Transforming Healthcare: Epocrates CEO Kirk Loevner (Part 3)

SM: You did two companies prior to Epocrates which were focused on content?

KL: PublishOne and ScreamingMedia were content-oriented.

SM: After ScreamingMedia you were recruited to Epocrates?

KL: I sold ScreamingMedia to CBS in 2004. I went to the beach in Florida and hung out for a while. I got some calls, one of which was about Epocrates. It had done $10 million in revenue in 2003.

SM: What was the genesis and thesis of the founding of Epocrates?

KL: It was founded by two Stanford students who graduated in the 1997. One was an MD and one was an MBA. They saw doctors carrying around books where they would look up drug information, drug interactions and dosing information, and decided there was a better way to provide this kind of content. They uploaded a drug database onto the Internet that people could download to their Palms. People started downloading it, and it started to take off.

They added disease content to it and started selling subscriptions for $60 a year. They had just started looking at the idea of selling programs to pharma when I joined. Early on the company had developed a big base of physician and health care users. Today we have 500,000 active users. Once you get above critical mass there are other industries such as the drug, insurance, and medical device industries that all want to reach these health care professionals.

I was attracted to the company because of the broad reach of the user base. They did not have a lot of revenue, but they did have a lot of users and brand loyalty. It is a unique market, unlike any I have seen before. You have a drug industry that spends $14 billion a year to influence people who prescribe drugs. There are only 600,000 people who are allowed to prescribe drugs, so there is $14 billion spent against 600,000 people. There are all these rules around how they can spend the money. They cannot just give them money. If you have a channel to reach these physicians, it is a gold mine.

Over the years we have effectively become a digital communication channel for pharma to reach physicians. Up until the past few years, they had detail reps who would go to each office to tell the doctors about the drugs. We have been able to duplicate a lot of that interaction, where the physician can get dose information, drug interaction information and disease information and take CME courses right from their devices. Some of the responsibilities of the reps have been able to be substituted.

The reps are still there, but they are not as cost effective. Doctors are not allowing the reps to see them, and when they do they only get a couple of minutes with the doctors. They do their own research using our platform.

SM: How many physicians did they have in 2004, when you took control of the company?

KL: They had a pretty broad reach. We had 150,000 already.

SM: They were just finding it all on their own?

KL: It was a classic Silicon Valley success story were everything was found via word of mouth.

SM: And they were all using this based on a $60 subscription?

KL: Some of them were using the free guide, others paid $60 a pop. There was about $10 million in revenue, primarily from selling subscriptions.

This segment is part 3 in the series : Transforming Healthcare: Epocrates CEO Kirk Loevner
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