Taking a Capital Efficient Company Public and Beyond: Medidata CEO Tarek Sherif (Part 6)

Sramana Mitra: In 2009 when you went public, what was the market share situation vis a vis you versus FaceForward?

Tarek Sherif: They had a larger market share when we went public. They were larger, certainly, in terms of revenue and market share, but we were growing much faster.

Sramana Mitra: Were they public?

Tarek Sherif: They were public. Why would anybody in their right mind go public in 2009? We went public in June of 2009 where our second tech company went out the door. It was a terrible time. The worst market you had in a century short of a depression. Why would you go public?

The reason we went public was about a year or so before, we were in a competitive situation with a large RFP. Up until that point, we had won every single large RFP that had come to market against FaceForward. They’d beat us in just one case. The reason was they played up the fact that they were public, had a strong balance sheet, and that we were a private, small company. This customer had in fact been burned by a small technology vendor who created all kinds of problems. So we got outsold in that way and we said, “That’s never going to happen again.”

So we went through the process of getting the company ready to go public. We went public in June of 2009. Subsequent to that, about nine months later, and because our metrics were so much better, our growth was faster, our profitability was higher, and our numbers were great in comparison.

They ended up selling themselves to Oracle within about nine months of us going public. That created another opportunity for us because then we were the largest public company providing these kind of services to our customers. But we surpassed them in market share in the next couple of years.

Sramana Mitra: When Oracle bought FaceForward, did they also evaluate you for an acquisition?

Tarek Sherif: They had at one point approached us when we were a private company, but it had been a couple of years before. When they actually made the decision to buy FaceForward, they did not reach back out to us.

Sramana Mitra: Oracle buys FaceForward. Two years later, around 2012, you surpassed Oracle’s FaceForward in market share.

Tarek Sherif: Somewhere in that period – two or three years afterwards.

Sramana Mitra: At this point, what is the revenue level? It’s about $200 million?

Tarek Sherif: No, higher than that. We can get you that. We were growing pretty fast. So $140 million probably went to $220 million. Something like that. So probably around $300 million, I would say.

Sramana Mitra: $300 million in about 2012. The market dynamics have shifted. Oracle has FaceForward. Not just the largest public player, you are the largest player in the market at this point. What happens next?

Tarek Sherif: As our presence in the market continues to grow, we started to look at other areas beyond just electronic data capture. There are a lot of manual processes in clinical trials that go beyond collecting and managing the data.

We saw how they tied into the core of data capture like patient randomization or other functions like collecting quality-of-life data from patients. Those peripheral areas were historically serviced by vendors who operated in a technology silo and process silo. We always said, “It doesn’t make sense.”

Back then SAP and Oracle were going head to head in ERP. You saw how it changed manufacturing. You saw how it changed organizations to have this integrated platform that tied a lot of different functions together. We said, “We should be doing the same thing in clinical development.” There’s no reason all these processes should be disjointed. They need to be tied together. The data needs to be tied together. That was a very important decision on our part. The other thing we started to do back then, which in hindsight turned out to be incredibly valuable, is that we started to ask our customers for the right to use their data.

At first, it was just on a transactional basis. We supply the pipes that over 50% of all clinical trials run through today. We have a lot of data. We said back then, “If we ask you for the rights to the transactional data, we can tell you about the efficiency of your clinical trial. We show you metrics on it and we can compare you to your peers on an anonymized basis. Are you doing better or are you doing worse than a group of your peers that are running a clinical trial in a particular therapeutic area.”

Then we had this moment where we said, “If we’re going to ask for those rights, why don’t we just ask for the rights to the scientific data too, again, on an anonymized basis.” Interestingly, customers agreed. So what you have today is not only do we have the broadest integrated platform in our space, but we also have this data moat.

We have the largest collection of clinical trial data that’s global across every therapeutic area that exists in the world. No one can replicate it because you’d basically need all of our customers to agree to somehow get their data to whoever the third party would be.

So we have a very unique data asset that we’re starting to figure out given some of the newer technologies in AI and the data size capabilities we’ve built up. We now have an opportunity to help our customers make much better decisions based on having that aggregated clinical trial data.

Sramana Mitra: For the top 20 pharmaceutical companies, how does the platform side break down? How many of them are with you? How many with Oracle? What’s the situation?

Tarek Sherif: We have 18 of the top 25 pharmaceuticals who have made the decision to, over the last x number of years, use us as their enterprise provider. It’s still in EDC and, increasingly, across the broader platform.

This segment is part 6 in the series : Taking a Capital Efficient Company Public and Beyond: Medidata CEO Tarek Sherif
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