You always follow the money. Any journalist or TV detective can attest to the usefulness of this maxim. If you want to know who did it, who's behind it, and why, follow the money.
That's exactly what ZDNet's Larry Dignan did last week after Oracle announced plans to buy Phase Forward, a software company that can manage the entire drug submission development and safety process from trial to the FDA. And what he discovered at the end of the money trail is a deal that has Oracle paying out $685 million to buy into a very lucrative health care IT boom and the $25 billion in federal payment incentives for electronic health records.
I've written on numerous occasions about the data-integration challenges facing electronic health care records. It's a fascinating topic, and one of immediate interest to anyone invested in the U.S. medical system, whether that's as an individual, a business or both. But I haven't seen an awful lot written about the IT companies that stand to gain the most from this boom. That's probably because until recently health care IT has been its own little island, ruled by a collection of fiefdom solutions rather than the major vendors.
As it turns out, while the solutions may be niche, the databases running them are not. And the three companies that dominate in the health care space are Oracle, its longtime rival SAP and Microsoft, according to this recent Sacramento Press article.
The focus in the general tech press has been on how this deal will give Oracle an edge over SAP in another vertical. But health care isn't "just another vertical." It's the vertical to watch, an area where spending has stayed strong despite economic turmoil in other sectors. It's also primed for growth in the United States, where it's the focus of major government reform efforts.
And while the Oracle acquisition of Phase Forward might seem like just another of Oracle's many belt notches, it's actually a meaty acquisition with huge significance in health care, the Sacramento Press reports:
Today, Oracle announced the $685 Million (507m) acquisition of Phase Forward, the leader in the EDC [electronic data capture] market, having as much as 70 percent market share, including as many as 15 out of 20 of the top pharma and biotech. More companies use Phase Forward's EDC applications than use Oracle's RDC (real data capture) applications. However, the landscape has now changed. This move adds Phase Forward's broad range of EDC, CTMS (Clinical Trial Management System) and other key products to Oracle's existing offering, thus elevating its position profile in a market that Forrester Research recently predicted will be worth $26 billion before the end of 2010.
The rest of the article gives context to how this acquisition might affect Microsoft and SAP-both of whom will either have to buy one of the other four players in the EDC space or develop something new in-house to compete with Oracle.
The Sacramento Bee predicts the next health care IT arena ripe for acquisitions is Electronic Patient Reported Outcomes (ePRO) and what I'd generally label electronic medical records, but which the article notes is actually a fragmented collection of players with many uniquely branded products, including solutions going under the labels:
Is it nave to wonder if bringing these varies technologies under one or three vendor roofs might actually help with the electronic health record integration problem? Maybe. But given Oracle's healthy acquisition appetite, it doesn't look like I'll have to wonder for long.