General
Dendrite International, Inc. (collectively, with its subsidiaries, the “Company,” “Dendrite,” “we,” and “our”) was incorporated in 1987 with a mission to improve sales and marketing productivity for pharmaceutical and other life sciences companies. Dendrite pioneered and quickly became the standard for pharmaceutical sales force automation, enabling transparency between the home office and its sales force—a relationship that was formerly detached and paper-based.
Dendrite leverages its extensive knowledge of the pharmaceutical industry’s complex and unique selling process to deliver leading and adaptive solutions. Our solutions are deployed in each of the world’s top 20 pharmaceutical companies, in hundreds of large, mid-tier, and emerging manufacturers, and in 59 countries around the globe. Every year hundreds of millions of interactions are made using Dendrite’s sales, marketing, clinical and compliance solutions that are closely aligned with the growing needs of the pharmaceutical industry
In the mid 1990s, with the advent of prescriber volume data, the pharmaceutical industry underwent a significant shift in the way it went to market, aligning its efforts toward scaling sales forces to maximize the number of contacts made with the highest volume prescribers. Dendrite led the way with innovative functionality to support more complex sales organization structures and integrated field support solutions to improve productivity among the growing sales force
Over the past few years, a new evolutionary shift has taken shape as only a handful of pharmaceutical companies have the sales force sizes to saturate the doctor’s office, and prescribers have become overwhelmed by sales visits. This trend, coupled with the decreasing pipeline of new blockbuster drugs to carry growth, has led the pharmaceutical industry to seek innovative solutions to drive market share. The industry is moving away from a mono-focal dependence on sales representatives toward a more integrated sales and marketing approach that allows it to reach the right prescribers at the right time with the right message through the right channel. As the complexity of selling, marketing, complying with regulations and supporting clinical trials continues to increase, Dendrite has continued to evolve and expand itself to cater to the industry’s emerging needs.
Dendrite Solutions
Dendrite helps pharmaceutical companies communicate effectively and efficiently with prescribers to provide the information and knowledge that will help doctors select the best available medication to improve their patients’ health. Our solutions are grouped into four categories: Sales Solutions, Marketing Solutions, Compliance Solutions, and Clinical Solutions.
I. Sales Solutions
In an environment where time with the prescriber is decreasing and competition is increasing, field sales representatives need state-of-the-art tools and information that allow them to achieve their ultimate objective of delivering timely and pertinent information to their customers—the prescriber. Our suite of Sales Solutions includes a comprehensive field and home based software suite designed to enable pharmaceutical and life sciences companies to manage sales force activities. The full suite of software and services in this category includes:
i. Sales Force Effectiveness (SFE) Software
A comprehensive, field-based product suite that helps pharmaceutical companies manage sales force activities and includes both software licensing and maintenance.
· Mobile Intelligence Ô . (Version 4.0). This is the next generation successor to WebForce Ô , Dendrite’s flagship Sales Force Effectiveness (SFE) solution used to provide visibility and direction between the pharmaceutical home office and the field sales representative. As sales force automation solutions became more complex over the years, there grew a need for a solution that not only provided better functionality, but also allowed for better use by the sales representative. Mobile Intelligence was developed using human centered design principles to improve product usability via a more intuitive user interface that maps directly to the daily workflow of sales representatives. The solution improves field sales productivity as it promotes more efficient and effective detailing interactions with customers and is available as an enterprise or On-Demand, hosted version. Mobile Intelligence is built on a Microsoft .NET framework that includes TIBCO Enterprise Application Integration (EAI) technologies. The platform enables an open, extensible and configurable solution that is easily integrated into a sales and marketing system environment.
· WebForceMedSurg Ô . An SFE tool used to manage the specialized needs of medical device and surgical sales forces.
· WebForceCG Ô . An SFE tool used to manage the specialized needs of consumer goods sales forces globally.
· j-force Ô . A suite of SFE tools specifically developed for the Asian hospital-driven pharmaceutical market.
· J-centreSYNERGY Ô . A solution that enables information exchange between pharmaceutical companies and wholesalers.
· VisiForce Ô . An SFE tool specifically for life science and pharmaceutical companies in emerging international markets where organizing, targeting, and evaluating potential prescribers is essential for the commercial success of sales forces.
· Application Integration Server (AIS). The AIS is the integration hub for Dendrite’s entire technology solution suite. It is a cost-effective, flexible, and practical architecture that provides pre-built integration between Dendrite products and allows Dendrite customers to integrate Dendrite solutions within their own environment. AIS enables customers to make better and more informed decisions in an environment where data and activity must be shared and accessed at an individual prescriber level. The AIS uses universal integration technologies (XML, Web Services), which promotes the reuse of existing sales and marketing infrastructure investments and standards.
· Analyzer Ô . A flexible, easy-to-use data analysis tool that standardizes the decision support and reporting processes for all levels of a pharmaceutical sales organization. Analyzer is available as a .NET based as well as a non-.NET based solution.
· Organization Manager ®. A comprehensive sales force resource management solution that was developed to minimize interruption to the sales process, as pharmaceutical companies rapidly redeploy and reorganize their sales force. The solution manages complex field sales alignments linking sales representatives and managers to customers, geographies, products, territories, and teams in order to promote an efficient and productive sales environment.
· ForcePharma Geo Ô . A geographical-based business intelligence tool used to share objectives or sales results between the home office and the sales force. It provides the sales force with an easy and intuitive way to analyze performance indicators against the strategy set by the home office.
ii. Customer Analytics
· 360 ° Insights Ô . As the pharmaceutical industry continues to experience pricing, regulatory and pipeline pressures, sales and marketing integration has become paramount to improving bottom line results. Dendrite’s 360° Insights enables sales and marketing integration by providing transparency into brand, market, and sales performance in one software application. This transparency enables integration and collaboration between the sales and marketing organizations to gain comprehensive, accurate, and actionable insights about their customers and their brands that will support and grow their business by making adaptations to sales and marketing tactical plans based on measured market responses.
· Nucleus Pharma®. Nucleus Pharma is an end-to-end customer information management solution that enables users to capture, centralize and manage customer-related information across the enterprise and use this information to make critical business decisions. Creating this “single view of the customer” enables the pharmaceutical company to leverage up-to-date information for improved relationship marketing and achieve more efficient selling.
iii. Support Services
Pharmaceutical companies are being challenged to increase their productivity through improved business process support, a robust technical infrastructure and seamless systems integration. Dendrite’s unique depth of pharmaceutical industry knowledge gained over nearly two decades of unrelenting support has yielded a suite of effective and proven business process alignment solutions that enable clients’ to meet these goals.
· Integrated Support Center. Support services that enhance the productivity and success of mobile field sales professionals and home office personnel, including support for Dendrite business applications, third-party software, custom applications, and communications. Unlike a traditional help desk, Dendrite’s Integrated Support Center is pharma-focused for greater depth of knowledge and uses multiple, integrated channels to create a complete view of support issues and allow for efficient resolution. It is a single site solution center for sales representatives that have problems executing their job.
· Hardware & Asset Management Services. This service focuses on minimizing pharmaceutical sales representative downtime by expediently repairing and/or replacing non-functioning field-based hardware, such as laptop computers, tablets, slates, desktops, or handheld devices. In addition, this service also focuses on tracking client assets and performing inventory management functions.
· Implementation Services. Nearly two decades of delivering customer relationship management (CRM) and SFE solutions back this service, which provides pharmaceutical and life sciences companies with unique industry insight, expertise and technical capabilities for implementing today’s business application software solutions that best reflect the customer’s current or desired future practices.
· Training Services. Training solutions tailored to a pharmaceutical and life science company’s specific needs.
· Production Services. Technical operations services to maintain customer applications/systems readiness.
· Managed Hosting Services. Provides a total outsourcing alternative for customer system, software, and business application components, including servers, databases, communication networks, and data processes, which are housed within Dendrite’s state-of-the art Data Center facilities, or with Mobile Intelligence technology, available for on site support.
Note: In 2005, the Company’s Sales and Sales Support Solutions were marketed under the First Source Sales Applications and First Source Sales Support Solutions brand categories.
II. Marketing Solutions
With increased industry pressure for brand performance as a result of fewer blockbuster drugs and shorter patent expiries, the pharmaceutical industry has sought more efficient ways to reach its prospects versus traditional mass-marketing techniques. Increasingly, the pharmaceutical marketer is striving to reach prescribers based on individualized adoption and prescribing behavior. Dendrite’s Marketing Solutions include powerful targeting tools, unique execution channels and the ability to measure campaign effectiveness to enable more precision to reach prescribers at the right time, through the right channel with the right message.
i. Targeting Solutions
· ScripMax Ô . United States business intelligence solutions that access anonymous longitudinal patient data (LPD) to identify individual doctor prescribing changes. ScripMax was developed for use in marketing campaigns to provide more precise targeting versus traditional volume-based solutions. It enables the brand to more quickly identify prescriber brand switching behavior and behavioral tendencies which can be used to craft highly targeted, personalized proactive messages.
· Physician Connect SM . Dendrite’s Physician Connect solution enables brand teams to identify prescribers that influence peer script writing behavior. Unlike traditional key opinion leader solutions, Physician Connect identifies local and regional influencers within social or professional networks of trust. By targeting these influencers with specific marketing and sales messaging, the rapid adoption of a new product by these leaders catalyzes its adoption in localized markets.
· Practitioner Validation and Cleansing Services. This solution reconciles physician data through standardizing, matching and merging out duplicate information. Clean, up to date files that uniquely affect each individual prescriber are the prerequisite for integrated marketing and sales activity.
· Optas TM Database. The Optas Database, used primarily for targeted patient compliance and relationship marketing programs, captures and centralizes patient records acquired through various customer opt-in programs that comply with HIPAA (Health Insurance Portability and Accountability Act) regulations to ensure privacy at all times.
· Pharbase TM . A prescriber database service that provides a source of intelligence to pharmaceutical companies. Powerful marketing programs can be developed with precise targeting characteristics based on elements such as doctor profile data, response to previous promotional approaches, specialty, interests, areas of influence and socio-demographic data contained in Pharbase.
· Docscan®. A European, regional and country based physician profiling service that enables pharmaceutical customers to analyze physician behavior, market trends, and demographics.
Docscan provides customers with business intelligence for a broad range of strategic sales and marketing actions, including projecting prescriber product acceptance, predicting consumer utilization and preparing subsequent promotional initiatives.
ii. Execution Solutions
· Medical Dialogue SM . A fully refined, pharmaceutical industry-specific service that provides telephone-based, interactive discussions between Dendrite’s own health care professionals and physicians targeted for specific promotion by our customers. The service builds product awareness using a disease management approach.
· Loyalty Programs. Comprehensive programs that help foster a sense of patient brand loyalty for specific pharmaceutical products. Loyalty Programs help maximize the effectiveness of direct-to-patient marketing through a one-on-one channel; reinforcing doctor prescribing intention. These programs use various mechanisms such as loyalty cards, debit cards, vouchers, rebates, email and other channels.
· Optas TM E-mail. Optas E-mail is a privacy-safe software solution designed specifically for pharmaceutical companies to create and deploy high volume and personalized e-mail campaigns to a target audience .
· Single Source Sampling ® . A cooperative, cost-effective mail and fulfillment program to target non-called or infrequently called upon physicians used primarily to market mature products
· Direct Mail . Dendrite’s direct mail services range from personalized mail creation and distribution to custom mail merge and dimensional mail projects.
· STAT/GRAM ® . A branded communication service that is favored by many pharmaceutical companies to distribute important medical news such as product launches, labeling changes and product safety recalls.
· Telecommunications/Call Center. A service that enables interactive communication with health care professionals via leading-edge call services, broadcasting, and Web-based technologies. Dendrite customizes programs and offers live operator or interactive voice response systems.
· CME Marketing. A service that allows a continuing medical education provider’s message to reach its key target audience through proprietary lists.
· Publication Circulation Management. Expert services to support paid, controlled, and single-sponsored publications. Dendrite’s extensive database resources make it possible to customize the profiling and targeting of healthcare professionals to meet a customer’s targeting objectives.
iii. Measurement Solutions
· Optas Ô Campaign Management Solution. A platform for designing, executing and managing pharmaceutical marketing campaigns. The campaign management suite incorporates several components of the marketing process including segmentation, message management, timed communications, response management, program registration and privacy protection. The suite is delivered in a hosted, online format and consists of campaign planning tools, an online survey tool, an email deployment tool and a reporting tool for tracking and measuring the progress and return of a campaign.
Note: In 2005, the Company’s Marketing Solutions were marketed under the First Source Integrated Marketing and First Source Customer Insight brand categories.
III. Compliance Solutions
A solution suite powered by Dendrite’s BuzzeoPDMA division. These solutions unite market-leading software tools with consulting, and professional services to help pharmaceutical and other life sciences companies meet federal and state regulatory compliance requirements. This comprehensive solutions suite supports the pharmaceutical product lifecycle through the following components:
i. Sampling Solutions
· Sample Guardian Ô . A complete sample management tool used to track, analyze and store all drug sample activity. Sample Guardian helps enable pharmaceutical companies to comply with government regulations, specifically in the United States, but with growing applicability in other countries.
· FDA/PDMA Consulting . A consulting service that addresses the needs of pharmaceutical and life sciences companies in the design or redesign of their sample accountability and compliance programs.
· Intelligent Allocations. A comprehensive solution, combining high value services with Web-based ordering technology that enables pharmaceutical personnel to manage and optimize the allotment of product samples.
· Distribution and Fulfillment. Services for distribution and fulfillment of pharmaceutical drug samples through Dendrite’s distribution facilities. These distribution centers include operations such as receiving, inventory management, fulfillment, shipping, returns and document retention.
· Reconciliation Services. Services designed to enable internal reconciliation of prescription drug samples along with the evaluation of potential significant loss of field sales representatives’ drug sample inventories. These services are guided by client-specific procedures and by regulatory requirements, such as the Prescription Drug Marketing Act (PDMA) in the US.
· Auditing and Inventory Services. Comprehensive services that include annual inventories, random audits, and for-cause audits of field sales representatives. Additionally, these services include practitioner office visits, signature verification programs and sales representative’s sample closeouts.
ii. Federal and State Regulatory Compliance Solutions
· Regulatory Consulting Services. Services in this suite include compliance auditing and gap analysis, mock inspections, standard operating procedure development, program design and implementation, ongoing support and guidance, staff augmentation, and liaising with federal and state agencies. Consultation is provided to pharmaceutical and other life science customers in the regulated areas of controlled substances, prescription drugs, list I chemicals, and medical devices.
· Regulatory and Compliance Training Services. Complete regulation and compliance-specific training and collaborative educational solutions delivered through traditional, web-based or blended training methods. Dendrite develops and delivers training-program content, tailored to specific requirements.
· State Services. Dendrite provides guidance to companies to assist them with understanding state regulatory requirements and registration processes related to research, manufacturing, and the distribution of pharmaceutical products, controlled substances, over-the-counter products, and medical devices. Services are designed to provide assistance in licensing, corporate changes, surveys, state license monitoring, state legislation and regulation monitoring, Medicaid program, and Puerto Rico regulations.
· Document Scanning and Data Capture. An optical scanning, imaging, character-recognition, and retrieval system designed for efficient, economical sample accountability to assist our customers with their regulatory compliance requirements.
· Computer Systems Auditing, Validation Services and Information Technology Security. Services focused on ensuring that our clients’ software applications and systems meet business and regulatory requirements.
Note: In 2005, the Company’s Compliance Solutions were marketed under the First Source Sample and First Source Compliance Solutions brand categories.
IV. Clinical Solutions
Dendrite offers a set of solutions designed to benefit the clinical trial process by assisting in effectively initiating studies, identifying potential investigators and patients, providing ongoing support and training to investigators, conducting pre- and post-marketing risk assessments, facilitating safety reporting, and providing data analysis of trial and competitive drugs. Services include:
· Clinical Trial Accelerator Services SM . Allow pharmaceutical and other life sciences companies to expedite the initiation of clinical trials, including protocol feasibility testing, eligible patient population profiling, and investigator identification/qualification.
· Clinical Trial Effectiveness Solutions Ô . Designed to ensure two critical success factors for trials utilizing clinical trial technologies: 1) trial site productive up-time, and 2) trial site satisfaction. These success factors are achieved through Dendrite’s site assessment services, provisioning services, connectivity services, application and data hosting services, site training and site support.
Proactive Risk Management SM . An intelligence-based service aimed at delivering actual drug usage data and analysis through observational studies and safety tracking tools that can be used to identify and analyze risk situations before they adversely affect the product life cycle.
Customers
Our solutions are deployed in each of the world’s top 20 pharmaceutical companies, in hundreds of large, mid-tier, and emerging manufacturers, and in 59 countries around the globe.
Approximately 24% and 10% of our total revenues in 2005 came from our two largest customers, Pfizer and Sanofi-Aventis, respectively. Approximately 28% and 36% of our total revenues in 2004 and 2003, respectively, came from our largest client, Pfizer.
Competition
Our solutions compete with others principally on the basis of industry applicability and product flexibility. They also compete on the basis of name recognition, global competence, service standards, cost, breadth of customer base and technical support and service. We believe that our solutions compete favorably with respect to these factors and that we are positioned to maintain strong market leadership through innovative new product and application developments and continued focus on support services.
While we face a number of significant competitors in each of our specific market areas, we believe that there is no single competitor that currently offers our breadth of solutions in the pharmaceutical and life sciences industries on a worldwide basis. We expect competition to increase as new competitors enter our markets and as existing competitors expand their product lines, consolidate or offer more compelling solutions. We believe that we have distinguished ourselves and are well positioned in the pharmaceutical market due to our combination of deep pharmaceutical business knowledge, recognized technical support, depth of personnel experienced in the pharmaceutical industry and the quality of our proprietary products and product architecture which is uniquely suited to the pharmaceutical industry. In addition, we face competition from current customers and potential customers who may elect to design and install or operate their own systems.
Research and Development
We continue to take advantage of new technologies in developing new products and services. We work closely with our customers to develop new products designed directly for their business needs. We recorded approximately $6,094,000, $9,316,000, and $11,633,000 of research and development expense for the years ended December 31, 2005, 2004 and 2003, respectively. Our research and development expense plus additions to capitalized software development costs, was approximately $10,958,000, $15,202,000 and $14,815,000 for the years ended December 31, 2005, 2004 and 2003, respectively. We capitalized less costs in the year ended December 31, 2005 than in 2004 due to the development for the release of our next generation SFE solution, released in 2005.
Dendrite has capitalized certain costs related to the development of new software products and the enhancement of existing software products consistent with Statement of Financial Accounting Standards No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed.” Capitalized software development costs net of accumulated amortization were $10,341,000 and $9,170,000 at December 31, 2005 and 2004, respectively.
Seasonality
Historically, we have experienced lower spending from our customers in the first and third quarters as compared to other quarters. Due to the recent growth of our international operations, we have been further impacted by lower third quarter spending by our customers outside the United States.
Proprietary Rights
Dendrite relies on a combination of methods to protect our proprietary rights, including:
· trade secret, copyright and trademark laws;
· non-disclosure and other restrictive covenants with our customers, vendors and strategic partners; and
· non-disclosure and other restrictive covenants with our executive officers and other key and technical employees and consultants.
Existing U.S. trade secret and copyright and trademark laws provide only limited protection for our proprietary rights, and even less protection may be available under foreign laws.
Employees
As of December 31, 2005, the Company employed 2,793 employees: 1,456 in the U.S. and Canada; 858 in Europe; 279 in the Pacific Rim; and 200 in Latin America.
Geographical Areas
See Note 13 of the Notes to Consolidated Financial Statements concerning information relating to the Company’s geographic areas.
Executive Officers
The following table identifies the current executive officers of the Company:
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Name |
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|
Age |
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Capacities in Which They Serve |
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John E. Bailye |
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52 |
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Chairman of the Board and Chief Executive Officer |
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Joseph Ripp |
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53 |
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President and Chief Operating Officer |
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Jeffrey J. Bairstow |
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47 |
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Executive Vice President and Chief Financial Officer |
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Christine A. Pellizzari |
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38 |
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