In a crowded field of companies marketing web-based handheld devices that allow physicians to perform a myriad of functions, ePocrates Inc. is trying to differentiate itself by offering less than its competition. That is, its idea is to ease physicians into using web-enabled devices with a package of prescription drug information.

As bleak as times may be for e-health start-ups, there's certainly no dearth of companies trying to get personal digital assistant devices into the hands of physicians. Although most of the buzz has been about e-prescribing, that's only the beginning of what start-ups aim to offer.

Medsite has built a steadily growing revenue stream and customer base, primarily through online sales of books and medical supplies. It also leverages those e-commerce offerings to provide pharmaceutical and other product companies with a means of promoting themselves to physicians by using incentives, such as discounted books or supplies. With further growth in mind, the company filed a $100 million IPO earlier this year--only to withdraw it a few months later when the bottom fell out of the e-health public markets. Facing a suddenly hostile financing environment, Medsite's management re-engineered their business plan, with the goal of accelerating the company's drive to profitability by emphasizing the higher-margin end of its business that derives income from promotional deals with product companies. A key element of this effort is an ambitious package of customizable Internet tools for physician practices that is intended to bring in lucrative sponsorship contracts from product companies. In entering this arena, Medsite will find itself up against some major players with significantly greater resources. And to fund their ambitious new initiative, Medsite will have to convince a wary investment community that, in an industry apparently headed for domination by a few billion-dollar companies, they will be one of the survivors. But Medsite's management expresses confidence that its higher-profile competition has yet to make any deep inroads into the physician market, which they argue remains quite open. The task now is to persuade investors, product companies, and physicians that they can succeed---where others have largely failed--in getting doctors to make the Internet an integral part of their practices.

Big Pharma is beginning to explore ways of moving beyond traditional corporate web sites to establish web presences designed to create relationships with their physician and consumer customers. As part of these efforts, some drug companies are experimenting with the e-detailing technologies offered by a growing number of start-ups.Although e-detailing will probably never replace pharmaceutical company sales reps, it may provide large drug companies with a cost-effective way of holding on to profitable niche products that would otherwise fall by the wayside as they focus attention on blockbusters. Perhaps even more significantly, emerging pharmaceutical firms and biotechs may be able to use the Internet to expand their sales and marketing infrastructure capabilities, without incurring huge infrastructure costs, and thus help those smaller companies compete more effectively against larger players.