Salesforce Stokes Fight With Veeva by Snagging Drug Customers

(Bloomberg) — Salesforce Inc. says it’s taking multiple large customers from former partner Veeva Systems Inc. in a mounting rivalry to sell software to the pharmaceutical industry.

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More than 40 customers, including a “top three global pharma leader,” have inked deals to use Salesforce’s soon-to-launch life sciences product, said Jeff Amann, executive vice president of Salesforce’s industry-specific software lines. Some of those customers are switching from Veeva, he added.

For pharmaceutical-focused customer relationship management software, Veeva is the “well-entrenched incumbent” with more than 80% market share, wrote Dylan Becker, an analyst at William Blair, in a November note. The company, which will generate an estimated $2.72 billion in annual revenue in the year ending in January, also makes tools for tracking drug development and data analytics.

Veeva’s customer relationship management product was historically built on Salesforce’s platform. The two companies had a kind of nonaggression treaty dating to 2007, which let Veeva thrive without competition from its larger peer. In late 2022, Veeva announced it was ending the agreement, which would allow the company to build a wider suite of applications.

That spurred Salesforce to develop a competing offering and begin trying to poach customers. “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,’” Salesforce’s Amann said.

In recent years, Salesforce, the top maker of customer management software, has seen revenue growth slow down. In a bid to expand, the company has recently begun offering AI agents and emphasizing its data integration product. Life Sciences represents a rare industry in which Salesforce’s central product isn’t yet saturated. The new product figured in some of the largest deals signed in the most recent quarter, Salesforce said on an earnings conference call.

The San Francisco-based company is currently staffing development teams at “a very aggressive rate” for the life sciences product, which is scheduled to debut in September, Amann said. The company is “in active discussions” with many of the largest pharmaceutical companies to use the product, he said.

Veeva announced at a conference in December that one of its 20 largest customers had decided to leave for Salesforce. Amann said the client was one of the three largest global pharmaceutical companies and he expects “many others” will follow.

In an interview, Veeva Executive Vice President Paul Shawah said he expects to retain the “vast majority” of customers. Some of the company’s largest clients, like drugmakers GSK Plc and Novo Nordisk A/S, have already committed to staying, he added. Large customers pledging to remain with Veeva “should reduce investor fears of potential disruption,” Brent Bracelin, an analyst at Piper Sandler, wrote in a note last month.

Veeva is in the process of rebuilding its customer management app separate from Salesforce’s platform. The Salesforce contract didn’t allow Veeva to create apps such as for customer service or patient management, Chief Executive Officer Peter Gassner said in October during an investor event. “We no longer have that barrier,” he said.

For customers thinking of leaving Veeva, Shawah said that Salesforce doesn’t yet have a working offering, while Veeva has been optimizing for life sciences for nearly two decades. He added that he expects Salesforce’s offering to be “significantly more expensive.”

“We already have the most advanced CRM and its getting better,” Shawah said.