Transforming Healthcare: Epocrates CEO Kirk Loevner (Part 6)

SM: Let’s talk about TAM. You looked at $400 million TAM on the physician side and $14 billion TAM on the pharma advertising side. Now we are looking at $250 billion TAM on the health care administration side. Those are serious orders of magnitude.

KL: I think right now we are taking smaller steps. The big market potential is out there. In this economic environment we have plenty of cash. We have $60 million in cash and are generating $20 million a year in cash. We are hopeful that there will be some interesting companies out there that need cash and will provide a more fair valuation than they would have a year ago. We could acquire a few companies in this environment.

SM: So there are a few companies you would be interested in acquiring?

KL: There are. They are companies that either give us broader reach and can get us access to even more health care professionals, or companies that provide other services that pharma may want in terms of interacting with physicians. When you think about what other untapped areas there are for a digital communicator, it is easy to identify clinical trial recruitment, all of the workflow improvement areas we have already talked about, and things called details that give a physician in-depth information on a particular drug and its regime. There are plenty of untapped regimens that have not yet been provided in a mobile form.

SM: Have you thought about getting your pharma advertising to pay for some of these applications?

KL: We do some of that. There is a cardiac calculator that might be sponsored by Lipitor which would have a splash screen on it. It is not too invasive. We provide that tool free to physicians. When a patient walks in, is 60 years old and a smoker with high blood pressure, the physician can tell him that he has a 50% chance of having a heart attack in the next five years.

SM: I was thinking about workflow engines, as they would be less rigid.

KL: There are regulations to be dealt with. If you are about to prescribe a drug you cannot flash a competing drug up on the screen. There are still whole areas to be dealt with; disease management is one of them. If a diabetes patient comes in, there is a lot of value to pharma and insurance companies to get that patient on a medication program. It would result in lower health bills and help the patient. Pharma would pay a lot of money to find that patient early and have them enroll in such a program.

SM: What is your growth rate right now?

KL: We have been growing revenues around 30%-40% a year. This year we will probably finish our growth around 26% over last year’s.

SM: Is it fair to say that Epocrates is the company most likely to become a billion-dollar company in this space?

KL: I can’t say that. I think we have the market opportunity, and we have the potential to be a very large company. I think there could be others out there as well. Don’t ask me to name them because if I could, I would be a stock picker. I would say that we are one of them.

This segment is part 6 in the series : Transforming Healthcare: Epocrates CEO Kirk Loevner
1 2 3 4 5 6 7