Offshoring may be a dirty word in the US IT sector these days, but India’s Tata Consultancy Services isn’t letting the recent backlash spoil its plans to build a life science IT services business.
Speaking to BioInform shortly after the BIO 2004 conference in San Francisco this month, Mathukumalli Vidyasagar, executive vice president of TCS’ Advanced Technology Center in Hyderabad, said the company went to BIO “with the idea that we could figure out what the demand was for our services.” As it turned out, he said, “there was far more awareness about the possibilities of outsourcing to India in the biotech community than I expected to see.”
TCS used BIO as a launching pad for its BioSuite bioinformatics software platform, along with a clinical trial management system called, appropriately, CTMS. BioSuite is still undergoing beta testing with TCS’ academic partners in India, but Vidyasagar said the firm is looking to expand its base of beta testers to US biotech and pharmaceutical companies before it brings the software to market.
TCS, Asia’s largest IT consulting firm, first dipped its toe into the life science sector in 2001. The company is pursuing a mixed business model based on sales of BioSuite, along with a package of services. So far, much of the company’s bioinformatics activities have been limited to development of BioSuite, Vidyasagar said, but the company is ramping up its bioinformatics R&D program as well as its marketing effort in response to the feedback at BIO.
“In the IT world, of course, it’s very common that if you want something done very efficiently at a lower cost, you can actually do it in India. But the fact that the biotech community also seemed to be considering it was a bit of news to me,” he said.
In the US, TCS has already secured several undisclosed pharmaceutical clients for its healthcare IT services business, said Ray Hanson, practice head of life sciences and healthcare for TCS America. These projects have so far focused on HIPAA consulting and implementation, GxP and CFR part 11 compliance, and systems integration — capabilities that Hanson described as “fundamental requirements” that most IT consultancies would be able to fulfill. Now that BioSuite and other tools are emerging from Vidyasagar’s group in Hyderabad, however, Hanson said the company expects to be able to extend its current partnerships into more “strategic” partnerships based around pharma’s research informatics requirements.
Vidyasagar said that TCS sees the most demand for its services offering in the area of lead identification and optimization for small- and medium-sized biotechs. TCS plans to partner with local academic groups to provide the wet biology and chemistry necessary for such work, while relying on BioSuite and other tools for the analytical portion of the job. “We’ll handle the contract, and how we get the wet part done is basically our headache,” he said.
Likewise, the company is targeting academic groups and “cost-conscious” discovery firms for direct sales of BioSuite. Vidyasagar was unable to disclose the exact pricing for the software, but said that the company’s inherently lower development costs will enable a price range of about one-fifth to one-quarter that of comparable software programs, such as Discovery Studio from Accelrys. The package includes eight modules: sequence analysis; genome analysis; comparative genomics; 3D modeling for homology and threading applications; 3D structure manipulations; protein structure analysis; thermodynamic and electrostatic simulations; and drug design. The conspicuous absence of a microarray analysis module was by design, Vidyasagar said, at least for this release of the package: “In 2002, we collected a whole bunch of potential users from 18 academic institutions in India that were our partners, and we essentially made a wish list of all the things we wanted the software to do,” he said. “The original list was much too big, but we pared it down to something a little bit more sensible, and nobody really asked for microarray analysis.”
TCS plans to finalize development of BioSuite based on feedback from its beta testers, and is also working on a new version of the package that will run on computer clusters instead of workstations. The company is also “toying with” the idea of a database management tool bundled with curated and integrated biological data.
Vidyasagar’s group of around 35 researchers was also recently awarded a three-year grant from the Indian government to reannotate the genome of Plasmodium falciparum — the major parasite that causes malaria. Vidyasagar said that most experts expected to find around 7,000 genes based on the size of the genome, but only around 5,500 have been found so far. Existing gene-finding algorithms are stymied by the genome’s high A/T content, Vidyasagar said, so TCS is developing new algorithms that will take this characteristic into account. The company is working with four academic partners to verify its predictions.
Even as the company ramps up its internal R&D, it is firming up its strategy for selling its services to the US biotech market. The offshoring backlash isn’t much of a concern, Vidyasagar said. “There is enough published material now to show that job losses are not due to outsourcing, but really just because US companies have become more and more efficient internally,” he said.
In addition, Vidyasagar said, the life science team is looking for a boost from TCS’ initial public offering, which the company just announced last week. TCS is currently a wholly owned division of the Tata conglomerate, but plans to offer 55.4 million equity shares in its offering, at Re 1 each, which could raise as much as $880 million to $1 billion.