Big eClinical mergers can work, Medidata CEO says
Reported problems with Oracle’s $685m (€557m) takeover of Phase Forward have cast doubts over the wisdom of eClinical mega-mergers but the Medidata CEO thinks such deals can work.
“M&A in the eClinical space, no matter the size of the transaction, can be successful when approached through a disciplined analysis of business and technology alignment,” Tarek Sherif, CEO of Medidata, told Outsourcing-Pharma.com.
What is important from a business perspective, Sherif said, is to find companies with a similar culture. This approach has seen Medidata buy other firms with cloud-based business models, such as Clinical Force and FastTrack.
These firms also fit with existing capabilities at Medidata. “From a technology perspective, the challenge is to look for architecture compatibility and complementary - versus overlapping - functionality,” Sherif said.
Overlapping capabilities are one of the challenges Oracle reportedly faces. After buying Phase Forward Oracle had two electronic data capture (EDC) systems - RDC and InForm - both of which it continues to support.
“While Oracle’s EDC-related investments are focused on InForm, Oracle continues to accept new RDC clients, likely confusing the marketplace and, perhaps, agitating existing InForm customers,” Sandy Draper, equity analyst at Raymond James, wrote after DIA last month.
Outsourcing-Pharma.com contacted Oracle one week ago with questions about its integration of Phase Forward and its plans for the EDC systems. Oracle failed to reply in time for publication.
Bolt-on business
While Medidata clearly thinks big eClinical mergers can work it is more likely to use its $110m in cash and equivalents - plus additional available financing - to make smaller, more targeted deals.
“I think major acquisitions are less likely, though smaller bolt-ons are to be expected. M&A in this space has not always been smooth, so I think in-house development will be the focus,” Tim Evans, equity analyst at Wells Fargo, told this publication.
Sherif confirmed as much, saying the primary focus is on organic growth supported by “modest
acquisitions.” Asked about specific capabilities Medidata wants, Sherif declined to elaborate, saying he was “not able to speculate or publicly comment on any specific M&A activity.”
The most recent example of Medidata’s M&A strategy is the takeover of Clinical Force. Since buying the firm in July 2011 Medidata claims to have increased the number of active studies running on the Clinical Force CTMS (clinical trial management system) by 85 per cent.
Growing the CTMS business is part of seemingly successful efforts by Medidata to diversify beyond its EDC system, Rave. “Our discussions indicate that Medidata is having increasing levels of success in securing multi-product and enterprise-level awards,” Draper wrote.
