VOI (Value of Insight) is a bio-pharmaceutical publishing and business intelligence consulting company. Its primary publications, pharmahandbook, Guide to the International Pharmaceutical Industry; and generichandbook, Guide to the Generic Drug Industry in the US, are important resources in more than 40 countries. The company has also created a data platform designed to increase return on investment for R&D and make the long, extremely expensive clinical trial process better, faster, and cheaper.
VOI is based in Ft. Lauderdale, Florida, and was founded in 1998 by president Todd Clark. Clark is the author of pharmahandbook and generichandbook, has advised numerous drug companies and biotech firms, and is a business professor at Tulane and Loyola universities. He says that VOI’s formation was a natural progression after he left his position as vice president of business development and media strategy at Medicus to get an MBA at Northwestern. He continued consulting for Medicus and eventually realized that there was no single, coherent source of information and analysis for the life sciences industry. He published the pharmahandbook and built VOI from there.
At present, VOI is focusing on a three-part initiative, InsiteInvestigator, that deals with global clinical trials. Such trials consume more time and resources and are more risky than any other stage of drug development and commercialization. According to VOI, for every day that a drug is in clinical trials, the opportunity cost of lost revenue and patent life is about $24 million. Pharmaceutical companies have turned to emerging markets for clinical trials to cut development time, but this approach is not without problems.
With InsiteInvestigator, VOI aims to solve some of the problems of clinical trials by providing three things: first, empirically-based information and analysis on successes and failures in a variety of areas (cancer, diabetes, cardiovascular disease, etc.) to help clients make decisions about all aspects of clinical trials. Second, VOI has created a kind of curriculum vitae of all trial sites and investigators around the world that study sponsors can use in determining which trials to sponsor. Finally, the platform includes a disease-mapping service that shows the relevant population in each site’s area. The price for InsiteInvestigator ranges from $1,150 to $40,000 depending on the number of licenses. The handbooks cost $750 to $13,500 and consulting $175 to $250 an hour.
The pharmaceutical business intelligence market has annual revenues of approximately $45 billion, or 5% of overall industry sales. Total demand for the services that VOI provides is about $25 billion. The company has calculated that there are approximately 170,000 economic decision makers around the world who have a need for its services, with an average customer value of $2,500. VOI works across almost the entire pharmaceutical industry in mature and developing markets: early stage drug development, post-patent commoditized generics, regulatory compliance, market strategy, clinical trial design and pricing and competitive strategy, and so on.
VOI has two distinct but interrelated revenue streams: publishing and consulting. It produces and sells publications created to appeal to a broad cross-section of the industry and that, while they provide significant revenue for VOI, are within clients’ research budgets. The company uses its publication customer list to sell high-end, targeted, consulting services. VOI says that over the past six years, the vast majority of its consulting revenues have come from executives who have purchased the company’s publications and then requested more in-depth analyses customized to them.
There are several competitors within each segment. The healthcare division of Thomson Reuters, DataMonitor, Epsicom, and Business Insights all provide business intelligence and consulting services that stem from their publishing businesses. However, these companies have all purchased information from VOI, so the relationship is not purely competitive. In consulting, Campbell-Alliance is the most notable competitor. VOI often works on a subcontractor basis with the large, generalized consulting firms such as McKinsey, Bain, Accenture, and BCG.
VOI has been profitable since inception, and revenues are about $450,000 to $550,000 annually. Cash flow has been and continues to be the main source of financing. Throughout 2010, the company has acquired consulting business, and publication sales have remained consistent. The company says that to move to the next level, it needs a working capital infusion of about $300,000, but it recognizes that it is not a candidate for VC funding at this stage.
VOI says that before it can hire new staff and move above the current plateau, it needs to complete development “and bootstrap all available resources” to launch and market InsiteInvestigator. The next stage would be hiring, especially an experienced pharma industry consultant and a senior research analyst. On the coattails of these hires, VOI wants to develop a professional sales organization, make its IP portfolio available across more information delivery platforms, and increase VOI’s market exposure.
The goals are to increase cash flow; improve, expand, and deepen offerings; and gain market share (based on the 170,000 decision makers described above, just 3% penetration would mean revenues of nearly $13 million). With higher valuation that comes with the achievement of these goals, says VOI, could lead to its purchase by a larger pharmaceutical company. In another scenario, VOI could sell its trademarks and applications while continuing to offer consulting services.
VOI presented at the roundtable on October 7, 2010. Todd and Sramana discussed whether Todd should raise money, and after discussing the business in more granular detail, they agreed that the business opportunity was about $5 million to $10 million, an excellent lifestyle business but too small for angels or VCs. Sramana encouraged Todd to keep building.
Deal Radar 2010: Nextrials
This segment is a part in the series : 1Mby1M Incubation Radar 2010