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.

eLabLink Inc. is developing services and programs to facilitate Internet access among non-hospital based physicians' offices and clinical laboratories. The company is raising money to beta-test a software program that provides send and receive capabilities for lab requisitions, access to historical clinical data, integration with legacy systems, utilization analysis and medical necessity checking. It is also developing an interface for a palmtop wireless connection between physicians' offices and labs.

The cross-marketing deal between Healtheon/WebMD and CVS (cvsc.com) provides powerful promotional opportunities for both parties; Healtheon gets a presence in CVS stores across the country and CVS gets exposure on Healtheon/WebMD.com, and on the portal sites with which it has formed partnerships. In addition, the deal may prove to be an important step in getting a reluctant physician population to more fully embrace the Internet as a part of their businesses.

Our list of the top 10 issues and events from 1999--from the Internet (scaring purchasing groups and reinvigorating the biotech industry); to Pfizer's war on Warner-Lambert; to indigestion among device dealmakers; and to the rebirth of research-based in vitro diagnostics.