Over the past few years Medidata ($MDSO) has frequently spoken of its efforts to grow sales of its Rave electronic data capture (EDC) platform by pinching clients competitors, notably Oracle ($ORCL). Now, having expanded its relationship with Alcon, Medidata is looking to make inroads with Novartis ($NVS).
Medidata disclosed the deal with Alcon--and discussed its implications--in its third quarter results. Alcon already used Medidata's EDC platform, Rave, and has now signed up to for other products too. The deal is significant in isolation. Alcon spent $950 million on R&D last year. Medidata--which has made cross-selling products to Rave clients central to its growth plans--is now poised to capture a bigger chunk of the trial technology portion of this budget. Yet, the broader, longer-term potential of the relationship goes beyond Alcon. Medidata is going after its parent company, Novartis.
"Novartis has historically not been a customer of Medidata's in any meaningful way. So we view this as a great opportunity," Medidata CEO Tarek Sherif said in a conference call with investors. When Oracle bought Phase Forward for $685 million in 2010, Novartis was listed of a client of the acquired EDC player. And 18 months after agreeing to the deal, Oracle looked to cement its relationship with Novartis by holding a customer day in Basel, Switzerland. Medidata has experience of overcoming preexisting ties to win business from competitors though.
One year ago Sanofi ($SNY)--which had used a competitor's product for a decade--was unveiled as a Medidata client. Signing up Sanofi boosted Medidata's sales in Europe--historically its weakest market--and the company now wants Novartis to join the French pharma, AstraZeneca ($AZN) and Roche ($RHHBY) in its portfolio. Europe was singled out as a highlight of the third quarter results, in which overall revenues jumped 27% year-on-year. The big increase in sales and earnings sent Medidata stock up 20% on results day.
- read Medidata's financial release
- check out the SeekingAlpha call transcript