Phlexglobal, a UK-based outsourced clinical trial master file service provider and software developer, has acquired Cunesoft, a niche Munich-based regulatory data and document management upstart from its shareholders, including Bayern Kapital, High-Tech Gründerfonds, and OCCIDENT.
Consolidation in Clinical Trial Master File and Regulated EDMS Space
Data and associated documents represent the fundamental manifestation of drug development work product that ultimately becomes massive digital dossiers for regulatory authority review and approval. The drug sponsor organizes voluminous dossiers for both the Investigatory New Drug (IND) application for approval to commence clinical trials and the far more massive New Drug Application (NDA) in the form of the electronic common technical document or eCTD.
The clinical and regulatory segments of document management fit into a broader category known as FDA-focused electronic regulatory document management or EDMS. The regulated document management business among clinical research sponsors and sites has undergone a profound shift in the past several years.
Starting about 2012, Veeva Systems began converting many of the biggest drug sponsors from client-server-based Documentum—starting with the conversion of the trial master file implementation to their cloud-based Veeva Vault. Regulated document management in life sciences is segmented by clinical (including eTMF), regulatory (regulatory filings and submissions, and intelligence), manufacturing and quality assurance (includes SOP management), medical and commercial.
Life Science (biotech/pharma/med device) document management represents a grueling business, and Veeva leads the pack. Documentum (now part of Canadian consolidator Open Text) was the traditional king of this space and still has a large footprint but struggles to wrestle control back from Veeva and probably never will. In fact, at just over $1 billion in revenue, a key underlying premise of Veeva’s $22 billion valuation includes complete and utter domination of the life sciences EDMS market across segments.
Other than Open Text ($3 billion sales and $12.7b market cap), no other vendor comes close to the Veeva market capitalization among the players to control regulatory (e.g., GcP/GxP) based documentation, other than Oracle and IBM, but these two are not that active in the management of regulatory submission documents.
Other sizeable players include electronic data capture market lead Medidata (now part of Dassault Systems), which attempted to get into the document management/eTMF space with the CHITA acquisition (built on Box) which hasn’t led to any material market share. Multinational CRO Parexel has issued some press releases around its Perceptive Cloud deployed in the Microsoft Azure infrastructure-as-a-service cloud (this did include the Liquent regulatory document submission and intelligence applications). Still, as of this writing, there isn’t a lot of evidence that this offering sells off the shelf. Another potential consolidation aspirant, IQVIA, purchased (via Quintiles) Wingspan, which had a niche trial electronic master file (eTMF) that Pfizer had implemented. The Veeva cloud juggernaut hindered Wingspan growth, hence the sale to Quintiles. Since the acquisition, however, some key Wingspan principles have moved on, and more than likely, these products can get lost in an organization such as IQVIA—with literally hundreds of products and offerings.
PhlexGlobal Enters Market
Although Phlexglobal, founded in 1997, started as a business process outsourcer for clinical trial documentation (e.g., helping sponsors organize their trial master files), with private equity ownership came the driver to push up valuation and hence, the need to develop intellectual property in the form of a software product called PhlexeView to compete in the eTMF market. They have since added modules for CROs and archiving.
However, although privately held, and hence specific revenue breakout not public at granular levels, for most of their history, most revenues were derived by TMF services. Ironically, it was PhlexGlobal’s deep domain knowledge of TMF document processing that kept them growing despite Veeva’s domination—they could keep selling into the need for document processing (even selling services around Veeva) while building up their software platform. According to one report by 2018, they generated a turnover of nearly 17 million pounds by 2018.
Private Equity Ownership Changes Hands
PhlexGlobal sold most of its shares to private equity group Inflexion in 2011. By 2014, Inflexion reported selling off the venture to Bridgepoint Development Capital for a 2.8X return on investment. Bridgepoint Development Capital held on to the asset until 2016 when it sold a majority of its shares to private equity firm Vitruvian.
Now Phlexglobal buys Cunesoft to tap into its regulatory software product and know-how in a bid to bolster up and attempt to expand regulatory intelligence product sales among clinical sponsors. Based in Munich, Cunesoft was founded in 2013 by an ex-NextDocs European sales lead. NextDocs was one of a few successful FDA 21 CFR Part 11 compliant document management systems built on Microsoft SharePoint that have since then been acquired as the wave of interest in SharePoint in the industry flowed and then ebbed. The other SharePoint-based regulatory and clinical document management firm that was acquired became part of what is now DXC Technology.
Cunesoft embarked down a path of innovation in what has traditionally been a plodding, conservative, and slow-moving group. The principles behind Cunesoft were relatively young, spry, and unorthodox as compared to some of the standard life science-based upstarts in Germany. The Veeva market disruption forced market entrants to raise the bar. Hence, the crew from Munich centered their development on cloud, AI, and “intelligent regulatory solutions” from regulatory master data management and document management to a regulatory information management and electronic common technology document publisher as well as a regulatory “distiller” employing artificial intelligence to streamline the regulatory enterprise.
Although Cunesoft had a dedicated entrepreneurial drive and undoubtedly some smart product development, they faced an uphill battle from the start—in such a conservative, slow-moving market with sales cycles that can endure in the years combined with the consolidation pressures of the day it made sense, even with supportive investors, to join forces with a bigger company. They couldn’t grow fast enough to remain independent—as the sale counted an estimated 25 to 30 employees.
How will they Compete
Now that Phlexglobal has Cunesoft, they will make a push to capture regulatory intelligence product market share in a battle against Veeva, IQVIA, Parexel—not to mention an Open Text that is not giving up on its Documentum asset—and other niche vendors. They will now position their “suite of solutions” that serve to “unify” clinical operations and regulatory processes combining subject matter expertise, technological development, and the deeper pockets of PhlexGlobal. They will have their work cut out for them as the same challenges exist, and Veeva is much bigger than Phlexglobal—the marketing spends cannot compare. On the other hand, PhlexGlobal will sell services even in Veeva accounts, which will lead to revenue growth. Much regulatory document processing is outsourcing so PhlexGlobal can build a center of excellence leveraging the Cunesoft technology and then compete for head-on against Parexel, Accenture, and others.
Call to Action: According to their recent press release, members of both teams will be available to discuss their vision for the future of TMF and Regulatory management at the 9th Annual Trial Master File Summit in Orlando, Florida, January 21st through 23rd, as well as the DIA Regulatory Submissions Information and Document Management Forum (RSIDM) in North Bethesda, Maryland, February 10-12.