Veeva Systems CEO: Chasing the Cloud | Mad Money | CNBC

This video provides an in-depth exploration of Veeva Systems' strategic position and growth within the cloud computing landscape, specifically tailored for the pharmaceutical, biotech, and life sciences industries. Jim Cramer interviews Peter Gastner, co-founder and COO of Veeva Systems, to discuss the company's recent financial performance, its unique market approach, and future prospects. The conversation highlights how Veeva has successfully carved out a niche by bringing the benefits of cloud computing to highly specialized industry applications, a strategy that Gastner asserts is both innovative and highly effective.

The discussion delves into Veeva's comprehensive suite of cloud-based software solutions, which address critical operational needs across the life sciences value chain. These applications range from enhancing the effectiveness of pharmaceutical sales representatives and streamlining data capture for clinical trials to ensuring robust compliance with government regulations. Gastner emphasizes that despite the competitive nature of the cloud market, Veeva's differentiated strategy of deep industry specificity allows it to be a strategic partner for its customers, including major players like Pfizer and Novartis, as well as smaller, emerging biotechs.

A significant portion of the interview addresses the macro trend of cloud computing, with Gastner agreeing with other tech leaders that the industry is still in its "early days" and will continue to expand over the next two to three decades. He counters skepticism about Veeva's total addressable market (TAM), stating that the life sciences market alone represents a $7 billion opportunity, which Veeva continuously expands by introducing new products. Gastner also cites Gartner's analysis, which identifies industry-specific applications as the largest and fastest-growing segment of cloud computing, a $132 billion market that is twice the size of ERP and CRM combined. This reinforces Veeva's long-term growth potential and its resilience against broader economic or regulatory shifts.

The video also touches upon Veeva's financial strength, noting its consistent delivery of "30/30 quarters," characterized by over 30% revenue growth and 30% profit. This robust performance is attributed to the company's extensive product portfolio and its ability to serve as a strategic, long-term partner to its diverse customer base. The interview concludes with a strong endorsement of Veeva's momentum and earnings growth, positioning it as a leading example of a successful cloud company in a specialized market.

Key Takeaways:

• Veeva Systems has successfully implemented a differentiated strategy by focusing exclusively on providing cloud-based software for the pharmaceutical, biotech, and life sciences industries, distinguishing itself from broader cloud competitors.
• The company's product offerings are comprehensive, designed to optimize various critical functions within life sciences, including improving pharmaceutical sales force effectiveness, accelerating clinical trials through efficient data capture, and ensuring adherence to government regulations.
• Veeva's "Vault regulatory information management" is highlighted as a key solution, assisting major pharmaceutical companies like Merck in automating regulatory processes required for product registration and compliance.
• Cloud computing is presented as a long-term, macro-level trend still in its nascent stages, with significant growth expected over the next 20-30 years, underscoring the enduring market opportunity for specialized cloud solutions.
• Veeva serves as a strategic partner to a wide range of clients, from large pharmaceutical enterprises such as Pfizer and Novartis to smaller, emerging biotechs, by offering a complete and integrated suite of products.
• New biotechs commercializing their first products often opt for a full suite of Veeva products from inception, bypassing legacy client-server systems to leverage integrated solutions and achieve faster time-to-market.
• Concerns regarding potential deregulation impacting Veeva's regulatory compliance software are dismissed, as the company operates globally and supports customer innovation and effectiveness irrespective of specific policy changes.
• The total addressable market (TAM) for Veeva within the life sciences sector is substantial, estimated at $7 billion, and the company actively expands this market by continuously introducing new applications, with 8 of its 24 products launched in the past year.
• According to Gartner, industry-specific applications constitute the largest and fastest-growing segment of cloud computing, representing a $132 billion market that grew 10% last year, making it twice the size of the combined ERP and CRM markets.
• Veeva demonstrates strong financial performance, consistently achieving "30/30 quarters" (over 30% growth in both revenue and profit), a testament to its extensive product portfolio and strategic customer relationships.
• The video underscores the market's appreciation for companies with strong momentum and consistent earnings growth, positioning Veeva as a prime example of a successful, specialized cloud provider.
• Veeva's success validates the power of a targeted, industry-specific strategy combined with continuous innovation, proving that a focused approach can lead to significant market leadership and expansion within a niche.

Tools/Resources Mentioned:

• Veeva CRM
• Veeva Vault regulatory information management
• Gartner (for market analysis)

Key Concepts:

• Cloud Computing: The delivery of on-demand computing services—including servers, storage, databases, networking, software, analytics, and intelligence—over the Internet ("the cloud").
• Industry-Specific Applications: Software solutions designed and tailored to meet the unique needs and regulatory requirements of a particular industry, such as pharmaceutical and life sciences.
• TAM Expanders: Companies that not only capture existing market share but also expand the total addressable market by introducing new products or services that create new demand.
• 30/30 Quarter: A term used to describe a company's financial quarter where both revenue growth and profit growth exceed 30%, indicating strong performance and profitability.

Examples/Case Studies:

• Merck: Cited as a client utilizing Veeva for marketing communications, field force automation, clinical trials, and regulatory assistance.
• Pfizer and Novartis: Mentioned as examples of large pharmaceutical companies that are Veeva customers.
• Small Biotechs: Highlighted as a growing client segment that benefits from Veeva's integrated suite for speed to market.