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Forecast: EDC Money-Making Shifts to Phase II Trials

Deborah Borfitz

Electronic data capture (EDC) software revenues will top $300 million this year, foreshadowing good news for the entire eClinical market. That's the forecast just out from Chris Connor, senior research analyst with Framingham, Mass.-based Health Industry Insights.

Overall EDC usage on new clinical trials will sit at 40 percent by year's end, up from 32 percent in 2005 and 25 percent in 2004. In 2007, overall usage will rise to half of all new trials, Connor estimates. From a revenue perspective, EDC-using Phase II and Phase III trials will converge in 2008. Revenues on Phase IV trials will "really start to hit the radar," and Phase I studies – owing largely to a rise in investigator-initiated trials out of the purview of the FDA -- will become a viable market."

On Phase III trials for the big sponsor companies, revenue per trial has started to decrease or flatten out, says Connor. "That will be the source of a lot of market angst." But revenues on often-pivotal Phase II trials will quickly "make up the difference" and, from 2009 onward, be the dominant moneymaker. "Toward the end of the decade we'll [also] see a rise in...government-funded EDC."

There is a distinct and interesting correlation between market segment and EDC penetration by trial phase, Connor notes. All the big pharmaceutical firms are hefty users of EDC and some -- notably Novartis, Johnson & Johnson, and GlaxoSmithKline  (GSK) – are at or near 100 percent adoption. But many large companies still consider their short though plentiful Phase I trials poor candidates for EDC. That creates a window of opportunity for newer players to nestle in and "hold onto those [projects] as they migrate to Phase II and III." Phoenix Data Systems, NexTrials, and etrials all have the wherewithal to spit out trials quickly, while Phase Forward "struggles" in the Phase I niche.

The culture of "piloting" has passed, and EDC initiatives routinely achieve expected benefits, including cost reduction and faster query turnaround time, says Connor. As almost everyone acknowledges, the payback on EDC compounds annually. A "pilot" has become such an anachronistic idea that Ted Chin, VP for electronic data management at GSK, reportedly has outlawed the term.

Large sponsor companies are now seeking to "rationalize" their EDC technology selections across the entire enterprise, says Connor. "In 2002-2003, project managers could have selected EDC applications with almost no oversight. They'd look at it based on therapeutic area: For example, which vendor did the most oncology trials? That's why the market is so fragmented." Today, purchases are more apt to require "signature authority" of a company's CTO, COO, or CEO who recognizes the inherent inefficiencies of EDC adoption on a project-by-project basis.

This has made the EDC market leaders "insanely happy," says Connor. GSK has already "short-listed" vendors and selected Phase Forward as its chief EDC provider. Medidata has made the short list at Bayer. But there's a downside to the status, as reflected in the per-trial revenue plateau for Phase III studies: Enterprise licenses put pressure on vendors for better pricing.

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