Veeva to plan IPO as Cloud startup chal­lenges Or­a­cle

The Pak Banker - - COMPANIES/BOSS -

Veeva Sys­tems Inc. plans an ini­tial pub­lic of­fer­ing this year, peo­ple fa­mil­iar with the mat­ter said, step­ping up a chal­lenge to Or­a­cle Corp with Web-based soft­ware for phar­ma­ceu­ti­cal sales.

Veeva is meet­ing with banks in­clud­ing Mor­gan Stan­ley (MS) and is seek­ing a val­u­a­tion of about $2 bil­lion, or 10 times pro­jected 2013 sales, said the peo­ple, who asked not to be named be­cause the talks are pri­vate. Rev­enue is on track to grow at least 50 per­cent this year as Veeva edges past Or­a­cle in tools to help drug­mak­ers pro­mote treat­ments to doc­tors.

Break­ing away from a model fol­lowed by Or­a­cle and oth­ers de­liv­er­ing soft­ware via In­ter­net to cus­tomers across var­ied in­dus­tries, Veeva and com­pa­nies such as Athenahealth Inc. (ATHN) and Deal­ertrack Tech­nolo­gies Inc. spe­cial­ize in a spe­cific busi­ness like med­i­cal of­fices or car sales. While its share of the $22.3 bil­lion cloud-com­put­ing mar­ket is small, Veeva has won over many of the world's top drug­mak­ers.

"Veeva's a shin­ing star that came out of nowhere," Eric New­mark, an an­a­lyst at re­searcher IDC, said in an in­ter­view. "Veeva is No. 1 in pharma in the U.S., and they're not far be­hind Or­a­cle for the global lead. They should pass them in the next year or so."

Word-of-mouth is key to Veeva's success. Within the drug in­dus­try, its soft­ware has built up a fol­low­ing for the abil­ity to track pre­scrib­ing habits and tai­lor pitches to spe­cific doc­tors. Mo­bile tools also help sales rep­re­sen­ta­tives doc­u­ment sam­ples given to doc­tors and ob­tain elec­tronic sig­na­tures needed to meet drug­mar­ket­ing reg­u­la­tions.

"Once you get in, there's a power of in­cum­bency," said Peter Gold­macher, an an­a­lyst at Cowen & Co. "If a small guy can be­come No. 1 or No. 2 in that mar­ket, they can make a great liv­ing."

Veeva spends just 25 per­cent of rev­enue on prod­uct pro­mo­tion, about half the per­cent­age for Sales­ Inc. (CRM), the largest maker of on­line cus­tomer-man­age­ment soft­ware.

Lisa Bar­badora, a spokes­woman for Pleasan­ton, Cal­i­for­nia- based Veeva, de­clined to com­ment on the IPO plans.

"In our par­tic­u­lar mar­ket, our cus­tomers know us al­most as well as they know Mi­crosoft Of­fice," Peter Gass­ner, Veeva's co- founder and chief ex­ec­u­tive of­fi­cer, said in an in­ter­view. Sales­force CEO Marc Be­nioff helped pioneer the idea of de­liv­er­ing soft­ware as a ser­vice over the In­ter­net, of­fer­ing sales-track­ing tools used by more than 100,000 cus­tomers, from donut shops to car mak­ers. Veeva board mem­ber Gor­don Ritter, who once founded a com­pany with Be­nioff, said the nar­row fo­cus of his cur­rent ven­ture of­fers a bet­ter profit model. "Marc Be­nioff and other gen­eral-pur­pose cloud lead­ers won the first round, but in­dus­try-spe­cific com­pa­nies will win the next," said Ritter, founder of Emer­gence Cap­i­tal Part­ners, which has backed both Sales­force and Veeva.

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