A large global pharmaceutical company approached us in 2015. “How can the business transition smoothly from using Oracle for clinical trial management to Medidata?” the R&D IT category manager asked. It was one of many pharmas that had begun making the move. That year, Medidata’s market share had grown to 26% compared to Oracle’s 23%. Today, Medidata has usurped Oracle as the market leader in the EDC (Electronic Data Capture) and CDMS (Clinical Database Management System) segment.
Cautionary lessons from the past
If you have been a part of the procurement organisation of a pharma, chances are that you have entered negotiation discussions with suppliers having very little bargaining power – because of your dependence on it and/or a lack of alternatives in the market. IMS Health (now IQVIA) comes to mind – a supplier that has been really difficult to negotiate with for the same reasons. Oracle too, before the emergence of Medidata, had a significant control of the market; and organisations were reliant on its products. So, for pharma companies dependent largely on a single supplier, such as Medidata, there is always a risk of losing bargaining power and the supplier controlling the pricing.
Tips on how to prepare
From our experience of working with top pharmas, we have seen Medidata Rave and Medidata Clinical Cloud becoming the preferred choices for many R&D IT category managers. A SaaS product with integration capabilities, better pricing and customer support, Medidata has rarely received negative feedback from users. But owing to the nature of the industry, it is important for organisations to be prepared for an unsolicited situation (like with IMS or Oracle in the past) where it might lose its negotiating power over the supplier (Medidata in this case). Here are some best practices that category managers in the R&D IT space can follow:
Partnerships can give early access to supplier innovations. One strategy that could be used to strengthen the partnership is by adopting a large scale engagement with one supplier, i.e. Medidata (across the organisation, clinical phases, therapeutic areas and geographies). Our industry research has discovered that multiple large biopharmaceuticals are already following this approach. Another advantage of enterprise licensing is that it potentially result in better supplier relationships. There are pharma companies in our clientele that have been keeping a proactive view of the business and performance of its R&D IT supplier base, and maintaining better supplier relations by using our Supplier Engagement Solution.
M&As are a common feature in the R&D IT category. In our comprehensive study, we found that Medidata is slowly stretching horizontally in the R&D chain. It acquired SHYFT Analytics, a data, analytics and mobile solution provider; and is now present in the EPRO (Electronic Patient-Reported Outcome), Clinical IT and Payments space, alongside being a major player in the EDC and CDMS markets. This signals a potentially larger clientele for Medidata, with more long-term client engagements and commitments across the R&D IT category.
The question is – how would this information help category managers in decision-making?
- The pharmaceutical company would understand how strategic a client it is for the supplier. This insight can help the business make an educated estimation of the supplier’s demand in the market and, be the foundation of its negotiation strategy. An increasing demand means a potential rise in future pricing. Committing to long-term contracts with fixed pricing, and increasing the number of trials to decrease cost per trial could work as an effective strategy in such a scenario.
- An eye on the competitor supplier landscape can also help pharmas understand where the market is moving. Veeva, for instance, is a very strong player in the eTMF (Electronic Trial Master File) segment. It has now entered the EDC space, despite the fact that more than 50% of the market is shared between Medidata and Oracle. This insight into the rising competition can work as a negotiation lever for category managers during contract negotiations with Medidata.
Pharmas have often approached us to support them with their R&D IT category strategies. Our experts’ recommendation has been to have one primary system (which is Medidata in most cases), and another secondary system to conduct 10%-20% of trials in parallel. This has a two-fold advantage. First, it keeps an avenue open for the organisation to experiment with new and upcoming technologies. Isn’t that how Medidata entered the fray after all? Second, it also helps in negotiations as the primary supplier is not the pharma’s only option, it can turn to its secondary suppliers when needed.
Most big pharmaceuticals have already committed to Medidata for managing their clinical trial data. Some are preparing to make the transition. These best practices could be helpful to avoid any pitfalls in the future.
With additional inputs from Varun Mahajan, Manager, Life Sciences