Five years ago, Oracle and SAP were virtually tied for the top spot for revenues in the life sciences market. But with an aggressive acquisitions strategy and its business unit focused on selling to that market, Oracle has opened up some daylight with its archrival.
Last year, Oracle established its Health Sciences Global Business Unit, a group dedicated to helping health sciences organizations discover, develop and market products to cure diseases. Analysts credit the unit with playing a pivotal role in pushing Oracle to the top of the life sciences heap.
"A dedicated business unit focused on healthcare and life sciences has clearly helped differentiate them and strengthened their position," said Dr. Alan Louie, research director with IDC Health Insights.
The acquisition of companies such as Relsys, a provider of drug safety, risk management and analytics applications for the health sciences, and Conformia Software, makers of product and process lifecycle management (PPLM) software, have further fueled that momentum over the past few months, analysts believe.
Yet neither company is dominating the market. In a recent report listing the top 10 life sciences software vendors, IDC had Oracle on top with a 7.43% share of the $2.95 billion spent on life sciences software. SAP was second with 5.52%.
While SAP maintains a comfortable lead over third-place finisher SAS, SAP's preference for focusing on internal development rather than acquisitions, coupled with a number of key executives leaving its life sciences initiative, has resulted in slower revenue growth, according to the IDC report.
Some analysts believe SAP has lost momentum in the life sciences market because it has been slow in delivering breakthrough solutions, particularly with its business intelligence products.
"A lot of the industry groups are looking for more innovative solutions from [SAP's] BusinessObjects to help with performance management and other areas so they can get better information analytics out of their existing systems," said Ray Wang, a partner with Altimeter Group.
SAP also needs to do a better job of producing dedicated offerings in the life sciences market, according to IDC's Louie, which will require significant financial investment if they choose to develop those offerings internally.
"A lot of the plays in the life sciences are mature and intensive in terms of investment," Louie said. "It is possible for [SAP] to get there through an M&A strategy, but it would have to be very targeted. What they have going for them is one of the major business intelligence components [BusinessObjects] that plays well in life sciences."
Louie and other analysts agree that BusinessObjects has better brand name recognition than Oracle's Hyperion product line in the business intelligence space, as does SAS.
But what has also helped propel Oracle's financial fortunes from a product technology standpoint is its focus on piecing together an integrated clinical ecosystem, something that users are beginning to gain a greater appreciation for.
"This idea of the interconnected clinical ecosystem is something Oracle is on the leading edge of because they have a strong database with applications that can sit on top. The fact that they can connect them tightly is a direction the industry would like to go in," Louie said.
One organization that prefers Oracle's integrated solutions approach is Hologic Inc., maker of a variety of diagnostic and surgical devices it sells to hospitals and other healthcare organizations. How it ended up using several Oracle applications in concert with each took a serendipitous route.
"We used a number of products that weren't from Oracle, such as Agile and Hyperion. But as Oracle began buying everyone, we became all Oracle. We were lucky we picked things acquired by Oracle, it could have been things acquired by SAP," said Dave Rudzinsky, a senior vice president and CIO with Hologic.
This integration-by-accident approach has worked out largely because Oracle has done a good job at making all the pieces work together without too many glitches and, in Rudzinsky's opinion, the company acquired all the right applications.
Another organization that prefers Oracle's integration approach is The Ottawa Hospital in Canada. Earlier this year, the hospital automated delivery of supplies to surgical suites by integrating Oracle's E-Business Suite with its own operating room clinical systems.
"The [E-Business] Suite is pretty fundamental for us in terms of making end-to-end integration happen with our supply vendors," said Cameron Love, vice president for facilities planning and support services and clinical programs. "I have to say it has reduced our costs and we got the efficiencies we were looking for."
Hologic did consider offerings from SAP before going with a competitive offering from Oracle, but in some cases, the company had difficulty making changes to them to make them smoothly fit into its existing environment. Still, Hologic didn't swap out the SAP system in a German-based company it bought, although managing that shop in an all-Oracle environment has been challenging.
"We integrate acquisitions quickly by moving them onto Oracle. With this German company, we didn't know what we were going to do with the business long term. But there was a piece of it connected to our medical devices business. So I am managing an SAP shop and it's going OK. It just takes more time and effort to get some things done," Rudzinsky said.