Salesforce Poaches Pharma Clients from Veeva, Signaling Industry Battle
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Salesforce is aggressively pursuing the pharmaceutical industry, aiming to disrupt Veeva Systems' dominance in customer relationship management (CRM) software, reports Bloomberg. The move comes after Veeva, a former partner, ended a long-standing non-aggression agreement, opening the door for Salesforce to compete directly.
Salesforce executive vice president Jeff Amann revealed that the company has secured deals with over 40 pharmaceutical clients, including a "top three global pharma leader," for its soon-to-launch life sciences software. Notably, some of these customers are reportedly switching from Veeva.
"When Veeva made the decision to go on its own way… many of those customers came to us and said ‘we don’t want to leave’," Amann stated.
Veeva, which holds an estimated 80% market share in pharmaceutical CRM software, generates an estimated $2.72 billion in annual revenue. The company's CRM product was initially built on Salesforce's platform, but the two companies had a non-competitive agreement since 2007, allowing Veeva to thrive without direct competition.
Salesforce's move to enter the pharmaceutical CRM space is part of its broader strategy to diversify and drive revenue growth. The company is currently hiring "at a very aggressive rate" to support its life sciences product development, scheduled to debut in September.
"We are in active discussions" with many of the largest pharmaceutical companies, Amann noted.
News of Salesforce's success has already prompted Veeva to announce that one of its 20 largest clients, a top-three global pharmaceutical company, is switching to Salesforce. Amann expects "many others" to follow suit.
Veeva, however, remains confident in its ability to retain most of its customer base. Executive vice president Paul Shawah stated that the company expects to retain the "vast majority" of its customers, pointing to commitments from major clients like GlaxoSmithKline and Novo Nordisk.
Despite Salesforce's entry, Veeva is actively developing its own CRM app separate from Salesforce's platform, aiming to expand its application capabilities beyond its current focus on drug development and data analytics.
"We no longer have that barrier," said Veeva CEO Peter Gassner at an investor event last October, referring to the limitations imposed by the previous agreement with Salesforce.
Shawah argued that Salesforce's life sciences offering is not yet fully functional, while Veeva has a nearly two-decade head start in the industry. He also suggested that Salesforce's product will be "significantly more expensive."
"We already have the most advanced CRM and its getting better," Shawah added.