Last week Medidata launched its most direct attack yet on two established rivals, Phase Forward and Oracle Clinical. The end game for dominance of the e-clinical space is well under way.

Later in the week, we’ll describe in more detail Medidata’s efforts to wean away customers with preferences for a clinical data management system from Phase Forward or Oracle.

Phase Forward, needless to say, is growing briskly, buoyed by synergies between multiple e-clinical product lines. Despite a broad and deep product line of its own, Oracle Clinical is limping competitively, having lost talent, resources, and focus in the wake of the database company’s acquisition binge. A database guy on a yacht off California had an interest in pharma, but it ebbed.

Medidata, by head count, is probably the second largest pure technology company in the industry after ClinPhone. Medidata’s core sales pitch has never changed: its electronic data capture (EDC) software sidesteps the data integration problems that are built into its larger competitors’ solutions.

Tarek Sherif, Medidata’s co-founder and CEO, sounds solidly confident about where his company stands in early 2007. “We’ve achieved a critical mass,” Sherif says. “Our business is solidly diversified across customers, therapeutic areas and geography. We are a much more mature company than we were a few years ago. We’re scaling the organization extremely well.”

Catching Phase Forward?

Hiring continues at the company, which has U.S. offices in lower Manhattan and New Jersey. “We’re up to 450 employees,” says Sherif. “We are larger than Phase Forward. People don’t realize how big we’ve gotten.” It is a striking ascendancy for a company that not so long ago had just 18 employees and was struggling for name recognition.

Sherif is keen to demonstrate the private company’s financial strength. He has no audited financial numbers to share. And nothing he offers can be verified or, strictly speaking, compared to the rigorous standards of financial statements from public companies.

But in a rare peek at Medidata’s accounting, Sherif says the company logged annual bookings comparable to Phase Forward, in the $129 million range in 2006. (All of his numbers refer to bookings. Phase Forward discusses overall bookings but generally breaks out EDC-related items as revenues.)

If true, Medidata’s bookings are just a few million dollars shy of Phase Forward’s in what has become an eclinical version of the Yankees-Red Sox rivalry. Phase Forward just reported bookings of $137 million in 2006. Since all Medidata revenues are related to EDC, Sherif implies that his company has perhaps 30 percent more EDC bookings than Phase Forward, which this week reported another strong quarter. Sherif is assuming perhaps $100 million in EDC-related bookings at Phase Forward.

$1.2 Billion Market

Medidata’s sizing of the overall EDC market, Sherif reports, relies on conservative assumptions about numbers of EDC-appropriate clinical trials a year (8,000), per-study pricing ($150,000) and the adoption of EDC. Sherif says the actual total number of trials is probably closer to 12,000 studies annually, and the industry-wide average for EDC-related software and services is more likely $270,000-$350,000 per trial.

Even if the number of trials and price per trial do not change, a rising rate of adoption will bring the market from a $350 million level now to $1.2 billion in a few years. Strong rivals such as Phoenix Data Systems and others, Sherif acknowledges, will capture a portion of that business.

But Medidata (according to Sherif’s analysis) currently controls the largest slice of the EDC pie. “We have about a 40 percent market share,” he says. “That’s how we’re looking at the marketplace. Being number one matters. We want to stay in the leadership position.”

Sherif went on to say he welcomes a strong competitor like Phase Forward. “It’s not a zero sum game,” he says. “The market is growing very quickly. It’s actually good that Phase is a success and that we are successful. You don’t want a one horse race. You want several viable vendors. The industry views that as a healthy thing. The financial community also views that as a healthy thing.”

True Partnerships

Sherif believes that in addition to big wins like AstraZeneca and Amgen, his firm is emerging victorious on other tiers of customers. “There is a major market share shift that has happened in the last year and half,” he says. “It’s not just in the large companies. There is a middle market play that is also happening for us.”

That’s because using the company’s technology, he suggests, helps contract research organizations be more efficient and profitable than they can be with his competitors. He says rivals should ask themselves: “How successful did you make your partner in 2006? How much business did you drive to them? We are being good partners, basically. We don’t undercut our partners from a services perspective. Other folks have done that. Service is a smaller part of our business. Licensing is a larger focus.”