Last year was the most difficult in the history of the IT industry. While there will be some recovery in 2002, spending in many verticals will stagnate or even keep declining. The pharmaceutical sector, on the other hand, is set for a major boom, as new drug discovery technologies such as genomics and proteomics require serious computing power.
A new Datamonitor report predicts the pharma industry’s IT spend will rise by 39% by 2004.
According to Datamonitor’s new report, Global IT and networking spend by vertical market, while 2001 was the first year ever for enterprise IT spending to fall, equipment vendors have reacted to the downturn and are now looking for signs of growth.
The sector predicted to offer the highest growth is pharmaceuticals, which is continuing to exploit networked IT to stay on top of a rapidly changing business environment. Pharma companies’ investment in IT & networking will see year on year growth of 11.5%, as expenditure increases from $24 billion to over $34 billion by 2004.
Other verticals’ spending will remain stagnant overall. Investment will actually decline further in some verticals in H1 2002, as network planners and engineers come under continued pressure to reduce overheads. Spending should pick up in H2, as the US economy improves.
Datamonitor expects the overall market will be worth $1.1 trillion in 2004 compared to $975 billion in 2001 – but this means significantly slower growth than previous years. It’s far lower than 1999-2000, when companies invested in new technology to prevent Y2K disruptions, then turned their attention towards eCommerce and other large-scale projects.
China has benefited from the global shakedown. Its domestic technology market keeps rising, and western-based technology manufacturers continue to migrate into the country, lured by government incentives and lower costs of production. Even so, the Asia-Pacific IT market will still be less than half the size of the US market in 2004, while Europe will contribute 28% of global spending.
Last year was tough for the technology industry. Faced with anaemic demand and commoditizing product lines, many vendors have been forced to restructure to cut costs. Now companies are ready to hunt for growth, which means tailoring product lines to match vertical needs.
The pharmaceutical sector appears like a diamond in the rough for the IT industry. The reason is that new data-intensive areas are emerging, such as genomics and proteomics. These need heavy investment in IT and networking equipment.