Emerging Technologies
Nicholas Pompelia
IT-330
Ellen Gaston

Abstract
This paper will describe the field of biotechnology. For a fuller understanding of what the biotechnology field is the paper will provide a brief history. Then will give the current state of biotech business sector and the approaches they use to sustain innovation capitol. In each approach, the paper will show how information technology can improve each of these processes.

Biotechnology Companies – The Innovation Capitol Squeeze
People from every developed nation in the world come in contact with a biotechnological product every day. Biotechnology is a science that has done more for the human race than any other form of science. The field of Biotechnology has been around since the dawn of civilization. And, the field will continue to be a crucial part of the human race for an eternity. Biotechnology is making something out of living organisms. The UN Convention of Biological Diversity uses the definition “Biotechnology means any technological application that uses biological systems, living organisms, or derivatives thereof, to make or modify products or processes for specific use” ("Pacontrol," 2012). The applications of biotechnology are endless and the biotechnology field all started when humans first started to grow their own crops. When people switched from being hunter gathers to settlers they used biotechnology to breed their own animals. They domesticated the dog, they stored seeds from one year to the next and they started to learn how to cook ("Pacontrol," 2012). They took fruit juices and fermented them into wine ("Pacontrol," 2012). Cheese was made from milk and beer was made from malt and hops ("Pacontrol," 2012). People also learned that using yeast made bread rise ("Pacontrol," 2012). All of these are early adoptions of biotechnology. The biotechnology of today is a lot more advanced of course. They are using cells of yeast to make insulin ("Pacontrol," 2012). Also, antibodies are made from E.Coli ("Pacontrol," 2012). Companies are making medical breakthroughs almost every year. Biotechnology companies create new drugs to help diagnose and treat dieses. Genentech, a large biotechnology company developed the drug Herceptin. The drug is a breast cancer drug that is rather unique. The drug is used with a matching diagnostic test and is the first approved drug/test used for women whose cancer cells express the protein HER2 ("Pacontrol," 2012). Biotechnology companies that create these drugs spend billions of dollars a year on research, development, and testing ("Ernst & young," 2011). And, they get rewarded handsomely when a drug succeeds. Profits for biotechnology companies are at record levels they were up 30% from 2009 to 2010 ("Ernst & young," 2011). However, healthcare facilities worldwide are trying to lower costs. This is continuing to put some downward pressure on what companies can get for new drugs ("Ernst & young," 2011). This pressure is causing biotechnology companies to find ways to reduce their bottom line expenses. In fact, biotechnology companies have seen a 20% decline in ‘innovation capitol’, a term used in the biotech field to describe money spent on new drugs and or treatments ("Ernst & young," 2011). To continue to making large returns on their drugs companies now must show that their products or services produce improvements in health outcomes not just make new drugs ("Ernst & young," 2011). To keep new innovations in their pipelines companies are using one of four approaches to development costs. The first is a ‘Prove it or lose it’ approach. In this approach companies will need to prove their products have differentiation. They will also need to show regulators in early stages of development that the product is effective, comparatively to that of other companies. And be willing to sell the products differently than before, for instance, an outcome based pricing model ("Ernst & young," 2011). This system relies on Porter’s Differentiation and Focus business strategy approaches (Cummings, Haag, 2009). Since healthcare systems are looking to save money they will be less willing to buy products that are similar. Biotechnology companies will need to make sure early on that the product they are developing will be different than their competitors. Or they need to ensure that they will be the first to market. An enterprise resource planning system that supports this type of approach will need to make sure that current reports from the scientists will be available to researchers immediately. This way management can be alerted if another company testing products similar to the ones that they are developing. The second approach that biotechnology companies are taking is the ‘do more with less’ approach ("Ernst & young," 2011). This approach focuses on being more creative on the capitol side and being more efficient on the research and development side ("Ernst & young," 2011). Companies may create virtual offices, reducing the cost of running offices. They may also have the lab work in three shifts to reduce the time it takes develop products. The products may be more focused for smaller populations so that they can be more efficient ("Ernst & young," 2011). On the capital side, they may make more money by licensing out some intellectual property ("Ernst & young," 2011). Companies using the Run-Grow-Transform framework that are also using the ‘do more with less’ approach will want to focus their IT dollars on the Run. This will help reduce expenses and ensure that the system that they have in place will run as efficiently as possible. The third approach that biotechnology companies are doing to sustain capitol is the ‘build new competencies’ approach ("Ernst & young," 2011). This approach supports the first two approaches. It calls for managers to become competent in areas that they were not competent in before. Managers will need to be acutely aware of changing market dynamics and the players involved ("Ernst & young," 2011). For instance how regulators, payers, new pharmaceuticals, etc. all work in bringing new products to the market place. They will also need to be disciplined in how they measure value and performance, i.e. analytical techniques ("Ernst & young," 2011). Also, they will need to take creative ways to develop new models, approaches and communicate value through the organization ("Ernst & young," 2011). This requires a company to invest more money and resources into a good knowledge management system. Managers will need to collaborate on projects and may need to work in virtual teams. Having a company intranet like Microsoft’s SharePoint site will help managers working on projects together. They could keep all of the project documents on the site and use discussion sections to keep abreast of new information. The company may also want to develop an e-learning tool to teach managers skills they are weak on. The last approach identified by Ernst and Young’s report is the ‘Collaborate for coordinated action’ approach ("Ernst & young," 2011). This approach involves companies collaborating with other companies in their supply chain. They will need to work with companies that provide clinical trials. And see if those companies can come up with a better and more efficient ways to run them. The company will also have to realign payments around the health outcome of the patient ("Ernst & young," 2011). Biotechnology companies are also not very transparent when they are developing new products. They may need to have more transparency to build the trust of investors ("Ernst & young," 2011). This way they will retain more biotech investors and that will lower capitol acquisition costs ("Ernst & young," 2011). This last approach tries to reduce bottom line costs by making the primary value process more efficient. Biotechnology companies need an information system that can look at other companies FDA filings and compare them to drugs that are being developed internally. They need to employee good knowledge workers that have access to all of the information. The information needs to be organized in as few as systems as possible. This will ensure the knowledge workers will be efficient when looking at the data. Biotechnology companies can use information technology to ensure that everyone that is working on a project has all the up to date information. Biotechnology companies are making record profits now but need to be aware of the cost pressures of their consumers. They need to have a more efficient, better focused product than their competitors to continue making record breaking profits.

References
Cummings M., Haag S. (2009) Information Systems Essentials, third edition. McGraw-Hill Irwin
Ernst & young. (2011, June 14). Retrieved from https://webforms.ey.com/GL/en/Newsroom/News-releases/Beyond-borders_global-biotechnology-report-2011
Pacontrol. (2012). Introduction to Biotechnology Retrieved from http://www.pacontrol.com/introduction-to-biotechnology.html