A boutique clinical research organization (CRO) focusing on analgesic studies called Lotus Clinical Research recently noted in the news that two of its team members presented at Veeva’s 2019 R&D Summit to discuss their use of Veeva Vault for CDMS, combining electronic data capture, data cleaning, and reporting in a single cloud platform for clinical data management. Veeva claims that by adopting their cloud-based CDMS that CROs such as Lotus can accelerate databases faster and improve efficiency for clinical trial study teams. Lotus has been a Vault CDMS early adopter. In an incredibly ambitious run, their first wave of clinical data management clients are starting to assess results.
Who is Lotus Clinical Research?
A specialized CRO and clinical investigational site with a focus on analgesic studies, Lotus Clinical Research (Lotus) lists on its website several analgesic-focused approvals. Established in 2001 and based in Pasadena, CA, they offer a Phase I/Proof-of-Concept study with a 50-bed, Phase I-III privately owned research unit on the 675-bed Huntington Hospital campus. They tout via LinkedIn that they have been inspected 9 times by the FDA with no issues reported. They differentiate as a clinical site that isn’t owned by a larger more bureaucratic institution, which enables them to be nimbler and more agile to help sponsors get their trials up and running.
Due to its size and focus, Lotus was a prime candidate for Veeva’s clinical data management (CDM) early adopter campaign in a bid for market domination.
The Veeva Story Summary
Veeva is one of the most successful software companies the life science industry has ever seen. The numbers tell the story. Approaching a billion in sales with $1.4 billion in cash, they generate nearly $300 million in profit and enjoy a market capitalization of $22.9 billion, They got their start on just a few million in investor capital as their founders brilliantly leveraged the Salesforce platform for biopharma customer relationship management (CRM).
Timing is very important in business and the founders timed their play just right—leveraging the rapid rise of the Salesforce CRM cloud while understanding that specific vertical markets were ready to “churn” out their older software systems for newer, more agile cloud-based systems (e.g. no hardware and less IT personnel needed). Pharma is a risk-averse, conservative industry with internal quality-assurance zealots that demanded they see the serial numbers of the hardware for the software they audited in anticipation of federal agency audits. The cloud was the enemy to them.
Hence, Veeva was smart. They didn’t start with Good Clinical Practice (GcP) regulated apps—rather they first gunned for marketing and sales. Veeva’s first victim was juggernaut Oracle (the latter had acquired Siebel long ago), which they absolutely slaughtered in the pharma CRM space. The bosses in Mr. Ellison’s modern and powerful looking Redwood City towers didn’t know what hit them. Veeva absolutely “killed it” in timing and sales execution—and the CRM product was good enough to essentially make pharma CRM Veeva country—with royalties to Salesforce, of course, as it was a verticalized version of the San Francisco-based cloud giant.
No Royalties for New Product
Veeva DNA is an interesting mix of new Silicon Valley techie and tough east coast pharma vendor culture, infused with old-school Silicon Valley Oracle/Peoplesoft fervent, an almost evangelical product marketing and sales bravado taking no prisoners—in another words, the Mr. Ellison playbook.
Their next victim in pharma was Documentum (now part of Open Text), which had long ago established itself as the market-leading regulatory enterprise document management system (EDMS) for pharma. Not anymore. In a period of several years, Veeva, building a separate product called Vault (first a proprietary built system and next generation leveraging some public cloud of AWS), absolutely destroyed Documentum first in the electronic trial master file (eTMF) space. They converted most of the biggest pharmas, at least for eTMF but also in other departments off of Documentum and to the cloud-based Veeva Vault. Much like the CRM churn where Oracle (Siebel) was replaced for CRM, now Documentum was being replaced for EMDS. However, now Veeva didn’t have to share with Salesforce, directly fueling the bottom line.
Zero Sum Game
Along the way, Veeva established quite a reputation for aggressive behavior, but this was to be expected. It partners with organizations to study what the solution stack consists of and then determines whether it should actually partner or build or possibly buy. Getting to $20+ billion market cap in enterprise in such a fast period of time requires calculated planning and execution.
Its ultimate vision—a unified clinical cloud combining documents and data. After all, given it already had most doctors in its CRM (as well as key opinion leaders via acquisition), it now set its sights on Oracle and Medidata country: electronic data capture and clinical trial management systems. As they entered the market to sell the Vault Clinical Suite, they assertively poached specific talent from what were partners and quickly competitors (e.g. Medidata) and lawsuits commenced (and continue to do so).
EDC is critically important for clinical research sponsors and CROs—the underlying currency of the study is the data—it makes or breaks everything else. Oracle and Medidata still own most of the data capture and management systems in the big pharma companies. Additionally, there is a robust ecosystem of other third parties. Veeva will struggle to achieve the kind of churn experienced in CRM and eTMF spaces as 1) big pharma is very conservative and it is easier to part with CRM and document management legacy enterprise data apps—the latter works and there are huge investments in process and reporting, for example, 2) there are a range of competitive options for data capture and management including big CRO -based systems, 3) powerful channels (consultants, experts and integrators) built around the old guard, and 4) the need to develop the internal expertise to effectively educate, position, and sell is a formidable challenge.
Veeva’s fight to accomplish what it has done in the other domains depends on an early-adapter strategy with emerging biotech and CROs. They are making some progress, but again, repeating the same success story will become successively more difficult. Hence why the wins in this critical domain are so important for them.
Veeva’s big plan is to win it all—but they may not, as life doesn’t always work according to the plan. Hence, Veeva has developed other offerings to keep the growth trajectory requirement for investors top of mind—Nitro (commercial data warehouse) and QualtyOne (regulated document management in other industry).
Veeva will have to probably open up its culture and take channel and a more conciliatory approach to “plugging-in-and-playing” with incredibly complicated, often customized, and disparate software infrastructures in the pharma giants. Although there are just a few target big vendors, there are intricate layers of customization and combination of add-on making the nice, clean and compelling one system approach less achievable—more a fantasy than a reality. This undoubtedly could slow the growth train and impact valuation, which is currently over 20X revenues! Investors have factored in enormous growth. The good news for Veeva is that they have a powerful and growing annuity in recurring revenue from the huge client-base today—this offers a natural momentum for continued growth. The challenge is that they can’t be all things to all clients—no vendor can. TrialSite News is aware of several areas where Veeva has struggled with product. For example, they jumped into the regulatory tracking and publishing fray, which represents super-conservative, complicated, and, in some way, cumbersome segment markets. At one point, Liquent (now part of CRO Parexel) was the market leader in regulatory publishing space but never had more than $20 million in actual license revenue. Most of the spend in those markets involves layers of services that can’t necessarily be automated by cloud applications as we know them today. Hence why it probably makes sense that service vendors sit on that business. Rather, the organic and incremental expansion from the existing success stories makes all the sense but at some point that might clash with investor expectation.
Back to the Early Adopter Lotus
Now with this context, it is apparent just how important deals are like Lotus and Vertex for Veeva’s big clinical data management and unified clinical Vault push. Jennifer Nezzer, Director of Biometrics with Lotus notes, “Veeva Vault CDMS gives our site personnel a user-friendly interface that takes them directly to what’s needed so they no longer have to click through casebooks and find where they left off.” She also tells readers, “Automated to-do lists and reports save our CRAs and data managers hours each week. Veeva has improved the overall experience in how we collect and clean clinical data.” To date, the results sound good—but do all users feel the same way?
Unifying CDMS with eTMF and CTMS
The combination of data, documents, and trial-tracking makes sense for those in a position to take advantage of one system. One sign on, one place to manage all the portfolio of trials in the cloud, one source of truth. It just may be that small to mid-sized sponsors and CROs are in a position to make this kind of move–“tier 1” global pharma companies have massive investments in systems such as Oracle and Medidata. In the case of Lotus, which has under 100 employees, they were looking for a streamlined approach to manage their studies—unifying the data entry for sites being a key objective. They can’t afford to maintain numerous systems with the IT support headaches not to mention the nightmare of “validation” when there are upgrades. One of Veeva’s sales calling card moments is “easy validation.” In all reality, the whole industry wants modern unified clinical data and eTMF documents to make the life of conducting studies easier. On the other hand, small to mid-sized ventures don’t necessarily have a lot of extra cash, so systems must increasingly become incredibly economical and a clinical sponsor that has all of its systems in one vendor can be subject to significant price increases at some point in the future.
Just when you think things will settle again, the industry is undergoing more change as the shift from blockbuster to precision and specialization continues at a rapid pace. Even the modernity of Veeva starts to age—its’ enterprise architects come from an enterprise perspective and what is happening out there in some cases, will turn things upside down—the technologies of today may not be as compelling as what is required tomorrow. Big pharma initiated campaigns such as Transcelerate for a “common interface,” but this isn’t possible given the unbelievable diversity, dynamism and direction of site markets for example. Whole new apps are emerging that are designed to accommodate morphing models—e.g. integrated research organizations as just one example. Moreover, with continuous payer pressure costs will become an ever touchier subject and many companies will be hesitant to pull all of their eggs in one cloud-based basket.
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