IQVIA Holdings Inc. — 2024 Q1

Let's move on to the next one in the queue, operator.

I wanted to ask a little bit about the large cancellation that you called out. You absorbed it into the numbers. Could you give us a little bit more specificity in terms of highlighting what kind of impact would be to revenue or/and also to bookings? Because you're [ rolling ] the revenue due to FX, but you're also absorbing an incremental cancellation that's unusual. And maybe that could help us a little bit with the context over there and then also on the booking side.

Yes. Thank you, Shlomo. Well, look, we don't normally speak to cancellations. As you know, we just provide net new bookings. I might point out, by the way, that we [ haven't ] speak to it, but our gross bookings were the highest -- the second highest in our history before cancellations.

Shlomo, just one thing, I would jump in there. I think you're asking about revenue, too. And obviously, because with an ongoing trial, it does have some impact to our revenue in the current year. But we're absorbing that in our normal numbers. And this is a series of trials, actually a program that would play out over many years. So there isn't an outsized impact in this year.

Again, I wouldn't read a lot in the variation quarter-to-quarter. Just as an example, the RFP flow last year was flat versus the [ '22 ] number. So we think this is very good. It's consistent with our expectations. The large segment, the large pharma was up more in the high single digits in terms of RFP flow. EBP was a little bit higher than that at kind of mid-single growth, depends on the therapies. We had a lot of bookings, infectious diseases and internal medicine, which drove a lot of the growth there.

In the TAS business, you talked about strength in the pipeline and some positive signs and maybe some more positive conversations there. As you're moving through the year, are you seeing your pipeline convert kind of at the same rate that you had initially expected? And with the macro maybe slightly more stable, can you just maybe speak to any potential areas of upside as things are starting to loosen up there?

Yes. Well, I mean, I wouldn't talk about upside here so far. And then the macro is not really stabilizing, unless you call stabilizing [ the fact ] that we now know there won't be a rate cut anytime soon.

Yes. I mean, look as a percentage of our total R&DS revenue, [ FSP ] comprised about 15%. So now, if you -- that's in totality. If you look only at the services portion of the business, meaning excluding pass-throughs, which, as you know in FSP, there typically is no pass-throughs; so that percentage is a little higher and continues, it's a little less somewhere between 20% and 25%, I would say. And it continues to grow a point or 2 every year.

I wanted to follow up on the Salesforce partnership comments. Just curious, if you can share any initial reaction from your OCE customers post that announcement? Or is it still early?

Thank you. Well, look, as you know, we've carved out a nice position in the global CRM market for Life Sciences, we came from behind much later in the game. I guess we entered the market more than 10 years after the large dominant incumbent in this market. And today, we have a footprint of over 400 clients and about 100,000 seats in the business, which is quite impressive in a few short years.

Ari, wondering what surprised you on the upside most in the quarter and maybe on the downside? And just following up on the last FSP question, thank you for that clarity, you gave us about its 20% to 25% ex pass-throughs. What do you think the max would be over time?

What was the first part?

What surprised to you on the...

I hate to be boring. I had zero surprises this quarter. I mean, for lack of better words, I think this was a boring quarter. It was exact -- it came in exactly as we thought. Look, the nature of business is pretty predictable. The large cancellation was kind of -- it's based on -- really on the results and on the assessment of the environment by the clients. It's always been very well reported.

This is John Kim on for Mike. I appreciate the FSP comment there. I'll just ask a quick one. On that swing pendulum comment, do you expect that percentage to go down at some point? And in terms of the RFP flows, that sounds great, solid, solid flows. But is there anything that may hinder or delay that turning into sales in the second half?

Okay, thank you. Well, on the FSP comment, I don't know when these things will -- this is a long-cycle business. I remind you that it takes an average 4, 5 years to execute a contract. So we have a very large book of business. I think in our backlog, what is the proportion of that FSP backlog? Is it also about 15%?

Yes.

Yes, so our backlog is over $30 billion, and about like somewhere worth $4 billion -- $4.5 billion of that is FSP. So you see the vast majority of the revenue we're going to deliver over the next 4 or 5 years is going to continue to be full-service programs, and it's not about to influence one way or the other.

Ari, you mentioned earlier about winning an [ EBP ] client that's going to do 2 simultaneous studies in oncology. And I'm curious whether decision to do 2 trials at once could be a function of terms in the IRA that kind of benefit companies to do -- the [ local ] trials that want sort of to maximize revenue before potential negotiating on pricing with Medicare. I'm curious if that could be part of the reason. And in general, I guess, as you think about the structure of IRA, do you foresee more companies engaging in multiple trials at the start? And how do you think that could be benefiting for IQVIA in the future?

Yes. Well, I mean that's a clever thought here why it was 2 [ material ] studies, but it happens to be not the case over here. But -- I see what you're thinking about, but that's not the case here. These are 2 different -- it's addressing 2 different diseases with different -- I think it's different molecules. Again, we can give you in post call some more color on this, but I don't think it's because of the IRA.

Ari, I have a few questions here on R&D Solutions. First, just broadly on the pricing environment, are you starting to see more pricing discipline from your peers versus what you saw in the back half of '23?

Okay. The three questions are totally independent. So first on pricing. Look, there's no change in pricing here. There continues to be pressure from clients, and price negotiations are always tough. We mentioned before that we're having maybe more pressure than we had before on pricing from large pharma clients as they're working on their savings initiatives, but it's not that different than history, maybe a little more than usual.

Look, I wish I had a crystal ball here, and I've been wrong before on predicting a comeback, if you will, of the TAS business. So I'll be cautious in my commentary.

That's correct.

Thank you for taking the time to join us today, and we look forward to speaking with you again in our second quarter 2024 earnings call. The team will be available the rest of the day to take any follow-up questions that you'll have. Thank you.