$VEEV Veeva Systems Q3 2023 Earnings Conference Call

This video provides an in-depth exploration of Veeva Systems' fiscal 2024 third-quarter earnings, offering a comprehensive look at their financial performance, strategic product developments, and market outlook within the life sciences industry. The call features Peter Gassner (CEO), Paul Shawah (EVP Commercial Strategy), and Brent Bowman (CFO), who discuss key milestones, new product announcements, and the company's progress in building out its "Industry Cloud for Life Sciences." The discussion highlights Veeva's ambition to become an essential strategic partner by offering a growing suite of high-value applications, data, and services across both R&D and Commercial operations.

A significant portion of the call focuses on the strategic transition from Veeva CRM to Vault CRM, with particular emphasis on recent commitments from major pharmaceutical companies like Bayer and GSK. This migration is framed as a move towards the "next generation of CRM," driven by a desire for innovation and future-proofing within these large enterprises. The speakers detail the multi-year plan for this transition, including early adopter programs and scaling efforts, and emphasize the importance of product excellence and a robust partner ecosystem to support the widespread migration across the industry.

Beyond CRM, the discussion delves into Veeva's expanding data offerings and clinical development initiatives. The company's Data Cloud strategy, featuring products like Compass (patient, prescriber, and national data), is presented as an effort to build a modern data platform and standardize industry data. In the R&D space, Veeva sees a substantial long-term opportunity, particularly in integrating clinical software (such as EDC, RTSM, and EO) with clinical data to revolutionize trial processes. The call also touches upon the evolving role of generative AI in life sciences, noting its potential in content creation and specific administrative tasks, while clarifying its current limited impact on core statistical analysis in clinical trials. The speakers also address broader market dynamics, including macro-economic headwinds, regulatory impacts like the IRA, and competitive challenges in the data market.

Key Takeaways:

• Vault CRM Migration Momentum: Major pharmaceutical companies like Bayer and GSK have made written commitments to migrate to Vault CRM, signaling a broader industry shift driven by a desire for innovation and a future-proof CRM solution. This migration is expected to scale from 2025 onwards, supported by dedicated services and partner ecosystems.
• Strategic Data Cloud Expansion: Veeva is actively building a "modern data platform" through its Data Cloud strategy, with products like Compass (patient, prescriber, and national data) positioned to become the standard data provider for large pharma. Early momentum is observed with new customers and brand expansions.
• Clinical Development as a Major Growth Driver: The clinical opportunity, integrating clinical software (e.g., EDC, RTSM, EO) with clinical data, is considered a potentially larger market than commercial. The synergy between software and data is crucial for revolutionizing clinical trial efficiency and addressing critical workflow breakdowns.
• Data Standardization is Key for Integration: The most important factor for integrating commercial and clinical insights is establishing a common data architecture and vocabulary across both domains. This enables a unified view of product classes, disease areas, and key opinion leaders, facilitating better process flow.
• Evolving Commercial Cloud Offerings: Veeva is enhancing its Commercial Cloud with new initiatives like marketing automation and modular content. The goal is to uniquely connect content creation and management to various engagement channels (sales, field medical, marketing), optimizing content distribution.
• Generative AI's Current Role: While generative AI is being explored for applications like content creation, safety narratives, and protocol evaluation, its direct impact on core clinical trial statistical analysis or patient prediction is currently viewed as less significant than traditional data science methods.
• Market Headwinds and "Deferred Modernization": Slower decision-making, budget scrutiny, and the impact of the Inflation Reduction Act (IRA) are affecting the life sciences sector, particularly small biotechs. However, this environment also leads to a focus on core capabilities and a build-up of "deferred modernization" demand for essential systems.
• Competitive Landscape in Data: Veeva acknowledges anti-competitive behavior from competitors like IQVIA in the data market, which can create barriers and slow adoption of new data products, especially for larger, established companies.
• Disciplined Hiring and Predictable Pricing: Veeva maintains a disciplined hiring strategy focused on growth, customer success, and innovation. The company also implements a predictable pricing approach, capping CPI-based adjustments at 4% with ample customer notice, which is well-received by clients.
• Transformational Clinical Data Products: New clinical data products like Open Data Clinical Site Base (providing deep profiles of sites and investigators) and Clinical Pulse (offering industry benchmarks for internal business processes) are designed to optimize R&D operations and provide actionable insights.
• Services Strategy for Migration: Veeva is focused on making the Vault CRM migration as repeatable and automated as possible, scaling its dedicated services team and enabling its partner ecosystem (e.g., Accenture) to manage the significant workload over the next 5-7 years.

Tools/Resources Mentioned:

• Veeva CRM
• Veeva Vault CRM
• Veeva Vault PromoMats
• Veeva Vault Medical
• Veeva Crossix
• Veeva OpenData
• Veeva Link
• Veeva Compass (patient, prescriber, national data)
• Veeva Vault Clinical (including EDC, CDB, RTSM, EO)
• Veeva Vault RIM
• Veeva Vault Safety
• Veeva Vault Quality
• Veeva QualityOne
• Veeva RegulatoryOne
• Veeva Claims
• Salesforce.com Marketing Cloud
• Adobe
• IQVIA (competitor in data)

Key Concepts:

• Industry Cloud for Life Sciences: Veeva's overarching strategy to provide a comprehensive suite of integrated software, data, and services tailored for the life sciences sector across R&D and Commercial.
• Data Cloud: Veeva's initiative to build a modern data platform for the life sciences industry, focusing on data standardization and providing actionable insights.
• Commercial Cloud: Veeva's suite of software and data solutions for customer-facing operations in pharmaceutical and biotechnology companies.
• Development Cloud: Veeva's suite of applications for clinical, regulatory, quality, and safety functions in R&D.
• Modular Content: An approach to content creation and management that breaks down content into reusable, compliant modules, improving efficiency and distribution.
• Clinical Master Data: Foundational data related to clinical operations, such as investigator and site profiles.
• Clinical Pulse: A new data product providing benchmarks for internal clinical business processes against industry averages.
• Deferred Modernization: The accumulation of delayed system upgrades and modernization efforts within pharmaceutical companies, often due to external factors like pandemics or economic uncertainty, creating pent-up demand.

Examples/Case Studies:

• Bayer and GSK Vault CRM Adoption: These two large pharmaceutical companies were highlighted as early adopters of Vault CRM, with their decision-making process driven by a focus on innovation and future-proofing their commercial operations. They publicly shared their rationale at Veeva's Europe Summit.
• IQVIA's Anti-Competitive Behavior: Veeva's CEO explicitly mentioned IQVIA's market practices as a factor slowing down the data market in life sciences, citing their unwillingness to grant third-party agreements for data mixing, which creates significant barriers for customers.