Timothy Pratt, PhD
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You're in a strong, growing company. Your new drug or device is likely to make a big impact in the market, and you need an
EDC/eClinical partner to help you get it there. Who should you choose? Who is the right dance partner for your organization?
There are a lot of companies in the EDC/eClinical space, most offering a product that looks attractive. It certainly seemed
as if there were dozens of new players at the 2007 DIA meeting in Atlanta—a fact that did not escape the attention and concern
of others in the industry.1 It may well be that the Health Industry Insights research results published in 2007 indicating that EDC/eClinical technologies
were poised for double digit adoption growth (from 30% of all trials during 2005 to over 75% in 2010)2,3 are driving both sponsor interest and entrepreneurial vendor activity. The standing room only EDC sessions at the SCDM conference
in September 2007 reinforced that such a move is underway.
This article will not deal with the questions of which EDC feature or product is more appropriate for particular circumstances. The focus will
not be on the product as such—after all, if your blockbuster drug cost between $800 million4 and $1.7 billion5 to get to the market and every week it's not there represents between $2 million and $200 million in lost revenue,6 isn't it far more important to you that the vendor is stable and will help you get there? So, this article will deal with
the much more fundamental issue of corporate vendor stability. Even if you're not developing the next $10 million a day drug,
the success of your product—and the future of your company and job—can and does depend on selecting the right technology partner.
Because no matter how good you are, it takes two to tango, and beauty certainly can be only skin deep.
Favorable characteristics
Financial stability. You'd probably be shocked to learn that in my experience on the vendor side, fewer than 15% of all customers ever ask about
our financials—even the very large customers, of whom we have more than a few. Is this unique? No. In various inquiries and
interviews conducted in researching this article, I found similar rates of 10% to 15%. In speaking with sponsors and CROs
at recent conferences about financial stability, it became obvious that the idea had never occurred to most. But the issue
of financial stability is both important and problematic. Why problematic? At a very fundamental level, the overwhelming majority of EDC/eClinical vendors are privately held companies.
As such, they do not have to—and in most cases do not—talk about their profitability or financial condition. The few publicly
traded companies are required by law to file financial updates providing details on income, cash-flow, balance sheets, expenses,
strategic directions, threats, and all sorts of things that have to be right or someone may be going to prison when the SEC
investigates. Of the well known publicly traded companies, the minority are profitable and the others are losing money consistently—and
have done so for quarter after quarter for a protracted period of time.
That alone should cause major concern in the vendor selection process. If expenses consistently are more than income, sooner
or later the business will shut down or other major disruptions will occur. If your prospective vendor is publicly traded,
finding information on their financial state is very easy via the Internet and should be a fundamental element for review.
What about the private companies? It's very simple: ask. Some people you can trust and some you can't, but you can solve that
problem by asking for audited financials and/or taking a financial person along with you for the vendor audit. (You are doing
an audit, right?) If you don't have a financial auditor in-house, then take a consultant with you. If the vendor responds,
as some have been known to do, with something like, "We're a private company, we don't have to disclose that," then run away,
as you have your answer.
