veeva systems: business prognosis

Veeva SystemsBUSINESS PROGNOSISBy: Mandar Kulkarni, Manish Chhabra, Patrice Hall

October 17, 2016

ELEMENTS OF SOFTWARE MANAGEMENT

Veeva Systems (VEEV) is a SaaS company focused on the life sciences. Veeva’s vertical focus created strong growth, but Veeva faces the challenge of declining revenue growth and growth limitations.

Will Veeva be able to leverage its strengths for future success?

ILLUSTRATION SOURCE: VEEVA.COM

Internal Analysis

● First cloud-based SaaS for life sciences

● Built on Salesforce Force.com platform

● Virtuous iteration cycle,Every 4 months

Focused Growth

DATA FROM SCOTTRADE.COM

Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY

Chart source: Slideshare: 2015 Emergence Capital Industry Cloud Forum, Veeva CEO Peter Gassner

Expanding Use of Veeva Products


Strengths give Veeva the ability to pursue opportunities

● Multi-tenant cloud technology● Financial health● High LTV:CAC ratio

StrengthsVEEVA OPERATING MODEL (MILLIONS)

VEEVA REVENUE FROM SUBSCRIPTION VS. PROFESSIONAL SERVICES

LTV $4,500,000

CAC$653,000

LTV:CAC6.89

Charts created with Google Sheets, using data from Veeva 2016 Annual Report Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY

● Leadership & team experience in life sciences● Market leadership in Life Sciences vertical:

○ Global presence○ 60% share for CRM○ Preferred brand status

● Established customer base with a high switching cost● Cloud & Multi-tenant architecture allows for non disruptive

updates and reduced maintenance hassles

1

Sustainable Competitive Advantages


● Declining YoY revenue growth, risk of saturation

● Dependence on Salesforce means barriers to growth & flexibility

2

WeaknessesDECLINING REVENUE GROWTH


Market Analysis & Trends

● Addressable market size ○ Life sciences: $1.6 Trillion ○ SaaS: $38 Billion ○ Veeva: $5.5 Billion

● Vertical-faced SaaS● Only company that targets this

market exclusively

2016 2018 % Growth

Life Sciences

$1.6T $1.63T 6%

SaaS $38B $90B 28%

Veeva $5.5B $6.05B 25%

RELATIVE SIZE & GROWTH

Analysis: Life Sciences Market


● Veeva’s revenue growth by geography○ 47% of revenue outside

United States○ Increasing foothold in Asia

● Total number of Veeva’s customers are 450+ and still growing.

Geographic Growth


DATA SOURCE: VEEVA SYSTEMS

UNITED STATES2016: $339 BILLION 2020: $550 BILLION

EUROPE:2016: $140 BILLION 2020: $220 BILLION

INDIA: 2016: $20 BILLION 2020: $50 BILLION

CHINA: 2016: $108 BILLION 2020: $200 BILLION

Market Growth Opportunities


● Growing pharma market in India, China○ Indian Pharma market $50 billion and China Pharma market

$200 billion by 2020.

● Growing market needs products to - maintain operational excellence, manage clinical trials, electronic records & content management

● Lack of any integrated CRM products ● Facilitate regulation compliance

Geographic Penetration Opportunities


● Mergers in life sciences ● Govt. pressure on drug pricing● Multi Channel Marketing

○ Veeva to deliver MCM over next 5 years● Life sciences industry moving towards electronic record

keeping● Data protection and security

Market Trends


Life sciences customers:

● High customer lifetime value ($4.5 M)● High cost of changing vendors● Low churn rate with only one customer

(Genentech) leaving Veeva system

3

Customer Analysis


Prognosis& Desired State

Revenue Growth

● 25% Revenue growth YoY● $647M Revenue by 2018

Product Growth

● Build new products ● Upsell ● Penetrate into competition● Leverage rich data

Geographic expansion

● Attractive new markets (India & China: $20B & $105B in 2016, $55B & $167B by 2020)

● Strategic acquisitions● Increase Sales and Marketing

investments

Prognosis: Veeva’s Health in 2 Years


Revenue Targets

● $1B by 2020● Meet expected 25% YoY

increase in revenue target for next 2 years

● An aggressive investment in M&A, R&D, S&M

● Resulting drop in retained earnings, increased revenue from market expansion

Desired State in 2 yearsMarket capture

● Life Sciences vertical○ Increase footprint by investing

in R&D and Sales & Marketing○ Product integration &

Multichannel marketing ○ Product development w/ data

& predictive analytics● Adjacent verticals

○ Launch Veeva Vault in adjacent vertical Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY

EXPAND TO HEALTHCARE

EQUIP/SUPPLIES

Adapt productsTo target Health care equipments

and supplies industry

CREATE A CONSUMER PRODUCT

App that manages all of a user’s test results & records

in one place, collaboration with

doctors & insurance

NEW EXPANSION WITH CURRENT

CUSTOMERS

Create new products for supply chain

management or administration in

life sciences

TARGET HOSPITALS &

DOCTORS

Create products that target needs of

SMBs in life sciences:

hospitals and private practice

offices

TARGET HEALTH INSURANCE VERTICAL

Adapt productsand/or acquire to

target health insurance industry

Opportunities to consider

Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY

● Increase S&M for Veeva Vault○ Vault: growth engine for Veeva

■ Upsell Vault to existing CRM customers

■ CRM & Vault Integration● Increase spending in R&D and

Sales & Marketing● Predictive and data analytics to

solve unmet needs

Recommendations: Product Expansion


● Enter the health insurance vertical and capture market share○ Health insurance TAM: $13 Billion○ Leverage industry experience

● Explore Health care equipment & supplies industry○ Industry value: $678B

● Capture SMB market ● Renegotiate Salesforce agreement

VERTICAL EXPANSION PLANNING (MILLIONS)

CURRENT CASHAVAILABLE

ACQUISITIONBUDGET

SALES & MARKETING

Recommendations: Market Expansion


Conclusion

Veeva has the capabilities needed to meet its goals. The company strategy will maintain its financial health for the next two years, making it an attractive investment. To reach and exceed its revenue targets, the company should more aggressively pursue areas of potential growth.

Conclusion


veeva systems: business prognosis

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