Dassault Systèmes SE (DSY) Earnings Call Transcript & Summary

Good afternoon, everybody in Europe, and good morning, everyone, in North America. We are delighted to welcome you to a webcast that we have organized with Dassault Systemes. My name is Mohammed Moawalla, and I cover the European software sector here at GS in Europe. And we are delighted to do a drilldown into Dassault's Life Sciences business, which is an exciting new opportunity for the company. On the call with us today from the company is Pascal Daloz, the Chief Operating Officer and Chief Financial Officer of Dassault Systemes. Joining him is Tarek Sherif, who is the Co-Founder and CEO of Medidata. And we also have Rouven Bergmann, who is the Chief Operating Officer and Chief Financial Officer of Medidata. So before we begin, and we will kick off with a few questions. And if you would like to ask any questions, feel free to send them to the webcast, but you can also e-mail them to me at [email protected]. And before we start, I just need to read out some disclosures. We are required to make certain disclosures in public appearances about Goldman Sachs' relationships with companies that we discuss. Disclosures relate to investment banking relationships, compensation received or 1% or more ownership. We are prepared to read aloud disclosures for any issuer upon request. However, these disclosures are available in our most recent reports available to U.S. clients on our form portals. And lastly, I just would like to remind you that this conversation is not intended for the media and is off the record.

So with that, maybe before we kind of drill into Life Sciences, Pascal, maybe -- I know this is a topical question for a lot of investors. Is last we spoke was about a month ago. And what we would like to do is, as we see lockdowns starting to be eased across many markets and businesses becoming operational again, maybe you can talk to us a bit about the environment. When we spoke a month ago, it was a bit of [indiscernible] across the globe with some signs of recovery in China, conversations starting in the U.S., while dynamics in Europe still a bit weak. Can you provide us an update on this? Maybe if it's best to kind of talk to the geographies, but also some of the industries, your core industries and how decision-making is changing and to what extent things are returning to normal.

Okay. So good morning and good afternoon to all of you. More we are almost in the same situation. I mean we see Asia starting again with a certain momentum in -- specifically in China, but also things are going a little bit better in Korea. We still have some quite activities, I would say, in India and the south of Asia. But for the rest, progressively it's becoming not normal, but close to normal. You remember last time we spoke, in Asia, I was telling you that the vast majority of the activity were really driven by the direct sales. Now we see the partner, again, starting to be active as well. Europe, I think some countries are opening. That's the case for sure, for France, but also the south part. We are almost at the same situation. I mean it's still difficult to have people being clear in when do they want to start projects, how do they want to manage the rest of the year. So we are still a little bit in the dark. However, the pipe is okay. We have not seen big transactions disappearing. And same things, we see progressively the partners restarting also, which is also very important because you remember, it's 50% of the revenue for us. U.S., it's probably where it's -- Americas, I should say, but specifically U.S., it's probably where it's probably more difficult right now because most of the states are still closed. And the vast majority of the companies are still closed. However, we see some clarity in the discussion we have with many customers. They start to have a plan with dates, which is really helping us to figure out how we will conduct the rest of the year. That's from a business behavior standpoint. From an industry standpoint, surprisingly, auto is going a little bit better, not only in China, but also in some other countries. And you remember, last time I spoke to you, I was telling you that people are using our solutions to do the product rationalization, if you want. And in fact, they are accelerating the hybrid development vehicles specifically. Aerospace is really where -- I mean, it's a little bit quiet right now. Many companies are laying off or preparing their plan. However, I'm still convinced that in the midterm, this market is still attractive, and we have a certain visibility. And we still continue to see some traction, obviously, in Life Sciences, but also in the high tech. High tech is a domain having not an excellent performance, but given the situation, some traction. And it's particularly true in Asia, but also in Europe as well. And we see also construction starting again. Because like aerospace and the auto sectors, it's one of the domains and one of the industries where governments will spend money in order to launch the economy. And we see some projects coming on this front. That's for the overview, Mo.

Okay. That's great. So maybe we can kind of go straight into kind of Life Sciences now, which is the kind of focus of the call. And maybe, Tarek, if we can talk about the opportunity in the kind of health care tech landscape more broadly, how big is the opportunity? How is the market kind of set up and organized between different vendors between maybe the tech specific players versus some of the initiatives that the pharma and the biotech companies are doing? So maybe just help us to kind of paint the picture of kind of health care tech today, and then we can kind of drill into that in a bit more detail.

Yes. Happy to do that and really pleased to be joining you all today, now as a Dassault Systemes employee, which has been a great experience so far, 7 months into the acquisition. So if we just take a step back and look at the health care -- health care overall, it represents about 10% of global GDP, and it's one of the fastest-growing areas at about 5% growth. But it's -- if you look at technology in that market, it's highly fragmented, very siloed; both in the provider market and in life sciences companies and even in the payer market, which is less relevant for parts of the other parts of the world, but certainly in the United States, it is. So maybe if we focus a little bit more on Life Sciences because that's at the core of where we are today, and I think it's where probably the highest growth is and where the highest concentration of tech spend tends to be. So there's a continuum going from the lab, so early discovery of drugs all the way through development and then through to manufacturing and commercialization. And again, because of the way the industry evolved because of regulatory requirements, because of just the way that the process has worked historically, it's again a very siloed, fragmented market with different players playing a role in each part. And in some cases, much smaller players, in some cases, much larger players. So where Medidata has historically been strongest has been in clinical development. And there we play a significant role to probably the largest -- second largest player at this point is Oracle Corp. They used to be the largest. If you look in research and development, it's highly fragmented, Thermo Fisher. Dassault Systemes have been significant players through BIOVIA. And then if you look into commercialization and compliance management, Viva plays a role there, but there are a variety of other players as well. I think what makes us stand out, though, is that we're the only company at this point, having come together, that really addresses the entire continuum within Life Sciences from early discovery right through to manufacturing and then commercialization. And I know we're going to get into some deeper questions as the conversation goes on. But I think it's one of the things that really gives us a great view into the industry and some of the trends that are happening as well as positioning us very well to be successful in the future.

Great. Thank you, Tarek. So maybe we can then move on to kind of what drove the combination of Dassault and Medidata. Because in some ways you're coming from kind of like very different fields. One is a very classical industrial focused player. The other is more kind of in science. And I know Dassault has made Life Sciences a bit more of industry focus. So maybe to help us understand what drove the combination, where are the kind of complementary aspects in terms of functionality that each brings. And I think one of the things that you highlighted that there's this fragmented market. And I think what you're looking to build is more of an end-to-end platform, which is kind of missing today. So why is this important? And why will this -- what will it enable pharma and biotech companies to do that they've not been able to do before?

Yes. Happy to address that. It's one of the passions that we have, and it's right on target. So at the highest level, I think what brought us together was a commonality of purpose. So Medidata's mission has always been to impact patients' lives by developing innovative technology and helping to spur innovation and using science to do that. And I think in first meeting Pascal and then getting to know Bernard, we saw a commonality there of wanting to impact society. Obviously, Dassault Systemes has done it at a much larger scale than Medidata. But when we started to talk, what we realized is that together, we would be much stronger. And what -- from a strategic perspective, what brought us together was that we both have a view of what's going to happen in the Life Sciences industry, in that we are moving from a world of developing tablets, small molecule -- what people call small molecule therapies, where you had blockbuster drugs and you manufactured the same pill over and over again and then you found a way to mass distribute it. We're moving to an era of precision medicine, where you develop very highly targeted therapies that focus on -- I don't want to say rare diseases, but the particulars of a given disease in a given person, right? Eventually, one day, it will be -- what we always like to refer to as an n of one. You're going to develop a drug for a specific or a therapy for one person to treat them. We're seeing a little bit of that already with CAR T therapies, where we're taking an input from a patient. We're bringing it to the lab and manufacturing, and then we're giving it back to the patient, and we're curing the patient. We're going to see a lot more of that. On top of which there's an innovation cycle that started in pharma in the last few years. I always think of innovation at pharma in very long waves. We came off of one when we had some very large patent expirations that happened a decade ago and pharma kind of retrenched. They pulled back on their R&D budgets. They were very expense focused. And now they've started pre-COVID, they were starting to focus again on R&D, how do we drive new therapies out of the lab to really have an impact on patients' lives, right, to save people's lives, not to just create palliative care. The combination of those 2 things requires a very different approach to drug development. Drug development historically -- and by the way, when I say drug development, I mean from the lab forward. So how you conceive of and create a molecule, through all the way through preclinical, then into clinical development where you're testing the drug on human beings, out of clinical development when you go into manufacturing, and then into distribution of drugs; that all has to be rethought. It's probably been 3 or 4 decades since the trial process was created and conceived. We're still running trials the same way we did. We keep adding bits of technology to it, but we haven't fundamentally changed how we run clinical trials. In the new world of precision medicine, you need a lot more agility. It's much more science focused. It's much more data focused. And so in order to be successful at scale in an era of precision medicine, you have to rethink the entire supply chain. And from supply chain, I mean, from the beginning of -- from the conception of the molecule all the way to commercialization and distribution. When we started to talk with Dassault Systemes, we realized that our complementary solution would be -- we'd be able to bring the first platform to market that could actually meet those kinds of needs and give our customers the capabilities to innovate, to be very scientifically focused and yet scale in a world where you're targeting an n of one, ultimately. And if you look at the solutions that we have between BIOVIA and some of the other solutions within the Dassault Systemes portfolio, we really do touch on that continuum. So the lab, the clinic, the patient which is playing an ever more important roll now collecting patient data directly, through to manufacturing and then commercialization. It's not that we have every piece perfectly put together, but we have all the building blocks. And when we saw that, we really said, it makes a lot of sense for us to get together because jointly, we can accomplish our mission of impacting society and patients much faster than we could do it alone. And I think that's -- that was really the driving impetus for us. And I can say from my perspective, having spent 7 months at the company now, I'm amazed by the capabilities that I've seen that we think will be applicable in the Life Sciences industry, and will really continue to help drive and create value for our customers and patients ultimately.

Great. Thank you, Tarek. So I mean, do you think that given the historical low adoption rates, even of kind of more integrated platforms of tech in general. Do you think in the current crisis with the kind of big lightbulb moment in many ways, [indiscernible] potential crisis a decade ago [indiscernible].

Mo? Mo?

Yes. Can you hear me?

No, you faded in and out. I actually couldn't hear the question, I'm sorry.

No, I'll start again. Can you hear me now?

Yes.

So I was going to say that historically, the pharma and biotech companies, as you said, have been slow adopters. Do you think the COVID-19 crisis is going to be that "lightbulb" moment? I mean, just like we saw post global financial crisis, banks started to rapidly change the way. I mean I would say rapidly might be a bit generous, but change their attitude to using more tech. You saw a rise of fintechs. I mean do you think that we could see a similar situation with pharma? And in many ways, do you think unlike banks who probably were already spending a lot on IT and had to both cut costs and drive more efficiency and innovation, but in the case of pharma, they spend about 5% of cost on IT; there is a kind of dual tailwind of both them spending more, but also now embracing kind of technology?

So only time will tell. The pharma industry has historically been, as you say, slow to adopt technology with lots of false starts. We saw it even when we started Medidata, focused on electronic data capture, it took more than a decade before it was legitimized, let's say, in clinical trials. But there was pre-pandemic, there was momentum forming within pharma to embrace technology more, to embrace the cloud, to bring AI into their operations and really try to use analytics more. A number of pharma brought in chief digital officers, and there were some fall starts, but they were moving in that direction. I do think that COVID will change the momentum. And I do think that companies will move faster. And the reason I believe that is that the pandemic has shown some of the frailty in the drug development process as it relates to supply chains, as it relates to, I think, the biggest factor being that if patients -- if you want to start a new trial, you can't start it if you can't enroll patients. And if patients aren't going to the clinic, then you can't enroll them. Similarly, if you're running a clinical trial and your patient doesn't show up in the clinic, you've lost data that you need to continue to run your trial. And we saw, based on the data that we have, which in real time, allowed us to look on a global -- take a global perspective to the trends happening in clinical development; we saw 80% drop-offs in new patients entering clinical trials, 60%, 70% drop-off in patients showing up for their therapy for their treatment if they were enrolled in a clinical trial. And I think that kind of risk has never been -- there's never been a light that's been shining on that kind of risk. And so I do think that pharma is going to reassess how they use technology, and I think they will embrace it at a much faster pace going forward. We've helped some of our customers look with the data that we have, look at how their operations are running in the current pandemic and make some decisions about how to restart trials, how to deal with certain supply chain issues, et cetera. And that's been very helpful for them. And it shows the power of data and analytics in an industry that's, in a way, only been focused on the data as it relates to whether a drug works or not and hasn't really embraced technology the way other industry has. And I think, by the way, that's the other thing. In your prior question, you said, what brought us together. The reality is Dassault Systemes helped to transform other industries by bringing a platform to them that allowed that kind of data agility that really changed the process of development. And I think we -- when we came together, we both saw that same opportunity within Life Sciences. And obviously, Dassault Systemes has had that experience before in other -- that transformational experience in other industries, and that's not something we had any experience with. So for us, that was very additive. But getting back to the question on COVID, we've seen an acceleration in our business around patient engagement. So collecting objective data directly from patients, it was always kind of a "nice to have" in a lot of clinical trials. Now it's become one of the things that our customers are leading with. They want to get patient data directly from them, either from a handheld, like a phone or an iPad or from a sensor. There are a number of different ways to do it. But the idea that drugs will be developed based on site centricity, so clinical sites, doctor site centricity in the future, I think that's dilutive. I think what's going to happen is there's going to be more of a focus on direct-to-patient interaction. And that's the direction that I think we feel we can add a lot of value in. And so that's one of the areas that we continue to focus on.

Great. Thank you, Tarek. And maybe before I turn it over to Rouven to talk about integration, I mean, I think you have stated that something like 60% of COVID-related clinical trials are running on Medidata's platform. I mean, any insights you can provide on kind of how these are faring? And any insights into the time frame around a vaccine? I think you also said that many of these are in the existing trials. I mean, do you think that could yield an effective outcome? And also, as we think about some of the tech you talked about, what are the kind of barriers that are hindering first developments? And do we need perhaps more advances in analytics, so AI technology, to provide a more sophisticated capability to accelerate this development process?

Yes. Happy to address it. So obviously, I can't speak to the specifics of our customers' results, if you will. But we are seeing a huge surge in interest in clinical trials, both looking for vaccines and therapies. That's somewhat offset by the way, by some trial cancellations and some suspension of studies. So it's not all positive, what's happening with the pandemic. So we've seen sort of the business fluctuate a little bit in the sense that some trials have been put on hold temporarily. None of this is a long-term issue. It's a short-term sort of blip, I think, as people put some -- starting some studies on hold. But at the same time, we have other companies like Moderna and some of the other ones that you read about in the newspaper, who are all Medidata customers, starting massive trials. What I think has been really interesting and what I can comment on, is typically to start a trial can take anywhere from 3 to 4 months, sometimes longer than that. We're seeing that time reduced to less than 6 weeks for some of these COVID-related trials. Now obviously, we're working with our customers hand-in-hand to do that. So I'm very proud of our team's capabilities in helping to enable that. That's really what it should look like. But we're seeing that agility happen. And so I do feel optimistic that given the focus by the industry, by all the various industry players, that we will have some solutions coming out sooner than we would have expected. Because the typical trial process is very slow, but we've seen an acceleration in the way people are using data to plan for the rollout of their studies, to monitor what's going on. I think there's a greater intensity to that than we've seen historically. So overall, I think I do feel very positive about the trend. And again, the other thing that we're seeing, which has been really interesting is a very big interest in what we call ECOA, which is electronic clinical outcomes assessment. So that's putting an iPad in the hand of the physician or of the patient to collect data in real-time at the clinic rather than transcribing it into a data systems like Medidata Rave, like our EDC system. Huge interest in that, a lot of large studies being started because it gives you more qualitative data faster as you're running your trial, and that's obviously very important in some of these vaccine trials.

Great. Thank you, Tarek. So maybe, Rouven, if I can sort of bring you in now. It's been sort of nearly 9 months since the acquisition. You've been leading the integration process. So maybe talk us through what has been -- what is the integration plan? What have been perhaps the challenges and what has kind of positively surprised you as you kind of bring the 2 organizations together?

Yes. Thanks, Mo, for the question. I would say, to start it off, the integration process has been going extremely well. And just very fresh as of this week, we just finalized our employee engagement survey this week. And the employee engagement numbers are at the highest levels we've had them as a company. And that's happening while we are going through an integration, and while we are working remotely as well. So it speaks for the strength of the organization, the focus we have, the clarity and the communication that's going on across the enterprise that people really are feeling that they are connected to the purpose or the higher purpose, but also to the tasks and can really be doing their job successfully. Otherwise, we would see very different results. So I think this is something we are all very proud about, and I think speaks for the quality of the process that we run together. I mean, more specifically, if you look at the elements of the integration really -- and my first point was around the people and the engagement. So I touched on this already. But when we look at the different business functions that we are bringing together, typically, many of the integrations are focused on G&A functions to start with. We have done the same. However, we've also continued to invest into our functions and businesses. So we've been growing our business. We're hiring more people. We're very active in HR to find talent and bring really great talent into the company. But at the same point in time, we look for the possibilities of achieving economies of scale wherever possible. So that we look at the bigger enterprise to tap into the economies of scale, the infrastructure and the resources that we have in the company, so that we really are smart about how do we allocate our resources, certainly as Pascal said at the beginning that the world is shifting and the industries are kind of going into different dynamics as they are reopening. We have to make sure that as an enterprise overall, we are thoughtful on how we allocate the resources. And one really great example is in R&D where our teams have started to work extremely well together to align the development road map, the platform work around the 3DEXPERIENCE platform, but as well the initiatives that Tarek was talking about on the innovation we drive in patient-direct applications, sensors -- data through sensors that we ingest into our platform at highest levels. So in order to accelerate this development work, we looked at a combined workforce plan across Medidata and Dassault Systemes. And one of the great things that Dassault Systemes that we have done very early on is to build a development center in India that has now allowed us to tap into this infrastructure and hire talented engineers very quickly. And I think we've never been as fast as now to ramp up development resources and get people to work. So I think that's a great example of synergies and integration. Creating joint workforce plans, I think, is something that is going to drive a lot of value for us in the future. And then going to the sales function quickly, Medidata, when you look at Medidata prior to the acquisition, and certainly, today, we are very North American U.S.-centric, right? That's where the majority of our revenue is coming from. That's where the majority of our employees are. And certainly, as we think about a global go-to-market function, the ability to tap into the geographies in EMEA as well as in Asia. We've invested at highest rates in China. But also, it's not only enough to hire sales and service people in China. You also need to build an infrastructure, a back office, HR, finance function, legal functions. So we are now bringing this together. So we can scale much faster. We can control the business better. And so these are just a few examples of what we are focused on. But in a nutshell, we are very well on track to deliver the synergies. And most importantly, our organization and people work well together.

Great. Thank you, Rouven. Maybe just -- maybe along the synergies moment here, to what extent in terms of some of the cost side in terms of -- I know you were looking to consolidate some of the cloud infrastructure. Is that all on track? And then the second one is really one for Tarek. To what extent is the regulatory environment, could that be a bottleneck in preventing or slowing down that pace of acceleration you talked about earlier in terms of the 2 companies?

Yes. So let me start off on the -- maybe some of the synergy items that we look at. For sure, the consolidation of cloud infrastructure is something our teams also work together on, and I should have mentioned that before. But that's a focus point, to [ out scale ] and our cloud in Houston that Medidata built, we are bringing this together. So these projects are all kicked off, and they will drive synergies over time. I also would caution it's going to take us some time to bring these infrastructures together. But there are no obstacles or bottlenecks that we have identified that are kind of giving us any change in direction. No, we are very focused on executing this. I think the second point is around buying power. As we combined the companies, we, of course, analyzed our suppliers and vendor base and look at this on a consolidated basis to get much better contracts and terms and conditions. And we do this on an ongoing basis as our teams are working together. So that's another area that is generating synergies right from the beginning, I mean, month-over-month as we continue to work through this.

And just to address the question of the regulatory environment, it's actually -- it's an interesting one. Because what we've seen is the -- in the United States, the FDA has been actually pretty proactive about encouraging the use of more analytics, of more technology. They've been open to, for instance, one of the things that we're an innovator on is synthetic control arm. It's basically where you replicate the placebo arm of a clinical trial using historical patient data so that you have to enroll fewer people in your trial, you can get the trial started faster. And basically, you aren't giving a placebo or current treatment to a patient, you're just giving patients the new therapy, right? And that's an innovation that it's something very new to the industry. Well, the FDA has been very open-minded about it. They're concerned about making sure it's high quality data, and there's some discussions about -- I think real-world data has some problems with it. Whereas our clinical data has already been audited and it's very clean. And therefore, I think they're much more open to it. And we have 2 submissions going into the FDA, not us, but our customers do, using synthetic control arm data to try to get fast track for a drug. And so we've seen that sort of open-mindedness. And in other areas as well. They are encouraging companies to take a more analytical approach to the data and bring new ideas to them. At the same time, we're seeing trends, certainly, in Europe, where there's a lot of concern about individual data privacy, so patient data privacy. Typically, clinical trials are exempt from that. So we haven't had to deal with that historically. But when you start to talk about combining clinical data and real-world data, which is something unique that we can do, there are some questions around that. So it's kind of -- I would say it's a mixed environment. And there's also some questions about where data needs to be housed and if it can be exported from one geography to another. But I think it's all workable. And the reason is that the regulators are pretty -- they're aware of the fact that they don't want to impede the science getting better, right? They want innovation to happen. They want better science. They want to impact patients in a positive way, and that really is their goal. It's safety of patients and improving people's lives. And so there are reasonable conversations around that. So I see it -- I don't see the regulators as a major headwind. And in some cases, they are actually advocates for this trend moving -- changing the way trials happened. I think some of them have been quite outspoken on that topic. [Technical Difficulty]

Mo, are you there? Tarek, can you hear us?

Yes.

I think Mo got disconnected. It's [indiscernible]. I'll just finish asking questions until Mo comes back. Maybe probably, can you touch upon kind of the product pipeline in the kind of near and the medium term, what -- where are you seeing traction? And how does it kind of compare versus the -- if you look at your competitive landscape and you compare versus their product pipeline, especially Viva, how does it kind of -- can you comment on how that develops over the next few months or years?

Yes, absolutely. So there's -- I would say, first of all, it's hard to make a direct comparison to Viva, because we're entirely different companies. They're document focused, really deeply embedded on the commercialization side. They really don't play very much in clinical development at all. They make a lot of noise about it. We don't see them competitively at all in the marketplace. But as it relates to sort of the overall landscape, I think if you look at the capabilities that Dassault Systemes brings, as I said earlier, from being to model -- modeling and simulation in the lab, all the way through to clinical development, manufacturing and then aspects of the commercialization process, there is -- we don't have any one competitor. There's no one that offers that continuum. And as we move towards creating a unified platform across all of these areas, it puts us in a very strong strategic position. I think there are lots of companies that have point solutions and continue to evolve those, add features and functionality. But in terms of the breadth of capability, we're unmatched. And it's really up to us to execute on bringing all the pieces together in a way that creates value for our customers. And that's really what we're focused on. It's not going to be an overnight process just because also pharma doesn't quite work that way. As I said, they are quite siloed themselves, and you have to take an incremental approach. But we feel very good about our competitive position.

Great. Thank you very much, Tarek. I'm sorry, I got dropped off a bit earlier. So maybe, Pascal, if I can kind of bring you back in. Dassault has sort of made some early forays into Life Sciences a few years ago. I think you were working on the kind of Living Heart Project in collaboration with sort of the FDA. And as we think of that kind of broader offering that you have, you talk a lot -- we talk a lot about digital simulation in the kind of manufacturing world. But how far away do you think we are to sort of simulation being more pervasive and things like the kind of Living Heart Project becoming kind of more meaningful in the kind of biological world?

Thank you, Mo, for the question. I mean if you step out a little bit, this industry is doing a lot of physical experiment. And just to make a quick analogy, if you remember, 20 years or 30 years ago, the aerospace, they were doing almost the same. We had the physical mockup to develop almost a different part of the airplanes. And they were testing physically many, many things. So the bet we are doing, and we are making with Medidata together, is progressively we will replace all the physical experiment, whatever inside at the research and discovery level, at the trials, at the manufacturing as well, by the twin, what we call it the virtual twin, the ability to use the virtual worlds as a way to test virtually all the different options and find the optimal way to do things. To make this happen, you need a platform. And this platform not only needs to have all the data-centric capabilities, all the collaboration things. But you need also to have this modeling and simulation capability on top of. Because at the end, what we do is deep science. And if you do not understand the science behind, there is no way you can transform this industry at large. So that's really the bet we are doing together. And frankly speaking, and maybe Tarek and Rouven can echo what I'm just saying. We are seeing more and more positive feedback from the customers, because they discover that that's the way to move forward. That's the way to transform their processes, their way to work. And looking at the competitive landscape again, who could claim they have this scientific platform? I guess we are probably the only one. And again, this is a combination of the data centricity coming from Medidata. The names by itself means a lot. And the modeling and simulation capability coming from Dassault Systemes historically, we developed those things for other industries, and we started 10 years ago to do it for the health care sectors at large.

I think you said it very well, Pascal. Just the microcosm that we have within Medidata is we do see this move towards -- and we see it actually also in BIOVIA, but this move towards modeling and simulation, and away from the physical world, and it has enormous benefit. Because there is a speed associated with it and a cost associated with it. But as you know, in the Life Sciences industry, when you first discover a molecule, your patent clock starts running. And so you have a limited amount of time to commercialize your product. So anything you can do to speed that up, creates tremendous value. And so I talked before about synthetic control arm. That's virtualization. You're basically taking data and recreating something that would have historically taken a physical form. And if you have to, let's say, you're in a rare disease. If you have to enroll fewer patients, it cuts your time line down tremendously, because the biggest reason that trials go over cost and over time, typically by 6 months or 1 year, 1.5 years, it's because they can't enroll enough patients. And if you can create a synthetic patient and make them part of your control arm, that means you can probably reduce time by 6 months or a year. The ROI on that is enormous. And in some cases, trials fail because they can't enroll enough patients. So now you go from not being able to run the trial, to being able to run your trial. So I think as Pascal so eloquently put it, we're going to be in a world where virtual plays a more significant role, because there's a lot of business -- there's a business need that's driving that.

Great. Thank you. So we have an interesting question from the audience. Have you had any customer in the kind of pharma Life Sciences industry have a conversation or ask for the kind of unified platform, like the ones you have sold to some of your big aerospace customers like Boeing?

Tarek, do you want to take it?

Yes, I'm happy to take it. So not in the sense of the scale of what we -- I think it's too early yet for that kind of scale. There are discussions that within pharma, about how to think about a unified platform that goes across all these areas, but that's very preliminary. So before they weren't really thinking about it. Now they're starting to think about it, but we're not in active discussions with anybody around that. And I think it's a little bit early for that. We've seen more of a focus on, okay, can we get a unified platform within just development? Can we potentially tie it to research and create that scope of landscape coverage? But it hasn't been across the entire value continuum. And I think the market needs some more time before we see that. But it's definitely moving in that direction.

Sure. I don't know, Pascal, anything you would like to add?

No. I think, as you clearly expressed it, Tarek, we are moving by pieces right now. We try to unify the research and discovery information systems. We try to unify the manufacturing and supply chain system, and we try to unify the trials and the real-world evidence with one single system. So that's the way we move forward. Because if you push the -- in one piece, I think it's difficult to swallow for many of our customers right now. However, in all the discussions we have, all of them after having unifying their pieces, I mean, the different steps; they want to have one single backbone. So the more important, we are building the road map for them to reach this point. And again, it's not in 10 years. But as Tarek said, it's not in one year or 2. It's probably something in between.

Got it. And maybe just coming back to some of the opportunities on kind of cross-sell and upsell. Obviously, you still have kind of the BIOVIA product. You have some of the kind of capabilities within the Dassault portfolio set. I mean, I know when historically adopting the full platform can take a long time. And customers may want to kind of look at the -- especially in this environment, the kind of low-ticket, quick ROI-type solutions. So do you see sort of any product combinations across the kind of BIOVIA Medidata and the Dassault to really experience product set that could drive those kind of "land and expand" quick wins before you sort of have that sort of bigger platform discussion?

I'm happy to take that, Pascal, unless you want to.

No, no. I think I already answered this question a few months ago. So I think it's probably good they hear from you.

Yes. So the answer is, there are opportunities, and we're taking a very systematic approach. So what we decided for 2020 was to pick a couple of examples of customers where we could go-to-market together. And basically, trial balloons from combinations of offerings and gauge their reaction and get our teams to work together, too. As you know, it's not uncomplicated to get different sales organizations with different compensation plans and different focuses and even different business models to kind of work together. And that's moving apace. There are some areas where I think we're ahead of schedule, and some areas we're probably a little bit behind schedule. But overall, we've selected some targets. We've had some conversations. We've had some opportunities pop up. And there are some, as you say, some natural places where I think it's probably a "sooner than later" scenario. And the BIOVIA portfolio, I think there's a lot of potential alignment there with the Medidata portfolio. And in some cases, especially in the sort of mid-market, what we describe as the mid-market, so not large pharma or not the top 50 pharma; there are opportunities for us to begin to cross-sell, and we're working through that process now. So I think we can leverage each other's sales organizations. I think we can give our folks more to carry in their bag and especially in that mid-market segment. There's more of a potential for quicker wins, because the approval process and the embedded systems are more fluid than they are in some of the larger pharmas, which it's one of the things that I think investors sometimes -- it's probably much the same as it is in the aerospace industry, I guess. But the time line for decision-making can be extraordinarily extended, but the commitments then match that, meaning that in pharma, it can take 5 years, 3 years for them to make a decision, large pharma to make a decision to move to a new system, sometimes longer. It took us, in some cases, 10 years, but we're persistent. But then when they make that move, they stay with you for decades. And so I think we're just feeling our way around this. It's been 7 months since we officially closed the deal. We've had 3 months of which -- where we've had a pandemic. So I would say that we're making good progress, given all the obstacles currently, but there's more to do.

Great. So we have another one from the audience. And maybe Pascal, if you can start and then Tarek and Rouven, feel free to chip in. In terms of the sort of integrated platform, what is the timescale we're talking here in terms of to a level that you're kind of happy with? Are we talking sort of 18 to 24 months? Or is it a longer time frame and that it will take sort of 3 to 5 years? Maybe help put some context around that, that would be great.

Again, the way we have architected the road map development standpoint, there are a few steps. But if I, again, give an overview, you have 2 major steps. One is how you connect the systems together in order to have the data flowing from one system to another one, and it's a 2-year time frame. And then to have a unified platform, which is linked to the previous discussion we had, and it's a 5-year time frame.

Got it. Got it. And what is that customers, in your view, what is the -- is the data integration, the big one, and then more the kind of UI harmonization equally important or it matters less? Because once you have the single data platform, the continuum just becomes much more powerful, I guess.

UI is probably the things we have to work on it, because the platform has been designed for manufacturing industries, more than health care and life science sectors. And I'm sure Tarek could add a few things about it, because we have sometimes this debate. However, I mean, the most important is really what is underneath, is to have one single architecture, one single infrastructure, a cloud one. To a certain extent, one single business model, which will be the subscriptions, because Medidata demonstrated that it's a way to go. There is no reason we cannot generalize this approach to everything we do. And to have the collection of applications to cover the entire product -- the drug development cycle. That's the way we do it. And as I was expressing to you, the UI definitively needs to be adapted to -- even if the basic capability being reused will be the same. But the most fundamental thing is really that is underneath. Because it's really the platform. We call it the path, which is really where the core value will come.

And then the last -- go ahead, Tarek.

No Pascal, it's Rouven. Maybe one thing to add is -- and more I wanted to maybe stress one other point. You asked specifically for time lines, right? I think I would look at this much more as the gradual approach of the subscription and SaaS model that we have built at Medidata. We've continuously delivered innovation to our customers and transformed the process. And so when we sign 5-year subscriptions, where we end -- when we are at the 5-year mark, the system has lots of more functionality and different capabilities than at the beginning of when the customer adopted it. And then you then think about a renewal, right? The cross-sell and upsell opportunities, they just happen naturally as we expand our capabilities and our domain knowledge that we bring to the customer, right? And so this is a -- I would look at this much more as a natural evolution that we are now starting. And it's really important for us to be focused on this "land and expand" approach and not think about it as a big bang. And now all of a sudden, we have this miracle platform, and we can move the customer from zero to 1.0. That's not how it's going to be.

Got it. That's very clear, Rouven. So maybe the last question, and this is probably for Tarek. How should we think about companies like IQVIA moving more into software solutions? And do they become more of a kind of competitor than sort of a partner?

Yes. So I mean, we've been a -- IQVIA has been a strong partner to us over the most recent years. And to some degree, CROs develop technology to differentiate and sometimes they turn it into a business, in some cases, not. So I look at -- they will -- there's always room in our space to have sort of coopetition, right? We are going to compete in certain areas, and we work together closely in others. And that's just the way it's going to be. I think there will be a mixed environment. I don't think that there's -- as I stated and then Pascal stated, if you look at our broader capabilities today, the continuum that we address and that we will continue to focus on, it puts us in a league that's different from anybody else. And that's not to say that they're not competitive or that they're not going to continue to be successful. Of course, they will. But we're -- we have different aims and focuses for our business. And at the end of the day, we are an innovation-driven company that's scientific and uses technology to do that, and their business model is different. And they've been very successful. And I give them a lot -- we have a lot of respect for them, and we're going to continue to partner strongly with them. In some areas, we're going to compete with them. And that's just, I think, the way it is.

Great. Well, I mean, we're out of time, and it was a really fascinating discussion today. So thank you very much, Pascal, Tarek and Rouven for this insight into the Life Science business, and Dassault Systemes overall.

Thank you. We enjoyed it.

We look forward to [indiscernible] the Q2 results. [indiscernible]

Do not put pressure on me, Mo.

Yes, and thank you for everyone for dialing in and for the great questions, and have a great weekend.

Thank you. Thank you, all. Bye-bye.

Good-bye.