How Big Pharma's App Maker Pushed A Struggling Stock To All Time Highs

In the summer of 2010, when his startup, Veeva Systems, was just three years old, CEO Peter Gassner summoned his team to deliver a surprising message: It was time to think about a second act. Veeva was on a roll. It had become indispensable to Big Pharma companies, who were embracing at a fast clip its software for tracking sales and customers. But to build a lasting business, Gassner believed, Veeva had to think bigger. "Batten down the hatches here," Gassner recalls saying. "We're in for six years of a hard slog."

The gambit has more than paid off. Bolstered by that second act--an entirely new product called Veeva Vault that helps the likes of AbbVie and Merck manage the process of drug development and clinical trials--Veeva has seen its sales grow an average of 37% over the past three years to $544 million in the most recent fiscal year. No enterprise software company other than Salesforce has topped the $500 million sales mark faster than Veeva, which ranks No. 8 on Forbes ' Fast Tech 25 list of America's fastest-growing public tech companies.

Today, Veeva counts many of the biggest names in the drug industry among its more than 500 customers, including Abbott, Bayer, Gilead, Novartis and Pfizer. Some 60% of the world's pharma sales reps use Veeva to track buyers and prospects and to coordinate between sales teams globally. Many of them also use Vault, which now accounts for nearly a third of Veeva's revenue. "We're a little bit of an unknown story," says Gassner, a wiry 52-year-old who is fond of plain dark suits. "But in financial returns, we are quite surprising."

The success of Vault capped a ten-year journey for Gassner, who grew up in Portland, Oregon. After learning to code in college, he rose through the ranks at IBM and PeopleSoft before joining Salesforce in 2003, when it was just 200 people. Four years later, Gassner saw a big opportunity to build software focused on a single sector on top of Salesforce's platform. Settling on the $1.6 trillion life-sciences industry, Gassner tapped Matt Wallach, a Harvard M.B.A. with a background in tech sales to big pharma, to cofound Veeva, maintaining dual offices in Pleasanton, California, and Philadelphia, a life-sciences hub.

Veeva's core customer-relationship management software struck a chord and propelled the company through a successful public offering in 2013. At the time, Vault was just "a glimmer of hope" for Gassner & Co. and the challenge of building it was considerable: It didn't share a single line of code with Veeva's core product. To make matters worse, a year later Veeva hit some turbulence as it failed to meet Wall Street's overoptimistic growth expectations. It bottomed out in May 2014, when its stock fell to 59% off its first-day highs.

The work on Vault pushed Gassner and his team out of their comfort zone and into building their own applications for the pharma industry. While the Vault applications have none of the bells and whistles you'll find on popular consumer apps, they facilitated tasks across the industry. They bear names such as Electronic Trial Master File, which provides templates to log patient types and results for trials of new drugs. "When Johnson & Johnson does that with thousands of people, they're not going to do it by email," Gassner says. The result, he says, could separate wasted investment from FDA approval. Vault sales reached $174 million this past year and are on pace to overtake the core business in upcoming years. They've helped Gassner regain the trust of investors, who have pushed Veeva's market capitalization past $8 billion.

Far from celebrating, Gassner is thinking about act three. The company recently launched its first app outside of pharma, providing quality control tools to two top-30 chemical companies. Analysts, such as JPMorgan's Sterling Auty, are raising their price targets for Veeva again. "We think this can be a big opportunity," Auty told investors recently.

Gassner remains cautious. He says he learned years ago from PeopleSoft's billionaire founder, David Duffield, not to get ahead of himself with ambitions or ego. Veeva may have the healthy gourmet made-to-order lunches that are hallmarks of a successful tech company, but Gassner still rides his bike to work. "I feel we are on to something," he says softly. "But it's too early to know."