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Minnesota health IT firm sees rapid growth, now seeks capital

Med-Net solutions, a Minnetonka-based health IT firm, has made Inc.’s list of top 5,000 fastest-growing privately held companies.

As the e-clinical software market has seen rapid growth, Minnetonka, Minnesota-based MedNet Solutions, which makes web-based clinical study management tools, has shared in some of that bounty.

Earlier in August, the health IT firm made the list of Inc. magazine’s 5,000 fastest-growing, privately held companies for the fifth year in a row. This time, MedNet Solutions ranked 4,085 and showed a 30 percent growth in three years with revenue climbing to $11.2 million last year from $8.6 million in 2008.

MedNet was profitable between 2003 and 2008. Then in 2009 and 2010, the macroeconomy dumped it in the red, said Rob Robertson, the firm’s co-founder, president and CEO. Since the fourth quarter of 2010, the company has been profitable again and Robertson projected that 2011 will close in the black. The company, founded in 2001, has 48 employees. Having launched a new product in March, MedNet is aiming to raise more money in the next year.

Historically, clinical studies were conducted largely on paper, Robertson said.

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“Even five years ago … there was maybe 25 to 30 percent of clinical trials that were using electronic data capture,” Robertson said. “Today, most industry experts say it’s probably closer to 60 to 70 percent. So our industry has been growing and that’s one of the reasons for our growth.”

Another reason for success has been customer loyalty where many customers have MedNet Solutions design and manage their clinical studies for one study and continue to keep coming back for additional studies, Robertson said.

Customers of the company include medical device industry heavyweights like Medtronic and St. Jude Medical, pharma giants like AstraZeneca and Eli Lilly, and biotechnology names like Genentech. Robertson said MedNet has worked with 75 companies and is currently working on 175 clinical studies. The company also works with clinical research organizations.

Over its 10-year history, MedNet has raised $1 million. Now, with a second product launch, Robertson said the company is looking to raise additional capital, but hasn’t decided exactly how much.

The product — called iMedNet — is a whole lot cheaper than the company’s single product to date — Enlighten. An average study using the Enlighten fully outsourced model of designing and managing a clinical study costs $200,000 to $250,000. With iMedNet, where customers use MedNet’s software to build their own studies, an average study costs roughly a quarter — between $50,000 and $75,000, Robertson said.

Along with being cheaper for companies, it’s also cheaper for MedNet. That’s because landing a big study necessarily meant hiring more people who are able to service and build the project.

“It opens up the market to us; it gives us the chance to grow without adding a lot of people to the company,” Robertson said.

Companies tend to like it for more than just the price compared with competing web-based solutions.

“What customers have told us that you need a highly technical person to get trained … on how to build the studies with a lot of our competitor tools,” Robertson said. “With our product, if you have some basic computer skills and understand the clinical study market … you don’t need to be a developer.”

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The main player in the field is Phase Forward, now part of Oracle. Earlier it raised millions of dollars before going public in 2004. Oracle bought the company for $685 million in April 2010.