By Deborah Borfitz

Many people think the electronic data capture (EDC) market must consolidate. The question is, how?

The last round of acquisitions may provide some clues. Phase Forward, for instance, acquired Lincoln Technologies to get safety signaling technology. "But the Lincoln deal gave Phase Forward a lot more, most notably a next-generation platform," says Chris Connor, a senior research analyst with Framingham, Mass.-based Health Industry Insights. DataTrak acquired Java-based ClickFind and gained a new customer base. Oracle got trial management expertise with its buyout of Siebel. And just last week, ClinPhone acquired DataLabs in a deal that will enable it to offer a comprehensive suite of clinical trial management and data capture systems.

However, the threat of "disintermediation" of EDC technology is a distinct possibility as electronic case report forms (eCRFs) become more standardized, says Connor. To counter the threat, "EDC vendors are attempting to establish themselves as a core system in their customer's eClinical infrastructure. Medidata, for example, is focusing on enhancing its data mining capabilities. That way, Medidata Rave can sit at the center of the eClinical transaction."

Sam Hume, vice president of technical operations for Phoenix Data Systems (PDS), muses that future acquisitions might involve contract research organizations and other healthcare and life science companies that want to augment or complement their current offerings. The number of EDC brands will definitely be far fewer than today. Of the estimated 105 EDC vendors in the market, he notes, only a handful land the big accounts.

"A mini ecosystem of partnerships will provide all the data integration and services customers of all sorts require," Connor predicts. "Large pharmaceutical companies have, for the most part, divested from the development of their own applications because of the cost of validation [per FDA CFR 21 Part II]." Recent partnerships have included Medidata with Cytel, which does adaptive trial management, and OmniComm with Fast Track Systems, which automates protocol development. The partnerships may or may not morph into acquisitions.

"Medidata's partnership model affords them a great position in the market," says Connor. "It has the necessary critical mass, momentum, an aggressive business model, and the size it takes."  eResearch Technology, next in line in terms of overall revenue, seems to be divesting itself of its software licensing business in favor of its successful electrocardiographic core lab services. DataTrak could burn too many calories on the ClickFind acquisition.

Right now, the money is good. "In 2007, we estimate that annual revenue growth for EDC software services will be 14.5 percent," says Connor. "But that annual growth surges to nearly 18.5 percent within the next two years.

"I'm getting a lot of calls from private equity firms and they're trying to figure this out, too," continues Connor. "We're at the knee of the curve in adoption of EDC. There's a flood of potential customers and no Microsoft in this market. Mid-2007 will be a defining time in terms of the success of EDC vendors. If the market keeps up its current pace of adoption, there may be more opportunity than capacity to deliver. It's turning into a game of execution against the potential."

Shoppers will go to the large players like Phase Forward or Medidata first, he adds. "But if those vendors are overloaded with work and can't deliver on time, they risk having their customers turn to nimble, more flexible vendors." That could lead to another round of vendor failures. "But it won't be a lack of revenue that kills them this time."

By 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.

By Deborah Borfitz

Japan's top pharmaceutical companies have been hearing about electronic data capture (EDC) for years, but Medidata Solutions is the first to bring them on board in a meaningful way.

The vendor's latest announcement is that Tokyo-based Astellas Pharma (the result of a joint venture between Yamanouchi and Fujisawa) will use Medidata Rave 5.5 for all its global clinical studies over the next five years. With other companies, including newly merging Daiichi Sankyo, Medidata is doing pilots and clinical programs ranging from four to six studies at a time, says Edward Ikeguchi, Medidata's co-founder and chief medical officer. "There's a real effort and commitment to adopt EDC."

It's irrelevant that Medidata has been in the Japanese market for barely 12 months. Rave has the functionality specifically requested by sponsors there, says Ikeguchi, a dual American and Japanese citizen who is fluent in both languages. EDC adoption in Japan is a mere 1 percent, but not because the business mindset is conservative and risk-averse. "The Japanese approach...is incredibly pragmatic," says Ikeguchi. They simply want a product they can use, and up to now, there hasn't been one.

It's important that Medidata's Rave has the ability to handle the 20,000-plus unique characters in the kanji language. It also accommodates the workflow of Japanese studies, which are intrinsically different from those in the West. For example, clinical research coordinator staff may or may not exist, and "that's the mission-critical user in the U.S." Communication with the investigative site also gets multiple levels of review which, as a matter of respect, involves the use of different linguistic styles.

Moreover, Japan's Ministry of Health, Labor and Welfare (MHLW) recently came out with its first-ever guidance on electronic records and electronic signatures, and it's slightly different from the FDA's 21 CFR Part 11. Rave is compliant with both.

Formatting is adaptable to whichever agency – the FDA or MHLW – the data is being reported to, says Ikeguchi. Data logged into the system in Japanese can be automatically translated into printable PDF files suitable for submission to the FDA, including an audit trail so translations can be reviewed.

All of this adds up to huge time and cost savings for Western companies doing studies in Japan. "The paper process adds months and months to timelines for clinical trials [in Japan]," Ikeguchi says, "especially if there are hundreds of thousands of CRFs [case report forms] that need to be translated." Data for concomitant medications or adverse events that get typed into the database have to be mapped to a Japanese coding dictionary and translated into English, along with all freehand text in the CRF.

The only other choice has been a Japanese-only EDC product like Phase Forward's Inform, which is a completely distinct product from the U.S. version and unable to handle data translation between English and Japanese. "Sponsors end up with divergent operations in Japan versus the rest of the world," says Ikeguchi.

Rave gives sponsors homogenous data in a single database and language using single dictionary coding. "If a data manager logs information in New York City, it's the same system the data manager logs into in Tokyo," says Ikeguchi. The user is automatically shown the appropriate user interface based upon their preferred local language, much as they would when using Google.

In terms of Medidata revenues, the Japanese market is a "significant component...which we expect will continue to expand at a rate comparable to other regions of the world," says Ikeguchi. He predicts EDC usage in Japan will jump "approximately 30 percent" within five years.