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Veeva Systems IPO shows updraft in cloud business

Veeva founder and CEO Peter Gassner outside the NYSE
Ben Hider | NYSE Euronext

Veeva Systems may not get the sexy headlines of, say, a Twitter or Facebook, but it sure has investors' attention.

(Read more: The cloud: A tsunami of data is headed your way )

In its initial public offering Wednesday, the cloud-based software company saw its shares, which had been priced at $20, soar as high as $39.64. The stock closed at $37.16 a share.

The Pleasanton, Calif.-based company is part of two major trends that investors can't seem to get enough:
1) It's a cloud service provider for life sciences companies, including big names such as Pfizer, Eli Lilly, Novartis and Genentech.
2) It has been profitable for the past three years and in the past year generated more operating cash flow than it raised in funding.

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The growth was a result of Veeva's emphasis on creating an "industry cloud," or vertical, said CEO Peter Gassner, who added that tailoring services to a a specific industry differentiates his 6-year-old company from a legacy business like Oracle.

Veeva has had success getting big clients because its specialized product enables clients to track prescribing habits while complying with regulations, he said.

The company offers three primary products: Veeva CRM, an app for pharma sales reps; Veeva Vault, a content management system and collaboration tool; and Veeva Network, a directory of health-care professionals.

Gassner, a former Salesforce executive and ex-IBMer, said the move from client server to the cloud has opened doors for more products because of the massive amounts of data Veeva collects.

"There are some interesting trends that become available when the majority of companies industries are all using a specific cloud application," he said. "You can essentially crowdsource new data about what the life science industry is doing overall. While the apps are great, the data opportunity is really interesting."

Because Veeva has access to a large amount of information from life sciences companies, it can spot industry trends. Such insights are valuable to big pharma and biotech businesses, and the data-driven service can eventually become another Veeva product.

"It all about industry cloud and data," Gassner said. "It's not rocket science."

—By CNBC's Cadie Thompson. Follow her on Twitter @CadieThompson