• November 14, 2001

Dendrite Prescribes Growth Strategy

Pharmaceuticals-focused CRM company's new president is pushing it on a fast track with new partnerships and services.

By Jerry Rosa

Dendrite, the CRM product and services firm, is focusing on growing its client base and penetrating further into the pharmaceutical arena with new partnerships and services to include analytics.

Dendrite's new President and COO Paul Zaffaroni outlined the company's strategy at a recent meeting with financial analysts in New York.

Having only been at Dendrite since October 10, Zaffaroni, a division leader at Acxiom Corp. and a former IBM executive, is moving quickly to position the company for fast growth. He believes Dendrite, which had revenue of $215 million last year, can grow its revenue by more than 20 percent annually over the next six years to reach the billion dollar mark.

However, acknowledging the tightened IT spending climate, Zaffaroni cautioned that reasonable target growth for next year will be within the 8 percent to 15 percent range. The company expects to come in the $225 million range for 2001.

Dendrite, he says, is financially stable with $60 million in cash and no debt, and is undergoing a restructuring that started in midyear that led to the layoff of 155 people and consolidation of certain offices. For its recently ended third quarter, the company reported revenue of $57.1 million and net income of $2.4 million compared to $56 million in revenue and net income of $8.2 million for the same period last year.

Central to Dendrite's future growth is how the company will bring new products and services to current and new customers, says Zaffaroni. "Pfizer is a $50 million a year client. Why not have five or six $50 million clients," he says. In addition to its software, the company offers implementation services, technical and hardware support services, sales force support services, and analytical services.

For Zaffaroni, the way to increase deeper penetration with Pfizer and other pharmaceutical clients will be through Dendrite's Clinical Trial Services Division that cuts the time and cost of clinical trials by allowing pharmaceutical companies to outsource this process. Zaffaroni says the division, which has revenue of $25 million, can be grown into a $100 million a year business. A big piece of that strategy will be leveraging the analytics engine and processes of Analytika, which Dendrite acquired last year.

Another piece of the strategy to enable growth will be the area of partnerships with the likes of consultancies and other high-tech organizations. That is something that Dendrite has not actively explored in the past, he says. The company is expecting to launch its first pilot next month with Oracle Corp. where both companies will market an integrated CRM solution aimed at the pharmaceutical industry using Oracle's E-Business Suite and Dendrite's WebForce Sales Force Effectiveness application.


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