Oct. 10, 2007 | With adoption of electronic data capture (EDC) at an all-time high, the question now is which EDC vendors will dominate the market, and how soon? “In terms of data acquisition, management, and analysis,” says Curt Sprouse, president of Boston Market Strategies, EDC is superior to the old methods. But, “The future of EDC needs to address sites’ needs and greater compatibility with investigators’ workflow,” says Chip Kalfaian, director of the life science solutions division of Cranford, NJ-based Paragon Solutions.
Analysts contacted for this story generally consider Phase Forward to be the market leader, largely due to its stability and familiarity. “Big pharma trends toward the security of the biggest players, especially Phase Forward,” says Kalfaian. “The result is that smaller EDC players are forced to build their businesses one trial at a time.” And that is both costly and difficult for small companies to bear.
Publicly traded Phase Forward is a known entity, agrees Sprouse. It wins business “by default” with large companies that aren’t apt to swap vendors “unless something is wrong or broken.” And Phase Forward has repeatedly proven its capabilities. “Those attributes are important to big pharma. The EDC space is scary to them...they’re concerned [other EDC] companies won’t be in existence in three years.”
However, Chris Connor, senior research analyst with Framingham, MA-based Health Industry Insights, notes that Medidata has made a “huge impact” in a market seeking scalability, and Sprouse agrees. Medidata has done well breaking into the top tier, Sprouse says. “It has won over some big accounts” and is positioned to gain business “if it can more effectively address installation, services, and support.”
Scalability doesn’t necessarily put smaller EDC companies at a disadvantage, Connor says. Phoenix Data Systems (PDS), for instance, enjoys success by offering an appealingly easy-to-use, affordable product for Phase I trials. “PDS selectively goes after high-value studies, helping to establish itself as a dominant player in the small, Phase I market. It gets follow-on studies — Phase II, III, and IV — using the same technology,” says Connor.
Kalfaian, though, considers Oracle the number three vendor behind “safe and trustworthy” Phase Forward and “near second” Medidata, even if its EDC credentials remain a bit cloudy: “You can’t ignore the pharma giants who continue to work with Oracle — the same giants that helped establish Oracle Clinical in the back-end data management space. Oracle’s scheduled year-end RDC release, if successful, will make it the [EDC] product of choice for many sponsors with a heavy investment in Oracle Clinical.”
The analysts agree that both strengths and weaknesses of different companies can be traced to their public or private status. “All the publicly traded companies have the advantage [when big pharma looks for a track record,] because of public disclosure requirements,” says Sprouse.
Yet OmniComm is the only other public company currently on the radar for Sprouse, who is looking on behalf of iBall (a Boston-based image management platform) for partnering opportunities with top-tier EDC vendors. “It has the most recent technology platform and does a good job with integration and scale” — two areas that Sprouse’s clients have found to be challenging and sometimes problematic for Phase Forward and Medidata. “The functionality, usability, and integration features of [OmniComm] technology are the best in the market today,” he says.
Connor, though, says being a publicly traded entity can be a hindrance because of the investment required to take advantage of exponential growth in the market. “The way the EDC market is structured, it’s pay-for-performance. Companies don’t recognize a return until the study goes live...and investors don’t understand that.”
OmniComm is doing “fantastically well” and grabbing attention, Connor acknowledges, but argues that PDS may be doing better because it’s privately held. Public ownership puts the squeeze on profits and operations. “There are lots of opportunities, but often no way to grab them.”
Several publicly traded EDC companies have felt the squeeze that Conner mentions. Datatrak recently laid off 17 employees and in its last quarter reported a $3 million loss on revenues of $3.1 million. At etrials, sales declined 31% following the departure of co-founder/CEO John Cline.
ClinPhone profits also fell below expectations, due largely to an interactive voice response server glitch that did not affect the EDC business with its own servers, says David Stein, VP data management solutions in ClinPhone’s product management division. But an increase in sales of EDC software service rather than license, and the weak dollar also hurt business, he adds.
The leading EDC players are not exempt, either. Phase Forward and Medidata both address scaling and integration with a costly, labor-intensive approach, says Sprouse. “[The price problem] can be fixed and, to retain its number one position, Phase Forward will have to fix it.” But transitioning to a new platform in a growing market is easier said than done, Sprouse says. Kalfaian says that Medidata has been hampered by service and performance issues, perhaps due to its swift ramp up.
Datatrak stands out in the customer service arena, “assigning knowledgeable study managers to their clients” much as central laboratories do with project managers, says Kalfaian. But the company has been hurt by its “conservative approach to technology,” prompting it to adopt an entirely new platform.
Datatrak’s acquisition of ClickFind last year was laudable, giving the company “more scalable” EDC technology, says Connor, “but the market is more about execution and delivery than about software functionality.” The company forced customers to make a mass migration to the new technology platform, essentially re-opening the RFP process while eliminating Datatrak’s incumbency status.
Recovery from these setbacks is a driving force in what some see as the emerging hierarchy of the EDC market. Some smaller companies, like Nextrials, could be counted among “second tier” organizations with solid technology platforms, says Sprouse. But he is unsure whether either Datatrak and ClinPhone are positioned “to be a dominant player in the market.”
ClinPhone, unsurprisingly, disagrees. Bidding on projects is usually against Phase Forward, Medidata, and Oracle, says Stein. The company last year acquired DataLabs, considered a strong second-tier player by Forrester Research. The vision moving forward includes continuing to focus on the user experience, driving toward “flawless delivery” on its growing ASP business, developing a next-generation design tool, and “advancing the integration capabilities across ClinPhone’s eClinical product portfolio.”
Etrials also remains optimistic. The company reports that it has a new CEO, COO, established a client services division, and doubled the size of its sales force.
Connor thinks the custom of lumping EDC vendors into “tiers” does the market a disservice. “One size does not fit all,” he says. “There are plenty of cases where, if you matched up Phase Forward and PDS, Phase Forward would unquestionably be the way to go. [But] if pricing is an issue...PDS may be the only way to go.”
In terms of total market share, Connor gives top billing to Phase Forward and Medidata, followed by etrials, Datatrak, and companies like Fremont, CA-based Velos that specialize in investigator-initiated trials. “Velos is the most successful company no one has ever heard of. It has tens of thousands of studies.”
Although consolidation is likely, including acquisitions by contract review organizations (CROs), smaller EDC vendors like Target Health (New York, NY) continue to pop up in the market with dynamic EDC tools, says Kalfaian. “Smaller companies don’t need that many trials to be viable. They can book a couple of CROs and biotechs and be good for a while. It’s hard to shift technologies once a trial is underway.”
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