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| Home - CEO Spotlight - Feb 06 Issue |
CEO Spotlight: Jeffrey Green, DATATRAK International, Inc. |
By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search
The biggest problem with drug companies is that despite being on the cutting edge of science, most of them are in the stone age when it comes to managing their own business. Both investors and desperate patients are getting hurt in the process. Enter enterprise software vendor DATATRAK, on a mission to help drug companies figure out what the rest of corporate America found out years ago: automation is a good thing. Angel Mehta, Managing Director of Sterling-Hoffman, talks to DATATRAK CEO Jeffrey Green about the crisis in pharmaceutical companies, and what he intends to do about it.
Angel Mehta: Give me a sense for the early state of the market and the problems the industry was facing and then take me from there into the early roots of how DATATRAK began addressing that.
Jeffrey Green: I founded the company 14 years ago; at the time, I was a faculty member at the School of Medicine at Case Western Reserve. I was running clinical trials for 10 years, enrolling patients in studies and collecting data, so I knew what a nightmare the whole process was.
Angel Mehta: Is that because of all the regulations involved in bringing drugs to market?
Jeffrey Green: Not really. It's about the process -- or, lack of efficiency in that process. The drug industry identifies research sites on a one-by-one basis, and it does no sort of advanced planning such as…you've heard of real time manufacturing and processing right?
Angel Mehta: Sure.
Jeffrey Green: So real time manufacturing is where you get your raw materials together, and then you run an efficient assembly line. It served as a major driver for ERP software companies in the early days of enterprise software. Think of clinical trials as the assembly line for the development of a new drug, which in essence it is, where they handpick their raw materials one by one and they don't build any patient tributaries to access the patients -- a critical factor in deeming how fast your practice will go.
Angel Mehta: So what's the hold up? Seems like an 'old economy" problem to me…
Jeffrey Green: You're right, but the drug industry is a strange animal. It's the most antiquated process industry that still exists today. They're still using three-ring binders of paper to collect their data!
Angel Mehta: I don't understand how they can get away with that given how far the rest of the world has come and how important it is for them to have efficient processes….
Jeffrey Green: It's because they're in an industry where they can make 30% after tax profit to infinity…though granted; they've had a bad year in 2005. But when drug companies come out with a product, it gets patented, and is protected that way for 3-5 years or more. With a model like that, the tendency is to just pass on inefficiencies to consumers who then pay for such process inefficiencies at the pharmacy. Ultimately, people need these drugs to live, so they'll pay whatever it takes.
Angel Mehta: So you're saying the issue is due to a lack of competition?
Jeffrey Green: Yes. You couldn't get away with it in the automobile industry because… take a look at GM, for example. When you don't run an efficient process, the Japanese come along with modern plants and kick your ass in the marketplace. It's because you can go out and choose either a Toyota or an Oldsmobile, the more efficient process wins in the market. Drugs are completely different. When they come out, they have patent protection so that the Toyota you're looking at, nobody else can sell until it comes off patent.
I'll give you another example of gross inefficiency. When I was an investigator, I would get called by multiple Contract Research Organizations and multiple drug companies for the exact same project. What this phrase means is that inefficiencies of locating and contracting research sites are magnified on an individual basis.
Alternatively, why not select your CRO to manage your study and then move forward with getting it done. What this industry does many times is give the exact same protocol to several CROs and it's then a "horse race" to see who can sign up the sites for the trial the fastest. The CRO that locates and signs up the sites the fastest is "then" ultimately awarded the project. Well, what this process does is, inefficiently and confusingly deal with the research sites by being questioned about the exact same study when they don't even know if any of the queries from the CRO are real or not. Basically, it's a waste of valuable "manufacturing time".
Angel Mehta: Just to clarify for our readers, Contract Research Organizations are the companies that basically handle outsourced R&D work for big pharma, right?
Jeffrey Green: Basically, yes. And it happens that way because they put the CROs in a bidding war against each other. Part of the reason for getting selected is who can bring the research site (a hospital or clinic that is retained to perform the clinical trial) and I remember thinking, 'this is ridiculous." What was required was a network of research sites that have integrated databases of standardized contracts, pricing structures and affiliation agreements so that if Merck called with a 10,000 patient trial for cholesterol, you can actually get on your computer, search through your databases, get people to respond to that and basically place that trial within an afternoon. That was the concept.
So I left Case and formed the parent company of DATATRAK, which was called Collaborative Clinical Research. I got two rounds of venture financing and then took it public in 1996. We had 550 research sites around North America and the UK and the information platform overlaying across those groups of sites was, in essence, a railroad track of information, so I named it DATATRAK.
Angel Mehta: Based on what you've told me about the 'late adopter" mentality, I imagine getting early traction for the company was a nightmare?
Jeffrey Green: We could talk for hours about it. It belongs on '60 Minutes', I kid you not. What I will tell you, unfortunately, is that the challenge faced in the early days was the same as the challenge we face today. It comes down to this fact: people feel threatened. If you're changing an entire paradigm of an industry then people's behavior must also change and the insecure people in the world feel threatened by these changes. Consider this: We essentially replace the three-ring binders of paper and run all the clinical data over the Internet. We have users in 55 countries, so instead of waiting six to nine months for the paper to work its way through the system before it gets into a digital database for you to examine, it's available on our live database only seconds after the doctor entered it in Seoul, South Korea. But the amazing thing is we actually had the drug industry fight back on that because the people we sell to are usually the heads of data management. These are managers who have droves of people that they supervise.
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CEO: Jeffrey Green
Company: DATATRAK International, Inc.
About Jeffrey Green
Founder & CEO
- Company Tenure: 13 years
- Experience: Over 20 years
- Academic Background: B.S. from Purdue University and Pharm.D. from the University of Texas
- Author & Speaker: Authored over 90 publications and has been an invited speaker at more than 170 national meetings
About DATATRAK International, Inc.
- Founded: March 1992
- Offices: Cleveland, Ohio; Bryan, Texas; and Bonn, Germany
- Focus: ASP for the EDC industry
- Competitors: eResearchTechnology and McKesson
- Employees: Approx. 75
- Market Capitalization: $75.64 Million (Feb 22, 2006)
- Revenues: $ 15.73 Million (2005)
- Stock Market: NASDAQ -- "DATA"
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