Sramana Mitra: If you look at all the things that they’ve been doing and all the product roadmap announcements that they’ve made, they’re going into clinical trials in a big way. That’s why I asked you the question. Historically, they have come out of CRM but clinical research organizations and clinical trials has been one of their big target areas. Are you starting to see them in deals?
Tarek Sherif: No, their marketing position is much stronger than the reality of where we see them. They have done a good job on electronic trial master file (eTMF), which again is document management. They’ve had a little bit of success in clinical trial management systems (Clinical Trial Management Systemz). We don’t see them at all in the electronic data capture (EDC) market, which is really the bulk of our business currently.
Our core business is around managing the complexity on a global scale. We have a lot of vertical expertise. One of the things that’s an interesting side note is that our customer retention rate is 99%. We don’t see defections. There are very few SaaS companies that can say that they’ve had customer retention of over 99% over the past decade. There’s a little bit of overlap. We’re certainly not partners.
There are areas where you probably are aware there’s a lawsuit between our organizations around some IP issues. The reality is that we are in some ways complementary, but we work in very distinct spaces. Our focus is really on drug development and the analytics around helping our customers increasingly make good decisions or better decisions around which drug candidates can move forward and find the right patients to get those drugs to. We have very different strategic directions. There is a little bit of overlap, but for the most part we don’t see them in the market.
Sramana Mitra: You said that you focus on the part of the pharmaceutical industry that has made the transition to electronic data capture. What percentage of the pharmaceutical industry is in that segment? How was the segment of the drug development processes that are currently in action made that transition to electronic data capture?
Tarek Sherif: The vast majority of clinical trials that are started every year are now done electronically. There’s still a small percentage that’s done on paper, but the entire development process is still very manual. EDC is one piece of it, but it goes way beyond EDC. It goes to areas like how to find the right investigator sites. How to find the right patients? How to randomize patients into a trial? How to manage all the logistics of moving drugs in a clinical trial? How to manage the payments in a clinical trial? The vast majority of that is still being done in a more manual process.
EDC is relatively saturated. Though I would not say it’s a mature market, in the sense that it continues to grow. One of the things that we’ve done very well is take market share. Our biggest competitor, over the years, has been Oracle. We’ve continued to take significant market share. Our win rates have gone up to about 70%, which speaks to your earlier question about competition from Veeva. We just don’t see them very often. They may be playing at the very low end of the market but not certainly not in global complex trials. I don’t expect to see them there for some time, but Oracle has been there. We’ve done a good job competitively against them.
I would say that the overall industry of drug development has a lot of potential for being a platform in the cloud. Because there are lots of disparate technologies that are typically not integrated, and there’re a lot of manual processes, there’s a huge opportunity for growth. We’re talking about an industry that spends about $140 billion a year.
Very little has moved to the cloud so far. In general, IT spending in development is pretty low. You expect that percentage to move much higher. I think that’s a trend that will benefit all the various players who are either in the space or coming into the space.