Cloud isn’t always one size fits all. By specifically targeting the healthcare and life sciences industry, Veeva has established a clear leadership position in a potentially lucrative niche where few other players have gained major traction.
Veeva is a profitable cloud computing service provider specializing in healthcare and life science. The company counts big names such as Novartis AG, Merck & Co., Eli Lilly and Co and Bayer Healthcare AG as customers.
On Oct. 16 Veeva raised about $194 million after its IPO was priced at $20 per share, well above the expected price range. The first day of trading was a massive success, with shares nearly doubling during Veeva's debut, hitting a high of $39.64 and valuing the company at nearly $5 billion. Shares of VEEV closed Friday at $43 in trading on the NYSE.
What is the company doing to enamor both investors and its customers?
Profitability, Revenue Growth = Win on Wall Street
Veeva is unique because it is a cloud provider with profitability and high growth, with revenue rising from $29.1 million in 2011 to $129.5 million in 2013. The company cites lower customer acquisition costs, efficient marketing and focus.
“What is it we’re doing differently? It’s this notion of industry cloud,” said Matt Wallach, co-founder and president of Veeva. "Veeva is specifically tailored to life sciences, a vertical that can’t use ‘one size fits all’ types of cloud offerings. We’re a beneficiary of the whole move from client/server to cloud. We have deep applications n specific areas within one industry. Big Data that is something that is possible with cloud computing. Another benefit is the level of functionality. All of our R&D is super-focused on what we can do in this industry."
The company has three product lines, but the best example of Veeva's vertical cloud approach is its customer relationship management (CRM) offering, which uses the platform from Salesforce.com essentially as the big database. “It’s better than a database, but for us it’s just a backend," said Wallach. "Starting from the data model, The CRM is much more built from the ground up.”
Infrastructure from Salesforce.com, Data Centers from NTT
“While the CRM uses Salesforce.com as the backend database, our two other product lines, we’ve built from the ground up,” said Wallach. “"We can’t use AWS for this. We have managed data centers from NTT. They keep up the hardware side, we keep the software side running.”
The company has data centers in the US, a data center in Japan, the same building as Salesforce.com. Wallach says there will be a data center in 2014 in Europe, most likely in the same building as Salesforce.com.
The architect behind Veeva’s infrastructure is Mitch Wallace, who set up all of Salesforce.com’s internal systems and was managing their data center infrastructure. “Having set up the world’s largest Software as a Service Infrastructure, Mitch is unimpeachable," said Wallach. "We took the best possible cloud expert.”
“Multi-tenant cloud is a fundamentally better for both us and customers,” said Wallach. “By having all of these applications targeted at one industy, we become the innovation engine for the customer.”
Veeva says there are important differences between what it does and a general CRM. “In life sciences, there are different workflows," said Wallach. "It’s about controlling and managing activities more than leads, and managing compliance. These are very heavily regulated drugs, and regulations differ from country to country. That functionality has to be there. You can’t use a generic CRM platform. The fundamental basics of what we do with CRM are just different. If you look at real systems of record that are for specifically tailored needs, those people have been left behind by those have gone to cloud.”
Another differentiator is offline capabilities. “This is industry is very mobile. It’s very different from CRM and it has to run offline. This is something that would keep a lot of companies out of the competition.”
Content Management and Networking
In addition to CRM, the company’s other product lines are content management and Veeva Network.
The content management offering comes with pre-built functionality to ensure customers can deploy complete regulatory content management systems without the need to write custom code. It keeps important medical files safe, acts as a secure collaboration platform, and enables customers to keep a constant audit trail. Some examples of the types of content managed on the platform are files around clinical trials. Veeva handles the management of highly secure and proprietary content in general, such as product recipes, change controls, and various EIT and FDA mandated electronic documents. The company also offers a complete medical communications content management system.
Veeva Network is a unified solution that compiles customer data from healthcare professional (HCP), healthcare organization (HCO), and affiliations data with a customer master application. It’s fully integrated with the CRM.
In terms of content management life sciences have unique needs. A large amount of documents and regulations make a general cloud content management systems a non-starter for life sciences. By focusing specifically on one industry, it once again is successful through offering functionality and compliance that others server general audiences cannot.
Veeva has an Early Lead
Are there going to be more industry players that follow suit? Most likely yes. However, Veeva has a lead thanks to being an early entrant as well as having satisfied, major customers.
“The fact that we have customers that use are product and are happy with it, that’s a huge barrier to entry for others," said Wallach. "You also have the barrier to entry of the specific functionality. It will take a few years for a competitor to be functionally compete. We’ve been investing six years. We barely a year ago put the flag in the sand. The last thing, in a regulated industry, we have to operate as if the FDA is going to audit us.
“The life sciences industry is undergoing pretty tremendous change,” said Wallach. “There’s some challenges that they have, the regulatory environment is more stringent. The fines are now measured as billions. The last fine was $3 billion for marketing wrong.”
“(Our customers) include many of the largest life sciences companies, and these companies are completely global companies," he said. "We already have 35 percent of our revenue coming from outside of the U.S. We’re already very global, and this is something we determined to do early. We’re very focused on the regions in which we operate."