PHARMA: A start-up data success? IMS Health buys PharMetrics

This one may be a little too inside baseball for some of you, so don’t be afraid to skip it.  However, if you care about pharma marketing, read on.

Yesterday IMS Health said it was buying PharMetrics. PharMetrics is a company that succeeded where my old company i-Beacon, and several others backed rather better, failed in creating a business for longitudinal patient data. What that means is that it linked medical claims and Rx claims data about the same people over time.

Theoretically that tells a drug company whether their drug is getting its "share" within its disease category and also whether its drug is working in reducing medical claims. (You remember that theory about drugs improving care quality and lowering cost?) It’s also supposed to tell a health plan whether its disease management efforts are working, or what disease management plans are working elsewhere, although local rival IHCIS concentrates more on that market. (i-Beacon BTW matched PharMetrics-type Rx and claims data with other consumer data in a very clever and legal way to help score DTC marketing–not that we ever really got the product to market).

PharMetrics gets its data as a by-product of a weird agreement with a tools company called Symmetry Health, and receives data on roughly 50 million people via lots of health plans. From my recall (which is some years old now) they don’t know who the people are (other than having a unique plan identifier so that they know it’s the same person). Therefore they a) don’t have a way of tracking the people once they leave their plan, which presumably makes the data somewhat less robust over time as most people change plans every couple of years, and b) can’t fulfill the pharma marketing wet dream of telling the detail reps which patient at which doctor ought to be on their drug but isn’t. Of course getting to that stage would be unethical, not to mention illegal! But the basic problem with these longitudinal patient data sets is just that. They can tell you what might work in general but cant point your sales people to specific things to do in particular cases because that would mean identifying individuals. Of course eventually if we all get electronic medical records, some organizations which have  legitimate right to do so will be doing that.  In fact Active Health Management, bought by Aetna last month, does just that–but they are then by definition confined to disease management and can’t sell that data to the pharma companies–who are the best market.

IMS Health of course has the "specific" data base on doctors and their prescribing habits, and it’s not only wrapped into telling the pharma sales forces what to do, but is also a direct component of how the sales forces’ compensation is scored. That’s why IMS is the best (and most profitable) franchise in all of information services and why big and small companies (like Arclight, PharMetrics and i-Beacon) continually take a run at them–often with the intention of getting bought.

PharMetrics seems to have achieved that goal. I don’t know specifically how well it was doing but with 75 people and probably $10-20m in revenue, it probably went for around $50m. Of course that’s pure speculation and we won’t know the real numbers till IMS next 10Q comes out, but the main thing is that the VCs who put in $30m over time got out alive.  And who knows, maybe they all did much better, which will of course only encourage others to get into the ring.  And that’s much of the driver behind the grimy little sector of pharma data analysis.

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