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Veeva Systems: Business Prognosis
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Transcript of 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
● 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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
● Declining YoY revenue growth, risk of saturation
● Dependence on Salesforce means barriers to growth & flexibility
2
WeaknessesDECLINING REVENUE GROWTH
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
● 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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
● 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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
● 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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
● 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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
● 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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY
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
Kulkarni, Chhabra, Hall | CARNEGIE MELLON UNIVERSITY SILICON VALLEY