Some of the points are fair critiques of where Epocrates currently stands, but I think the overall position reveals a lack of practical understanding of the healthcare system for a number of reasons.
(1) Epocrates has a name. In medicine, a reliable name means a lot, even more so than in other industries. It may be true that eventually EMR’s will be sufficiently comprehensive with mobile solutions that supplant the need for apps like Epocrates as drug references. I can only imagine the bidding war that will take place when established EMR companies – particularly those chasing market leaders like Epic and Eclipsys (GE has awfully deep pockets and Centricity could use a boost) – decide to integrate an established, highly respected product into their EMR.
(2) Epocrates is more than a drug reference. I think a lot of market observers fail to recognize that – a business magazine recently named Epocrates one of its top 50 most innovative companies “for giving doctors and nurses instant drug reference.” That was a great reason in the late ’90’s when the company first opened up shop. With plans to establish a new EMR offering, expanding integration of CME activities, “interactive services” for pharma companies, and acquisitions that are expanding its software offerings, Epocrates is now clearly more than a drug reference. I think this is a critical expansion and is part of the potential that investors are buying into. If nothing else, in the long run it makes them an even more attractive acquisition target.
(3) There aren’t “more effective ways to reach medical professionals.” Traditionally, marketers reached medical professional in one-on-one interactions at lunches, dinners, etc. However, there is a well recognized trend towards limiting these interactions given obvious ethical questions. My own institution for example essentially bars all pharmaceutical reps from the facility. Pharma can certainly spend billions advertising through television, but that’s like using a sledge hammer to hang a picture. Even if only 0.01% of users look at an ad on an Epocrates product, that’s 10,000 healthcare professionals. It’s not easy to reach that many providers with a single investment.
In the end, I think Epocrates offers more than some of its skeptics – and even its supporters – seem to believe. Over the next several years, it is bound to face several challenges as it tries to justify the valuation that investors are making of the company. At least from our point of view however, Epocrates current good fortunes remain a great sign for mHealth overall and is something to be excited about.
This post was revised after publication to correct an error regarding current monetization of free users, discovered after review of the firms prospectus (but not on review of the website or financial media). References to how Epocrates is currently monetizing its free user base were removed from this post and we will write more about that in a future post.
