Articles
The Vendor Tango -
Four Traits to Help You Choose Your EDC Technology Partner Wisely
By Timothy Pratt, PhD
Originally published in Applied Clinical Trials EDC Supplement, March 2008
Favorable Characteristics
Financial stability. You'd probably be shocked to learn that in my experience on the vendor side, fewer than 15% of all customers ever ask about our financials - even the very large customers, of whom we have more than a few. Is this unique? No. In various inquiries and interviews conducted in researching this article, I found similar rates of 10% to 15%. In speaking with sponsors and CROs at recent conferences about financial stability, it became obvious that the idea had never occurred to most. But the issue of financial stability is both important and problematic.
Why problematic? At a very fundamental level, the overwhelming majority of EDC/eClinical vendors are privately held companies. As such, they do not have to - and in most cases do not - talk about their profitability or financial condition. The few publicly traded companies are required by law to file financial updates providing details on income, cash-flow, balance sheets, expenses, strategic directions, threats, and all sorts of things that have to be right or someone may be going to prison when the SEC investigates. Of the well known publicly traded companies, the minority are profitable and the others are losing money consistently and have done so for quarter after quarter for a protracted period of time.
That alone should cause major concern in the vendor selection process. If expenses consistently are more than income, sooner or later the business will shut down or other major disruptions will occur. If your prospective vendor is publicly traded, finding information on their financial state is very easy via the Internet and should be a fundamental element for review.
What about the private companies? It's very simple: ask. Some people you can trust and some you can't, but you can solve that problem by asking for audited financials and/or taking a financial person along with you for the vendor audit. (You are doing an audit, right?) If you don't have a financial auditor inhouse, then take a consultant with you. If the vendor responds, as some have been known to do, with something like, "We're a private company, we don't have to disclose that," then run away, as you have your answer.
Also, watch out for companies that are unduly reliant on one or two customers for a large chunk of their revenue; if something happens in that relationship, you'll suffer too as the vendor undergoes major corporate stress.
