Disruptive innovation in online marketing for pharmaceuticals

M3 is a leader in online marketing for medical products. Over the years, M3 has built a huge following among doctors, with it’s platform dominating this niche market segment with more than 5mn doctor subscribers globally.

More importantly, it has also monetised this relationship and as a result, generated high cash flow with a conversion ratio of 97% (net income/ free cash flow).

Pharmaceutical companies have been taking note and are increasingly turning to more efficient marketing methods to preserve margins. By using ‘pay-for-performance’ services to promote their products directly to doctors on M3’s medical platform, the costs of hiring traditional medical representatives could be reduced significantly.

We first initiated a position in the company in 2017. M3 is a leader in a niche market with an economic moat and we believe their entrepreneurial culture and innovative mind-set should see continued growth as it invests into new business areas and overseas acquisitions. We believe M3 is on the right side of disruption and could become a much larger company in the next 5-10 years.

Physician subscribers topped 5m mark globally

Source: SMBC, company data, as at March 2019.

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