Pfizer to form venture with IBM, Microsoft to sell software to doctors
Firms will go where others have encountered little progress
By Ann Carrns and Rebecca Buckman
THE WALL STREET JOURNAL
March 29 — Drug maker Pfizer Inc., moving onto the turf of health-technology companies such as WebMD Corp., is expected to announce Thursday that it will form a joint venture with partners Microsoft Corp. and International Business Machines Corp. to sell software and services to doctors.
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THE NEW COMPANY doesn’t yet have a name or a chief executive, and the companies declined to specify how much money the participants are contributing. But in its stated goals, the venture echoes what companies such as WebMD have been trying to accomplish, with frustratingly slow results. That includes eliminating the costly administrative paperwork that ties up much of doctors’ time and automating clinical functions, such as prescribing.
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Big employers and health-policy makers increasingly are promoting the use of technology to reduce medical errors, such as those caused by illegible handwritten prescriptions. But companies such as WebMD have struggled because doctors have been slow to adopt such technologies in their daily practices, and it has been difficult to link up incompatible systems. Privacy concerns have been raised about electronic transmission of medical information.
But Pfizer and its partners nevertheless see great potential. “Technology is having, and will continue to have, an impact on health care, and, we believe, for the better,” said Peter Brandt, senior vice president of finance, planning and business development with Pfizer’s pharmaceuticals group. “For Pfizer to have a front-row seat is strategically critical.”
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The offering, he said, represents a “natural extension” of the relationship that Pfizer has with physicians through its pharmaceuticals sales force, known as “detail” representatives.
Pfizer’s 8,000 representatives won’t actually sell the software, but they will talk it up while visiting doctors to make drug pitches and refer physicians to the venture’s own sales force for follow-up. The venture mainly will target doctors who practice in small groups, rather than physicians affiliated with large clinics or research institutions.
Doctors may be wary of a software system backed by a drug company. But Mr. Brandt said there are no plans to use the new system to promote Pfizer products or to advertise to doctors. “Credibility with physicians is key to Pfizer’s core business, and we aren’t going to do anything to jeopardize that,” Mr. Brandt said.
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Plans call for the system to use the latest in Internet and wireless technologies, such as hand-held computers, to help doctors issue prescriptions, check lab orders, run their offices and even communicate by e-mail with patients. Details of how the service will be priced remain to be determined, but it is likely that doctors will be asked to pay subscription fees. The venture expects to make an acquisition of a closely held company in the next month to establish a basic product, and will build from there with a goal of introducing an expanded offering by the end of the third quarter.
IBM will provide computer hardware and installation services, and will act as the “help desk” for doctors’ practices to make sure the systems function smoothly. It is likely most practices would use the software on an “application service provider” model, in which the system is hosted and maintained off-site, allowing for easy updates and maintenance. Russell Ricci, general manager of IBM’s global health-care business, said all partners understand that the health-care-technology field is challenging, but “I so believe we can use information technology to fix a lot of what’s wrong with health care.”
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For Microsoft, the venture is a springboard to try out some of its powerful new server software for big businesses, a market in which the company is eager to gain ground. Many of Microsoft’s new servers — based on the more reliable Windows 2000 operating system — also tie into the company’s sweeping “Microsoft.NET” Internet strategy. That is Microsoft’s still-evolving attempt to Web-ify some of its existing products and develop new, Internet-based services that can run on personal computers and other devices, such as cellphones and hand-held computers.
Microsoft already has a nonexclusive strategic alliance with WebMD, under which WebMD has agreed, in part, to use Microsoft technology in its new software systems. Rich Noffsinger, Microsoft’s world-wide group manager for health care, said the new venture’s offerings will complement WebMD in part, and that Microsoft maintains partnerships with various health-oriented companies.
WebMD declined to comment on the new venture.
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