have to take on any more cash,” Palestrant says. “We’ve put ourselves a very firm trajectory to become profitable, and we have an ample cushion at this point.”
Palestrant is careful not to put a deadline on when his firm will become profitable, and his short answer to that question is “very soon.”
What gives the CEO, a physician by training himself, that level confidence in his firm’s profitability? In part, it’s a pure numbers game. Sermo’s main clientele are large pharmaceutical outfits that pay for access to the firm’s online community of more than 112,000 doctors and growing. Depending on the figures you use, the number of registered doctors on the site equals somewhere in the neighborhood of a quarter of all practicing physicians in the U.S., according to Palestrant. And drug companies are expected to increase their spending on Internet marketing, especially as they reduce their legions of field salespeople to trim their own budgets. Sermo wants to be the No. 1 online option for those marketing dollars spent to gain the attention of physicians.
As we reported when Sermo made its layoffs last year, the slumping economy has been felt at the company. The pharmaceutical business, for one, has been rocked by competition between lower-priced generic drug and the marquee products that have supported outsized budgets at companies such as Eli Lilly, Merck, and Pfizer, to name a few of the biggies. Sermo has been competing for the attention of such companies just as they undertake major cutbacks to salvage their embattled businesses. The company is also focusing more narrowly on pharmaceuticals nowadays after finding that drug companies were more receptive to the firm’s offerings than outfits in the financial services sector like investment banks and hedge funds.
But Sermo is seeing business pick up already in 2010. Palestrant says that sales were up 600 percent in January from the same month last year. (The privately held startup does not disclose exact financial figures.) He’s seen an increase in sales of the online surveys drug companies pay Sermo to administer to doctors, the syndicated reports his firm generates on health topics based on physicians’ insights, and the online forums in which pharmas pay to hold online discussions with physicians on topics of the customer’s choice. Another positive development at the company has been an increase in business from electronic medical record software and medical devices vendors, he says.
When the company launches Sermo X, Palestrant says, one of the features of the new website will be a revamped dashboard for customers. The firm’s customers use the existing dashboards to view analytics on trends on Sermo, and the updated dashboard is expected to improve customers’ ability to use the dashboard to access the firm’s services such as the online surveys and forums. That ought to help out with those profits the CEO expects to bring in “very soon.”
