, Google had its Base and its YouTube – a little too much hype and not enough substance – a rarity for them, but nevertheless punctures their aura of invincibility.
Also YHOO reports today and we expect another choke, so to speak. Every time I talk to advertisers, they always tell me that ROI on YHOO is dropping faster than an extreme skier in a Warren Miller flick. They’d better pick something they are good at (which is tough these days) – and pick it soon. The longer they wait, the better for MSFT.
Tags: GOOG, MSFT, YHOO
Posted in Laxmi Poruri | No Comments »
Intersolar, San Francisco
Ishita ManjrekarTuesday, July 21st, 2009
I spent most of last week at the Intersolar in San Francisco. It was much better attended than last year, which is surprising in light of the oversupply and shortage of project finance issues that plague the solar industry. Most developers I spoke with mentioned that they had been pleasantly surprised by the turn out. In fact, some even ran out of business cards. The other thing that caught my eye was the large number of Spanish project integrators that were at the show exploring the American market. I suppose that makes sense, given how the collapse of the Spanish solar market in September of last year almost single handedly (with a little help from unwilling lenders) caused the module oversupply that the industry has been steeped in for over three quarters now. It seems to me that a lot of hope is being pinned on the US market. The grant-in-lieu and the loan guarantee programs seem to have infused the industry with a rush of optimism. PGR experts are cautious, though. There are still a lot of issues, risks and procedures that need to be worked out by the DOE, the utilities and the financial institutions that choose to get involved with the process.
I think it’s going to be an interesting 2010.
Tags: Intersolar, Semicon West
Posted in Author, Energy, Ishita Manjrekar, Solar | No Comments »
Back Up Your Truck to Backhaul Space
Rajan VaradarajanThursday, July 16th, 2009
As the mobile communications industry continues to grow at a significant pace, the greatest capex expense facing mobile service providers today is the overhaul of the backhaul (BH) network. This is the part of the mobile network that encompasses the cellular tower and the base station; the radio controller, the equipment that aggregates data at the base station and transports it to the metro access point, and the elements in the metro network that aggregate data from the multiple base stations. This infrastructure is currently comprised of leased lines or point-to-point microwave links. As much as a quarter of a mobile service provider’s opex is associated with this infrastructure. This has a direct impact on the mobile operator’s operating margins. If this infrastructure cannot be maintained and upgraded in a capital efficient manner, the operating margins of the mobile carrier will deteriorate rapidly.
The total number of mobile subscribers worldwide is expected to grow to 5.2 billion by 2011. Wireless operators have to also respond to the increased usage and availability of mobile data devices such as laptops, 3G handsets, smartphones and PDAs. Two trends are driving up bandwidth (BW) requirements in the BH network. The first is the introduction of mobile devices with interfaces that provide the user with an enjoyable experience for data applications. The Apple iPhone was the first device to break this barrier, which led to rapid growth in data application usage, and BW demand, followed by such devices as the LG Dare and Samsung Instinct. This has exponentially increased the demand for mobile data, multimedia and video services. The second trend is the introduction of mobile technology. The demand for mobile data services will only accelerate with the deployment of 4G technologies like WiMAX (Worldwide interoperability for Microwave Access), HSPA (High Speed Packet Access) and LTE (Long Term Evolution). The key challenge faced by most mobile operators is how to support the increasing BW requirements per subscriber.
While the average tower used to produce less than 10mb/s of traffic to be backhauled, 4G wireless technologies will produce hundreds of mb/s per tower. This rapid increase in BH bandwidth requirements will quickly overwhelm existing TDM and ATM backhaul networks.
Yet exciting as that growth may seem, the huge ramp-up in data traffic means more cost for wireless network operators, who aren’t necessarily getting significant additional revenue from such services. The introduction of bundled - all-you-can-use voice and data - packages is a clear sign that the wireless operators’ ability to charge for the extra BW is limited. The expected growth in data and evolution to such plans mean wireless network operators need to find a way to handle traffic in a more efficient and cost-effective manner.
Therefore, the mobile BH access, aggregation and transport infrastructure is undergoing a massive overhaul. This presents significant opportunities to companies that offer solutions in the space. There are a number of them jostling for various pieces of the pie. Most notable of the players are: Cisco, Juniper, Huawei, Alcatel-Lucent, Ericssson, Ciena, and ECI Telecom.
It is widely accepted that long term, all of the backhaul will be accomplished using Ethernet links. However, mobile operators will be unwilling to completely write off their current investments and upgrade completely to Ethernet based backhaul. In the short and midterm, a hybrid backhaul approach that deploys Ethernet in parallel with TDM/ATM links will dominate.
Tags: backhaul network, mobile communications industry
Posted in Rajan Varadarajan | No Comments »
Why do we care about capacitive touch?
BN_TechTuesday, July 7th, 2009
Why do we care about capacitive touch? The short answer is because it’s cool and it’s a growing business despite the economic downturn. Capacitive touch technology has been around for years. As a consumer, we first experienced this technology in our notebook; the notebook touchpad is capacitive and likely supplied by Synaptics or Alps. Then came the scroll wheel on Apple’s iPod and now the technology is migrating into handsets. On the business side pretty much all notebooks/netbooks come with capacitive touchpad technology and handset manufacturers are all working to get more handsets out with touch capability.
The future outlook for capacitive touch is promising. We’re seeing more and more touch capability in smartphones: iPhone, Blackberry Storm, Palm Pre, etc… and on the horizon are capacitive touchscreen notebooks/netbooks. Consumers are still willing to pay for this cool technology. My question to you: who do you think benefits the most from this expanding market and why (handset makers, PC makers, capacitive touch module makers, mobile carriers, the consumer, etc…)? My short answer is the module maker; because handset manufacturers and consumers are still willing to pay a premium for the technology. Would manufacturers be willing to pay a premium if consumers aren’t?
Tags: capacitive touch
Posted in Bob Nguyen | 2 Comments »
Reaction to Amerigroup’s Medical Cost Outlook
Renita ShahMonday, July 6th, 2009
A few weeks ago, Amerigroup (AGP), a managed healthcare company focused primarily in public health plan membership, disclosed that it is experiencing organic membership gains across all markets, and with this, increased outpatient utilization. Due to the weak economy, members that were previously ineligible for Medicaid are now meeting criteria and causing an increase in AGP’s medical claims costs. While I recognize that new members will have a upward push on utilization, I think it is premature to conclude that this is detrimental news to the stability of Amerigroup, or similar companies such as Centene, Molina, and Wellcare.
Many of these newly covered lives are individuals or families that were previously ineligible for Medicare because they income bracket was above the ‘poverty line’ set forth by criteria. As PGR’s network of Medicaid professionals convey, there is a clear correlation of where you sit on the poverty line and your health and utilization trend. Historical data confirms that higher economic brackets tend to be healthier and incur less high-cost claims. These new members, many previously employed and working, are likely a healthier group than the ‘traditional’ Medicaid member. Although AGP is experiencing an increase in Outpatient costs due to new qualifying members, it is more likely a short-term, one-time glitch due to pent up demand. Because Managed Medicaid reimbursement is distributed on a per member, per month basis, AGP could actually stand to benefit higher profit margins from this group, if three to six months down the road, they are still qualified for Medicaid and the utilization, through pent up demand, has calmed back to norm.
Tags: managed healthcare
Posted in Renita Shah | No Comments »
Desperately Seeking Bing
Laxmi PoruriMonday, July 6th, 2009
So the latest news on Bing (which I got tonight from Fox News, of all places) is that traffic has increased 8% in the last week to Yahoo’s 11%. This trend, it seems, is getting better week by week. Apparently, the traffic numbers indicate progress for Bing, but the big question is that, will Bing take share away from Google and if so, when?
PGR experts are not seeing much a shift in advertising dollars going towards Microsoft–— much too early at this point—. They do foresee however, that if growth trends continue, they’ll be more apt to spend on Bing/Microsoft than they previously spent on MSN search. And the more interesting note is that most of them desperately want BING to succeed. As one of the experts put it—, “Everyone hates Google.”. They want to spend money elsewhere so badly that Bing could be the biggest thing since, well – —-Google, if they get it right.”.
Let me restate that —-“IF they get it right.”
Most experts, while hopeful, are skeptical—. I mean, how much better can an algorithm get? Google is also getting a lot more aggressive with its integrated Ad Sense platform and this only means that they’ll be able to lower CPC’s – music to advertisers’ ears in this economy.
The more interesting discussion however, is “what if Microsoft bought Yahoo’s search business—? Would that be powerful enough to take share away from Google?” It will certainly improve the race, but our experts think that even then, Google will be pretty hard to beat.
Tags: Bing, online search market
Posted in Internet, Laxmi Poruri | No Comments »
Wall Street’s Embrace a Precursor of Enterprise Acceptance
Unni NarayananThursday, July 2nd, 2009
Wall Street’s adoption of cutting edge technology has always been a precursor to broader mainstream enterprise acceptance. The reason is that financial firms — and trading companies, particularly — are comfortable with a higher degree of risk. As a result, Wall Street seems to gravitate to technologies at precisely the instant these technologies start to have favorable risk/reward profiles. There are numerous examples, ranging from Salomon Brothers’ aggressive utilization of higher end workstations like Sun in the 1980s to the Nasdaq’s implementation of its Supermontage system.
In this context, Ben Worthen’s June 29 story in the Wall Street Journal, “Remaking the NYSE’s Data Center” highlights a couple of interesting points: 1.) NYSE CIO Steve Rubinow states the exchange is utilizing a best-of-breed approach. This is consistent with where the data center design is headed. For example our checks at Primary Global Research indicate no single vendor is going to “own” a vision for cloud computing. It is more likely that cloud computing architectures will organically unfold as IT managers (as in the case with the NYSE) piece together an optimal solution; 2.) That the vendor list includes Juniper, Ciena, and Voltaire is notable for several reasons. First, there is the obvious non-mention of Cisco, which is part of a broader statement that competitors are closing the gap. But, more interesting is the revelation that NYSE’s design uses optical networking products (Ciena) and will implement Infiniband (Voltaire). Infiniband has been relegated to the high performance computing niche (think Livermore Labs, etc.) for years. Perhaps these technologies are at inflection points where we might see more widespread usage.
Although many enterprises do not push the envelope in a manner that requires the “renting of space” for proximity reasons in the data center, one thing remains clear: demand for performance and bandwidth remains unfulfilled and numerous emerging technology companies are finally in an attractive sweet spot to address these challenges and reap the rewards.
Tags: Ciena, Cisco, Juniper, Voltaire
Posted in Data Center, Technology, Unni Narayanan | No Comments »