Pharma next big thing for IT cos
Healthcare sector will also offer big growth opportunity for software firms
Bengaluru LIFE sciences and pharmaceutical vertical is slowly emerging as the next growth spot for the IT services industry with growth opportunities spanning over the next decade.
Experts and company officials are of the opinion that ongoing pandemic has brought healthcare as one of the top priorities of countries, leading to higher public and private investment in life sciences and pharmaceutical sector.
As the pandemic is going to remain here for some years, the application of software services in life sciences sector will grow over the years.
"The technology spend of life sciences and pharmaceutical vertical has increased manifold during this Covid period. Therefore, tier-I IT services players, engineering services companies that are into medical devices design and development and BPM players have benefitted from this rising spend. As nations increase their healthcare spend, this is a growth story for the next decade," said Pareekh Jain, an IT outsourcing advisor and founder of Pareekh Consulting.
The growth in spend has already been visible in the fourth quarter earnings of IT services firms. For instance, Infosys witnessed a year-on-year growth of 18.3 per cent (constant currency term) in the Q4 of FY21 in its life sciences vertical. Out of 23 large deals the company won in January-March period, three came from life sciences vertical. Similarly, Tata Consultancy Services saw its life sciences vertical growing 19.3 per cent in the fourth quarter of this fiscal year.
Cognizant Technology Solutions, which is considered one of the big players in healthcare technology space, witnessed 7 per cent rise in CC term. This growth came from increased demand for its integrated payer software solutions and continued strong demand among its life sciences clients.
Apart from IT services players, even engineering services companies such as L&T Technology Services, Cyient, Tata Elxsi and others operating in designing of smart healthcare devices are also witnessing higher demand from this sector. For instance, L&T Technology Services' medical devices vertical grew 21 per cent YoY in Q4 of FY21, making it the best performer among all verticals.
Amid the Covid pandemic, pharmaceutical companies are spending more on technology to reduce time for vaccine trial and its subsequent release. Many IT firms have collaborated with vaccine producers to create technology platforms for interpretation of data coming out of vaccine trial.
Not only IT firms and engineering services companies, even BPM (business process management) service providers operating in the healthcare segment like telemedicine and insurance have also seen surge in demand.
"Bioinformatics is the other area which will see rising spend in the coming years. Though it is there for quite some time, there will be greater momentum this time around. So, while the pandemic creates demand for IT companies with domain knowledge, it also enables technology firms to provide various digital technology-powered solutions to healthcare players," said Jain of Pareekh Consulting.
Though the growth of life sciences vertical will support the overall revenues, the supplementary impact will not be that big as this vertical typically contributes around 10 per cent of the total revenues of most IT firms, experts said.
- Covid likely to remain here for some time
- Life sciences sector will use more IT services
- Infy sees 18.3% rise in its life sciences vertical in FY21Q4