Clinical IT sumo wrestlers

FRAMINGHAM (09/24/2003) - DataTrak International Inc. is the poster child for electronic data capture (EDC) -- a paradox of programming excellence and impending doom. SEC filings say there is no immediate prospect of the Cleveland-based application service provider (ASP) making money. Shareholders are in a mutiny, with 31 percent of shares voted against management in one recent vote.

Yet DataTrak has somehow figured out how to engineer a staggeringly complex 700-page clinical case report form (CRF) -- the coin of the clinical IT realm -- electronically. In a US$600,000 project, one new DataTrak customer will collect data from 3,000 ophthalmologic patients at 350 clinical sites. The most recent quarter's revenue rose by more than 50 percent. This is a company in trouble?

Despite the pugnacity of small, hemorrhaging companies like DataTrak, EDC heavyweights insist consolidation is in the air. In a report titled "The EDC Market Is Down To Two Vendors," Forrester Research analyst Joshua Walker writes, "Only Oracle and Phase Forward can compete with homegrown solutions." But Walker quickly qualified that prediction with the following words: "And even those products need work."

Ken Getz, president and CEO of CenterWatch, the leading print and Internet resource on clinical trials, says vendor consolidation has not occurred. His tally of 60 to 70 companies in the space has not changed much over the past 18 months. He concedes Oracle and Phase Forward do occupy a class by themselves, given hundreds of employees, financial stability, and international reach.

"Their scale puts them in a different league," Getz says. "Oracle is a massive organization that has long-established relationships delivering technology solutions to pharma. Phase Forward, if you look at the sales they generate, they just have a look and a feel much larger than their next largest competitor."

Forrester, meanwhile, is predicting an EDC "showdown" this fall. But it is not clear when Oracle will have a product to bring to the O.K. Corral. The release of the Oracle Clinical Remote Data Capture application has slipped, complicating a Forrester-sponsored comparison of more than half a dozen leading platforms that should be published around the end of the year. "If the evaluation rolls around and their product is not ready, we're going to do the evaluation anyway," Walker says.

Oracle's Oracle

Both the affordability and ease of implementation of Oracle Clinical are open to debate. At the Drug Industry Association (DIA) annual meeting in Texas this summer, Pfizer's Thomas DeFaria, global project manager of I*Net, spoke glowingly about the Oracle Clinical software and staff.

Pfizer's I*Net is a clinical data system that blends homegrown code and other applications. It combines Oracle Clinical with Adobe Acrobat PDF technology to help nurses and clerks enter clinical data without navigating yet another EDC interface. Filling out an electronic version of a 100-page paper form on screen may sound like something Rube Goldberg would have admired, but it seems to get the job done. "They will save tens of millions of dollars," says Oracle's Ed Lengyel, director of product and program management, adding that he is happy to have "co-developed" the new release with the drug company. "We think it is essential to work closely with the industry."

Oracle Clinical's Keith Howells, vice president of pharmaceutical applications, says the PDF idea is something interface-wary clinical sites embrace. "When Pfizer came to us, they said the clinical sites love it. They just love it. Everyone's got the Adobe Reader anyway. The learning curve is almost nil."

In the broader EDC market, Howells says, consolidation is real and the biggest vendors will grow their positions. Howells cites connected Oracle applications that enforce consistent vocabularies, collect data, manage them at the back end, and report safety-related issues. "We believe the market is consolidating," he says. "We believe that our message of an integrated suite is getting more traction."

Adds Howells: "We have a dominant share of the clinical data management market, a roughly 50-percent share. Our goal is to get to that for the EDC market as well. The EDC market is growing. Every single one of our customers that has used EDC is using more. We will be increasing our share."

There are no reliable estimates on the relative strength of the two companies. Most analysts say the EDC niche is just big enough that even IBM Corp. would not rule out swaggering into it again. For now, Oracle is known for its links to garden-variety Oracle databases and for clinical data management; Phase Forward has placed more emphasis on gathering clinical data electronically. There is no consensus on which company's tools are more tightly integrated, largely because deep-pocketed life science customers have so many mission-critical homegrown applications with which Phase Forward and Oracle Clinical must connect.

Many small EDC players can survive on the margins by providing great service, focusing on a single large sponsor of clinical trials, or specializing in the capture of clinical data over the Web. But only Phase Forward and Oracle Clinical can offer comprehensive suites of tools in the way that Microsoft Office can take care of most of what needs to happen on the corporate desktop.

Phase Forward: 'Not About to Implode'

At Phase Forward, President and CEO Bob Weiler sounds frustrated that the company is not regarded as more dominant. "They don't perceive a real leader," he says of customers. "I spend a lot of time telling people our numbers, our financials. They are actually surprised," he says, at a $135-million order backlog. "We are not about to implode. We have a whole lot of trends that are positive."

Like Howells, Weiler sees a clinical IT consolidation coming. "I think it is going to come down to Oracle and ourselves," he says. "When you have two larger guys fighting it out, the smaller guys have trouble."

Weiler maintains Oracle's size is actually a disadvantage for demanding pharmaceutical customers: "(Oracle CEO) Larry Ellison doesn't get up in the morning and worry about clinical trials. That is a very small product in a very large company."

Weiler can even come up with a (mostly) satisfied customer. Stephen J. Ruberg is director of clinical data technology and services at Eli Lilly. "We quickly came to the conclusion that they were the leader of the pack," he says of Phase Forward, "and that their InForm tool was going to help our business considerably."

Lilly is using Phase Forward for "multiple dozens" of trials, Ruberg says. But more of Lilly's trials will gather data electronically, even the largest Phase III studies. "Far and away the majority of our trials in that arena are going in that direction," he says. "We'll continue to expand as much as we have capacity to train people and make the switchover."

Asked if Phase Forward has lived up to his expectations, Ruberg first confers with a Lilly public relations specialist. Back on the line, he notes that senior people at Lilly made a long-term, worldwide deal with Phase Forward and that the company remains happy and committed to that strategy.

So is EDC maturing as a whole industry? Now Ruberg speaks with less hesitation. A statistician by training, he recalls several mathematical software packages that have all disappeared -- except for SAS: "I do think it is possible that some company could take the lead and be so far in the lead or establish a lead that keeps others from catching up."

It is also clear that even Lilly is keeping its options -- and checkbook -- open. Says Ruberg: "There are always niche providers or other electronic data capture tools that we use for specific trials."

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