July 10, 2014 Companies: IBM, MDSO, MRGE, ORCL, QCOM, PRXL 1 1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com Although Not to Forecast Level, MDSO’s CTMS Sales Will Grow This Year REPORT David Franklin, [email protected]Summary of Findings As Blueshift Research found in its Dec. 13, 2013, report, Medidata Solutions Inc. (MDSO) is secure in leading the CTMS industry. Eighteen of 23 sources said Medidata will continue to grow its sales this year, including eight sources who believe Medidata can achieve its 20% to 25% growth projection. One source said an industry merger or one or two large contracts alone could generate significant sales for the company. Medidata and Oracle Corp. (ORCL) dominate the large pharma market. However, three sources said Oracle may be losing share. Medidata’s strengths are its reputation, longevity, salespeople, products and programming. Challenges include a saturated high- end market and a high price that limits down-market success (both issues identified by Blueshift in December), complicated products, and inconsistent customer support and product integration. CTMS industry growth is being driven by pharma and CRO M&A, more clinical trials, cloud-based and collaborative solutions, and pharma’s migration from in-house software to standard solutions. CTMS trends include big data acquisition, data collection management, risk management, regulatory mandates, health record integration and mobile apps for trial patients. CTMS competition is abundant as 20 companies were discussed, including BioClinica Inc., OmniComm Systems Inc., Parexel International Corp. (PRXL), Merge Healthcare Inc. (MRGE), Datatrak International Inc., MedNet Solutions Inc. and OpenClinica LLC. MDSO 2014 Sales MDSO to Achieve 20%– 25% Growth CTMS Market MDSO Customers and Partners Medical R&D, IT and CRO Professionals Competitors’ Customers Competitors Industry Specialists Research Question: Can Medidata capitalize on a stronger sales pipeline to reach its projected growth of 20% to 25% despite challenges from innovative competitors? Silo Summaries 1) Medidata Customers and Partners Four of these six sources expect Medidata to continue to grow its sales this year, and another source said the company could even achieve its growth forecast of 20% to 25% if it offers “best-of-breed” products. Along with Oracle, Medidata leads in servicing large pharma. 2) Medical R&D, IT and CRO Professionals Four of these five sources expect Medidata to experience sales growth throughout this year, while the remaining source expects its sales to be steady. A growth rate of 20% to 25% is unlikely. Medidata is considered too robust for most applications in the midtier market. 3) Medidata Competitors’ Customers Three of these four sources expect Medidata to experience continued sales growth this year. The remaining source was uncertain about its growth opportunities, but noted a need for new software in big pharma. The three sources who expect Medidata to grow believe a rate of 20% to 25% could be achieved through mergers or by securing one or two large clients, but they added that this kind of expansion takes time. All four sources expect the clinical trial market to broaden although one source noted that growth in the university research setting will be slow. 4) Medidata Competitors Two of these four sources said Medidata’s growth would not continue this year. However, two others said its sales could increase further, and one said reaching the 20% to 25% forecast even was possible; these two sources credited Medidata’s strong reputation and longevity, the current high demand for cloud-based solutions, and the lack of strong competitors. The detractors said Medidata would be challenged by its high pricing, its lack of responsiveness to customers and the saturated big pharma segment. 5) Industry Specialists These four sources expect Medidata’s sales growth to continue this year, thanks to capturing market share from Oracle, the pharma M&A trends, and CROs and pharma abandoning in-house clinical trial software. However, achieving 20% to 25% growth in a saturated market will be a challenge. Also, Medidata will have some difficulty expanding into the smaller markets, but its modular products may be of interest if offered as a pay-as-you-go model.
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July 10, 2014 Companies: IBM, MDSO, MRGE, ORCL, QCOM, PRXL
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Although Not to Forecast Level, MDSO’s CTMS Sales Will Grow This Year
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Medidata Solutions Inc.: CTMS Market
Background
Medidata Solutions missed its first-quarter earnings and revenue expectations, but management remained optimistic about
the company’s opportunities as it saw 21% revenue growth year to year. Also, its customer base grew to 420, and 52% of
customers adopted multiple products—an 11 percentage point increase from a year ago. Its sales pipeline contains twice the
potential of a year ago, and interest in its products has increased. Medidata is focused on matching customer CIOs’ biggest
priorities through its cloud-based platform in life sciences, a massive set of clinical data and analytics, and a mobile solution
called Medidata Patient Cloud. As a result, management reiterated its long-term revenue growth target of 20% to 25%.
Blueshift’s Dec. 13, 2013, report revealed that Medidata was a clinical trial management system (CTMS) leader with a
primary strength in serving large pharma. However, sources said CTMS demand from large pharma could be curtailed by
some product saturation, and added that growth would come from the small to midtier clinical trial market. Serving this
market would be a challenge for Medidata because of its nontransparent high pricing, older software design, and competition
from innovative industry players.
Many competitors are ramping up their efforts to gain share in the CTMS market, which expected to grow 14.1% in 2014 and
see a compound annual growth rate of 13.6% through 2019. OmniComm recently landed deals with Seoul National University
Hospital, and is conducting clinical studies with a leading specialty pharma company as well as the Surrey Clinical Research
Centre. BioClinica holds contracts with two of the top 10 pharma companies. Meanwhile, Qualcomm built an app that allows
mobile devices to serve as gateways to patient medical information.
Current Research In this next study, Blueshift Research assessed Medidata’s sales pipeline and its ability to meet its sales growth forecast of
20% to 25% despite stiff competition. We employed our pattern mining approach to establish six independent silos,
comprising 23 primary sources (including five repeat sources) and five secondary sources focused on the CTMS industry:
1) Medidata customers and partners (6)
2) Medical R&D, IT and CRO professionals (5)
3) Medidata competitors’ customers (4)
4) Medidata competitors (4)
5) Industry specialists (4)
6) Secondary sources (5)
Next Steps
Blueshift Research will monitor the clinical trial software industry to determine contract and share wins and losses, including
in the small and midsize markets. We also will research Medidata’s sales outside the United States. Finally, we will gauge
Oracle’s market share in light of some sources’ reports of losses for the company.
Silos
1) Medidata Customers and Partners Four of these six sources expect Medidata to continue to grow its sales this year, and another source said the company could
even achieve its growth forecast of 20% to 25% if it offers “best-of-breed” products. Along with Oracle, Medidata leads in
servicing large pharma. Medidata has an opportunity to infiltrate midsized pharma and CROs, but for now OpenClinica,
BioClinica and Clinovo’s ClinCapture serve the midrange and small pharma markets. Medidata’s strengths include a strong
sales staff, a solid and broad product offering and substantial programming resources. Its challenges include its high prices,
which could limit its down-market reach; it also offers inconsistent customer support and product integration. All six sources
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Medidata Solutions Inc.: CTMS Market
are also more time-consuming to set up.”
“There has been talk here of dropping Medidata and picking up Oracle. Companies change software brands, but
Medidata will need to offer better customer service to not lose contracts.”
Trends
N/A
3. Business manager and consultant to CROs and pharma, based in Europe; repeat source
This source, who builds on the Medidata systems for clients, sees increased client interest in mobile technology and in
using one vendor like Medidata for the entire technology landscape. Still, this conservative industry takes its time to
implement new ideas.
Medidata Sales Pipeline
N/A
CTMS Market Conditions
“The large companies in clinical trial management, Medidata and Oracle, the growth isn’t coming from the pure EDC
market anymore; growth is coming from integration with other services and systems, especially cloud data storage
and data analytics.”
“Using the cloud, doing big data analysis, doing clinical data warehousing: These are the areas were the technology
is rapidly expanding.”
“Years ago customers would have a Medidata EDC system, and then it was connected to dedicated backend
systems probably from other vendors, but now this seems to be combined now from vendors like Medidata and other
big ones. They’re really tried to serve the full landscape of systems, including clinical data warehousing.”
“For several years, CROs have been moving away from their own systems
and toward the major vendors like Medidata, and that trend is continuing as
we see more collaboration in the industry. Clearly, the same platform
makes collaboration far easier. Big pharma is using CROs more and other
vendors and requiring that they all work on the same platform.”
“More requirements from the regulatory authorities are also driving the
move to major platforms, and over the years it became obvious that it’s not
really feasible for smaller CROs to run their own systems.”
Clinical Trial Software Competitive Landscape
“Competition is not growing in this market. Medidata still has the largest
market share in Europe.”
Trends
“Medidata is focusing more on daily measurement of body signals reported
via mobile devices, so not really focused on clinical research. It seems that
they are looking toward having a broader landscape of services and
systems.”
“Companies are definitely starting to get interested in the wearables and
getting data from healthy people. There are initiatives going on surrounding using that data for finding clinical trial
subjects, but there are a lot of regulatory boundaries that have yet to be worked out.”
“This is such a conservative industry that although we’re hearing a lot of new ideas, we haven’t seen much new
implemented.”
4. Data project manager at an East Coast biopharmaceutical company
This source could not address the growth of Medidata’s pipeline or sales, but said end users like the company’s software.
Medidata will continue to sell to large and midsize pharma but may be too expensive for smaller companies. Medidata
and Oracle compete with many other small-name companies. Many companies now outsource, but doing so depends on
the length and complication of trials.
The large companies in clinical
trial management, Medidata
and Oracle, the growth isn’t
coming from the pure EDC
market anymore; growth is
coming from integration with
other services and systems,
especially cloud data storage
and data analytics.
Business Manager & Consultant
CROs & Pharma, Europe
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Medidata Solutions Inc.: CTMS Market
Medidata Sales Pipeline
“Companies of all sizes use Medidata. They will continue to sell to large
pharmaceutical companies and midsize companies. Smaller companies
may have a harder time paying the Medidata prices.”
“Users like Medidata, and end users are driving its use. The investigators
say it is more of an exposed product.”
“We are working the kinks out of Rave right now. We need to make little
tweaks to make this happen. Rave is structurally more difficult. When you
make a migration or change, you need to take the whole system down.”
“Once you set up a program correctly, get it all done in the beginning with
all the FDA protocol, and you don’t need to change the protocol or made
amendments, you are good to go forever. It is hard when you start and then
need to change.”
CTMS Market Conditions
“Companies change software all the time, and they often work in several different programs. I’m new to this
company, and we are just starting to use Medidata Rave.”
“Many companies outsource. I’m not sure why we aren’t sourcing. We may have all the parts we need here. Oncology
is more complicated, and we have a lot of Phase I studies, which are short, only six weeks long. It may be more
efficient to do the work in-house.”
Clinical Trial Software Competitive Landscape
“Oracle is one of the biggest names out there. After Medidata and Oracle, they are many other smaller companies.”
Trends
“Everyone wants real-time, and they want it to be done quickly.”
5. Clinical research scientist at a large Midwest university medical center
Medidata software works well for this research group, and the source said the company should grow if other researchers
have the same positive experience. The university hospital uses Oracle software and occasionally has problems with it.
Medidata Sales Pipeline
“It is an interesting statement that [Medidata’s sales will grow 20% to 25% this year], but I can neither disclaim nor
confirm it. I have no problems with their software, and if other people do not, [the company] should grow.”
“Medidata is commonly used to capture patient information and data. Their data capture has a good interface.”
“We let Medidata know our protocol, what we want the software to do. This has worked well and is very helpful for
the end user.”
CTMS Market Conditions
N/A
Clinical Trial Software Competitive Landscape
“The hospital uses Oracle software. They are a big Medidata competitor. If there is a problem with it, we hear about it
in a meeting.”
Trends
N/A
6. Clinical research coordinator at a research center in Florida
This center frequently uses Medidata software; if other centers or companies are doing the same, then the company
must be growing. The source could not address the size of Medidata’s pipeline, but said its products are user-friendly and
meet clients’ needs. She also uses other software brands but said the company names do not stand out like Medidata.
Medidata Sales Pipeline
Companies of all sizes use
Medidata. They will continue to
sell to large pharmaceutical
companies and midsize
companies. Smaller companies
may have a harder time paying
the Medidata prices.
Data Project Manager
East Coast Biopharmaceutical Co.
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Medidata Solutions Inc.: CTMS Market
“I’m not sure about the company’s growth. I couldn’t answer this with confidence. But I can say that we use
Medidata frequently, for many studies. I would say their software is in high demand if other centers and companies
use it as frequently as we do.”
“The Medidata software is sufficient for us. Rave meets our needs. It is easy
to use. It all depends on the detail of the study, but it appears to be user-
friendly.”
CTMS Market Conditions
N/A
Clinical Trial Software Competitive Landscape
“We use Medidata most frequently, but we also use other brands. I honestly
couldn’t tell you the names. We just follow the link and enter the data. The
names don’t stand out.”
Trends
N/A
2) Medical R&D, IT and CRO Professionals Four of these five sources expect Medidata to experience sales growth throughout this year, while the remaining source
expects its sales to be steady. A growth rate of 20% to 25% is unlikely, but opportunities do exist based on mergers and
acquisitions in pharma and CROs, the management of big data, collaborative software tools, wearable and mobile devices,
and patient interfacing tools. Medidata is considered too robust for most applications in the midtier market. Its toughest
competition comes from Oracle and in-house solutions. Newcomers to watch include DrugDev Inc. and MedNet. Less costly
solutions out of Eastern Europe also will challenge Medidata in the international market.
KEY SILO FINDINGS Medidata Sales Pipeline
- 4 expect Medidata to experience sales growth but not in the 20% to 25% range.
- 1 thinks Medidata’s sales will be flat.
- Medidata software may be to robust for the midtier market.
CTMS Market Conditions
- Market growth is expected due to pharma and CRO M&A and emerging trends that require new technology solutions.
Clinical Trial Software Competitive Landscape
- Oracle and in-house software are Medidata’s main competitors.
- Less costly solutions from Eastern Europe are expected to gain share.
1. Clinical affairs manager for a West Coast medical device company
Medidata has new products, and likely will expand its sales but not by as much as 20% to 25%. The company is
organized, helpful, and has dedicated project managers to talk with clients. However, its software has more features than
smaller companies need. Each of the small and large clinical trial software companies offers something worthwhile, but
small companies tend to go out of business while larger companies may not have the right software match.
Medidata Sales Pipeline
“It is probably true that Medidata has extended their pipeline. Every time I’ve talked to one of their coordinators, they
have lots of new software. But companies always have a great pitch, and it is always about the pitch.”
“I can see Medidata expanding sales and growing but maybe not that much [20% to 25%].”
“I worked with Medidata when they were just starting. They were organized and always had a project manager come
to us. They had the capability of a dedicated programmer to talk to, and we had a person to articulate to the PM.”
“I felt comfortable with Medidata, and I liked their folks; they were willing to help out, and it was worth the
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Medidata Solutions Inc.: CTMS Market
reduce their in-house rule in order to maintain control over spending money. It is less likely now that a company
would manage a clinical trial on its own.”
“If you are a new biotech and do not have this in-house expertise, then you will hire someone to watch over the
clinical trial data. You can decide a reasonable amount of expenditure, and then you are done. The client that owns
the property will get a big, thick report.”
“The service providers play a big role and can provide specializations only for a year or two.”
“The smallest companies are generally startups, with small trials in early phases. There is the likelihood that they
would purchase less software.”
Clinical Trial Software Competitive Landscape
“I’m not sure how globally aware Medidata is. Outsourcing is becoming global. Trial research costs one-third less in
Eastern Europe than it does here. People will start looking for this service.”
“Selling a product to the pharmas, this is a very dynamic situation with global challenges. Now it is an international
competitive landscape. To sell to the pharmas, you need to have the ability to translate across cultural and language
barriers.”
5. R&D project manager at a major CRO; repeat source
Business with Medidata is stable. Some clients continue to prefer Medidata, while others split use between Medidata
and Oracle. The source questioned whether 20% to 25% growth was possible in light of Medidata’s past robust sales.
Medidata Sales Pipeline
“I don’t see any decrease in Medidata or increase. We still have some clients that prefer to use Medidata or they
split their work between Medidata and Oracle InForm. From our company standpoint, it’s business as usual. I have
no idea about their pipeline elsewhere, but for my company it’s the same.”
“[A growth rate of 20% to 25%] seems high to me because they’re not a new company, but that’s more from a stock
market perspective.”
CTMS Market Conditions
N/A
Clinical Trial Software Competitive Landscape
“Medidata and Oracle are still the top two. I haven’t heard about new technologies. There’s a company called
MedNet that we’ve been asked to look into, but I don’t know more about them yet.”
3) Medidata Competitors’ Customers Three of these four sources expect Medidata to experience continued sales growth this year. The remaining source was
uncertain about its growth opportunities, but noted a need for new software in big pharma. The three sources who expect
Medidata to grow believe a rate of 20% to 25% could be achieved through mergers or by securing one or two large clients, but
they added that this kind of expansion takes time. All four sources expect the clinical trial market to broaden although one
source noted that growth in the university research setting will be slow. Medidata and Oracle are considered leaders in the
large pharma market segment, with each holding significant share. However, Parexel is the preferred CTMS provider in
Germany. Midsize and small pharma cannot afford Medidata, and also consider its products to be complicated. Competitors
favored by small pharma include Ginger.io, the REDCap Consortium (Research Electronic Data Capture) and GraphPad
Software Inc.’s Prism. Emerging trends include consolidation and standardization, capturing data in real time, and concerns
over security and data management in the cloud.
KEY SILO FINDINGS Medidata Sales Pipeline
- 3 of 4 think Medidata can achieve growth in the 20% to 25% range through servicing companies that merge or
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Medidata Solutions Inc.: CTMS Market
Acquisitions These two sources highlighted key acquisitions made by BioClinica and Parexel to expand their portfolio and global presence.
June 17 OutsourcingPharma.com article
BioClinica is acquiring Blueprint Clinical in an effort to address current CTMS trends of risk monitoring and management.
“CRO BioClinica will acquire Blueprint Clinical, which offers a cloud-based site scoring tool to help pharma address
risk-based monitoring strategies for trials.”
July 2 RealWire article
Parexel acquired Atlas Medical Services, which will expand its presence in Turkey, the Middle East and North Africa.
“Parexel International Corporation, a global clinical research organisation, announced today that the Company has
acquired all of the outstanding equity securities of ATLAS Medical Services (‘ATLAS’), a provider of clinical research
services in Turkey, the Middle East, and North Africa.”
“Josef von Rickenbach, Chairman and CEO of Parexel stated, ‘The acquisition of ATLAS strengthens Parexel’s
presence in Turkey, the Middle East and North Africa. These markets are of increasing importance to our clients who
are looking for market access and a broad spectrum of patient populations for clinical trials. In addition, ATLAS has
been a trusted business partner to Parexel for many years, and their infrastructure and staff are already aligned with
our processes and operations. By fully integrating ATLAS into Parexel’s global operations, we will enhance our ability
to help clients more quickly achieve their goals of bringing important therapies to patients not only in Turkey, the
Middle East, and North Africa, but also throughout the rest of the world.’”
Additional research by Linda Richards, Renee Euchner and Carolyn Schwaar
The Author(s) of this research report certify that all of the views expressed in the report accurately reflect their personal views about any and all of the subject securities
and that no part of the Author(s) compensation was, is or will be, directly or indirectly, related to the specific recommendations or views in this report. The Author does not
own securities in any of the aforementioned companies.
OTA Financial Group LP has a membership interest in Blueshift Research LLC. OTA LLC, an SEC registered broker dealer subsidiary of OTA Financial Group LP, has both
market making and proprietary trading operations on several exchanges and alternative trading systems. The affiliated companies of the OTA Financial Group LP, including
OTA LLC, its principals, employees or clients may have an interest in the securities discussed herein, in securities of other issuers in other industries, may provide bids and
offers of the subject companies and may act as principal in connection with such transactions. Craig Gordon, the founder of Blueshift, has an investment in OTA Financial
upon, in whole or in part, without Blueshift’s written consent. The information herein is not intended to be a complete analysis of every material fact in respect to any
company or industry discussed. Blueshift Research is a trademark owned by Blueshift Research LLC.