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IBM s Head of Life Sciences on the Maturation of an Emerging Business

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In August 2000, IBM moved Carol Kovac out of the computational biology group at IBM Research to head up Big Blue’s newly launched life sciences business unit. Backed with a budget of $100 million to invest in partnerships, the company has established itself as a major player in the bioinformatics sector and the life sciences group has already outgrown its original role within IBM as an “emerging business unit.” Kovac recently spoke with BioInform about the progress the group has made in the last year and a half, and outlined its strategy for staying competitive in the future.

 

BioInform: Describe the strategic trajectory for the life sciences group. When you originally set it up, was the idea that it was going to be for three years?

We never had that thought about a finite time. When we first announced this we announced how much we were going to invest over a three-year horizon. The period of that [$100 million] investment was intended to be 2000, 2001, and 2002. But the business was always intended to be much more long-term.

We never actually formally announced it, but about six months after the original announcement we saw things moving faster than we had initially anticipated, so the investment that we’re making over approximately the same time frame is actually about twice as much as what we had originally said. We decided we were going to do more investments and partnerships and relationships, which included some equity investments. It also has included a lot more investment in co-development of solutions and exploratory projects with universities.

 

Do these investments include equipment as well as cash?

There’s no equipment in that, but there would be people. We want to be able to make more cash investments, whether it’s making equity investments or joint projects.

The original announcement was about building a business unit. And the business unit is now over 200 people that are directly full-time working in life sciences around the world. So it’s become quite an expanding business. It’s one of the fastest growing new business areas that IBM’s entered.

Life sciences was one of several special groups that reported to IBM Vice Chairman John Thompson as emerging business units. Now that he has announced his plans to retire, who is your new boss going to be?

We took care of that in January. We created an industry called “life sciences” in our industry unit, so now I head the life sciences industry organization. We moved essentially all of pharmaceutical under that. We do everything associated with medical informatics stuff that links up to the scientific research on the pharmaceutical side.

It’s kind of interesting because although we created an “official” IBM industry around this, we still have a view that there is still a lot of emerging space. So I have what we’ve started to call an ambidextrous management responsibility. We’ve got the existing pharmaceutical industry struggling with its core set of problems, but then you have all this new stuff that’s happening.

 

So when you talk about the pharmaceutical industry, you now have the sales piece and the process management, all the bits of pharmaceutical IT.

Yes, but a lot of that stuff is in place and, frankly, it makes this very interesting right now. We’re at a very critical point in the pharmaceutical industry, and it constitutes a very crucial point for biotech companies and for informatics companies.

Increasingly, as we talk to the CEOs and heads of research in big pharma, if you talked to them even three or four years ago a lot more of their thinking about where they needed to use information technology to be competitive was around marketing, customer relationship management, managing after-market kinds of data, and so on. And you can actually see a shift over the last three years toward thinking about IT as the competitive advantage in solving this increasingly critical research productivity problem.

 

Do you see an attempt within pharma to bring research computing into the larger IT organization?

I don’t see that it’s changing. There typically has been at most pharma companies a CIO who deals with general business kind of stuff — procurement and supply chain management and ERP and accounts receivable and all that stuff, but does not have responsibility for R&D. Coming out of IBM Research, it was similar. We always made the argument that, ‘We’re special. We can’t have the general business CIO managing our stuff,’ and that is the pharma R&D argument and continues to be.

We have very large outsourcing contracts — AstraZeneca, Novartis, and others — but the way the industry sees it is that you outsource that which you believe is not the competitive core. You want it done well, you want it done efficiently, you want to save money, and you want somebody who can reap an economy of scale that maybe you can’t. No one is outsourcing a substantial amount of research [IT] yet anywhere. I think that speaks to the fact that people are seeing IT in the research environment increasingly as a competitive weapon.

 

Has the connection between the business unit and the computational biology group in IBM Research grown stronger since you launched the group?

I used to manage that group, so it was strong from the beginning. Our direction in the business unit has been not to bring applications to market, but to partner with leading companies in the application space. So we had to make a decision about the computational biology work in research. Were we going to commercialize some of the algorithms and things they were working on or not, and our decision was we won’t commercialize them. We make them available to partners, and some of our partners see an advantage in partnering with IBM because of that.

The one thing we did commercialize out of research was DiscoveryLink, but, that’s much more of an infrastructure thing, which is where we see our strategy going.

 

Were there any market considerations that went into that decision as well? Was infrastructure perceived as a safer or more promising market than applications?

The tools have tremendous value, but right now pharma’s really wrestling with this whole problem of integration… There are going to have to be tools and applications that are very powerful, but they’re going to have to work together, and they don’t. I think some companies will put together platforms or suites. But no company right now has the capability to say, ‘We have the deep expertise across the board that we’ll have a suite that can have the most powerful applications across all the applications required.’

So we actually see that that world could go in two directions. It could go that one company emerges that has all the powerful tools. We doubt that that will be the case. We see it more likely that there will be some consolidation, but there will still be multiple companies and because of the pace of change and the role of the universities and public laboratories, there will be a best-of-breed environment. So scientists are going to want to choose best-of-breed tools and if next year there’s a new tool out there and that’s best of breed, then they’re going to migrate to it.

That places a tremendous demand on their infrastructure, and that’s where we see that a company like IBM has a lot of the capabilities to address the integration of data, but also applications, which is something that we’re working on now in something called the Life Sciences Framework [BioInform 03-04-02].

 

It’s clear from looking at the partners you’ve chosen that there were efforts to get the main applications in research computing ported to AIX. How have those efforts gone?

We have three strategic areas we’re working on right now. One is what we call high-performance information infrastructure — it’s a bit of an unwieldy term, but we want to use that to say that it’s not just about big computing. It’s an integrated compute/storage/systems management infrastructure to run whatever it is you’re running. That’s very much a hardware thought, but also a systems management thought. Then there’s data management and integration, and that’s much more of a software thought and involves the framework and this whole issue of integration. The third area is what we would call e-clinical and regulatory.

If you look at those three things, then you’ll see partners that are very clearly part of this. The high-performance information infrastructure means that we have got to not only port to AIX, but to Linux, too. We have very, very strong support for Linux, so our porting work has focused equally on AIX and our new Regatta machine, and also on Linux clusters. We have a key set of application partners — right now 80 companies with whom we have porting agreements.

On the data integration side, that’s something where we formed more tightly coupled relationships around co-developing, around IBM middleware. Lion is certainly one of those companies. There was a point in time where it was questioned whether SRS and DiscoveryLink were positioned as competitive products. Our view all along was we should not view them as competitive.

Phase Forward is a wonderful partner in the clinical space. They’re a good example of why Oracle’s strategy is very broken in this space, because Oracle has made it very clear that they’re going to compete in applications with companies like Phase Forward. So we, in contrast, made an early decision to say we’re not going to do that. It’s not where our core competencies are and it’s not the biggest value for our customers.

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