Cardinal.com Rx Market-Share Tracking Program In Beta Testing

Cardinal's "real time" market-share tracking information service is in beta testing, Chief Operating Officer John Kane told a March 24 conference unveiling the cardinal.com Internet site.

"The data we collect instantaneously through our current post-adjudication programs shows what supplies are being used by institutions," Kane explained. "It gives the executives of the manufacturing community the ability to see what is going on...immediately."

A pharmaceutical program "is in fact in beta testing right now with one of the major chains and with a few of the manufacturing partners," Kane added.

The program "gives patient de-identified information - prescription drug data - back to the drug companies via the Internet," Kane said. "It allows them to define the categories that they are looking at." The next phase of the program will allow manufacturers to provide information "through to the dispensers."

Cardinal first talked about the potential to develop a market-share tracking product for manufacturers in 1997.

Quintiles recently announced that its Rx market monitor will be providing "real time" market share data (¹ (Also see "Quintiles Rx Market Monitor Provides Real-Time Rx Share Info On Internet" - Pink Sheet, 27 Mar, 2000.)). IMS also plans Internet delivery of information to manufacturers through its TriZetto merger (² (Also see "IMS Envisions e-DTC, Disease Management Products With TriZetto Merger" - Pink Sheet, 3 Apr, 2000.)).

Cardinal has access to product dispensing data through several avenues: its Medicine Shoppe pharmacy franchise subsidiary; the Leader voluntary network; its inventory-ownership supply agreement with Kmart; and its Pyxis automated dispensing subsidiary.

Cardinal's initial focus is on using the Internet site as a means to further reduce waste from the distribution system. In addition to procurement and fulfillment functions, cardinal.com offers the "entelligence" systems to help customers "gain greater insight into their purchasing practices, design cost-saving product formularies and benchmark against best-of-class clinical and administrative practices," Cardinal said.

"Entelligence integrates, sorts and organizes data from billions of procurement transactions."

"As customers repeat the [ordering] cycle over and over again, they need to constantly re-evaluate what they are ordering and how they are ordering it. This is where the role of information, not data, comes in," Kane said. "For example, how could they order more each time versus more frequent small orders?...Are they using too many high-priced products?"

Cardinal is anticipating $2 bil. in business-to-business Internet revenue in fiscal 2001, which starts July 1.

"We are quite confident we will pass this number," CEO Robert Walter declared. "Sources for this revenue will include a gradual shift from EDI to the Web, extended presence in markets and new forms of sales such as transaction fees for new information services."

The cardinal.com site is already generating revenues ($3 mil. in January). The company said the number of hits on the site doubled to 500,000 in February.

Cardinal has invested more than $230 mil. to make its procurement, fulfillment and support systems available via cardinal.com, Walter said. "We are creating a separate business within Cardinal with a management team dedicated solely to leading our Internet issues."

The launch of cardinal.com also has an eye to the stock market, where Cardinal's shares have been down during the boom period for "technology" stocks.

Numerous start-up companies are attempting to stake out a position in the supply chain using "dot.com" strategies. Cardinal is emphasizing the scale of its existing operations as an advantage.

Cardinal has "an unmatched...logistics infrastructure," Walter said. The wholesaler operates 75 "highly automated distribution centers" in the U.S. that produce 25,000 deliveries each day. The company also has 67,000 Pyxis machines installed, which the company describes as "mini-distribution centers."

"Our Internet model goes well beyond order-taking, well beyond the customer's loading dock [and] the central supply and pharmacy areas. It goes all the way to the patient's bedside in the hospital and to the filling of prescriptions at the retail pharmacy," Kane said.