icon plc brendan brennan cfo - jefferies group...1.10 1.22 1.21 1.00 1.21 1.18 1.17 1.18 1.13 1.16...
TRANSCRIPT
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ICON plcBrendan Brennan CFO
Jefferies HealthCare Conference New York
6TH June 2017
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Forward Looking Statement
Certain statements will be forward looking statements. Actual results may
differ materially from those stated or implied by forward looking statements
due to risks and uncertainties associated with the company’s business and
listeners are cautioned that forward looking statements are not guarantees
of future performance. The company’s filings with the Securities and
Exchange Commission discuss the risks and uncertainties associated with
the company’s business.
This presentation includes selected non-GAAP financial measures.
While non-GAAP financial measures are not superior to or a substitute for
the comparable GAAP measures, we believe certain non-GAAP
information is more useful to investors for historical comparison purposes.
For a presentation of the most directly comparable GAAP financial
measures, please refer to the latest Form 6-K (Unaudited) filed with the
Securities and Exchange Commission.
1
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1: ICON Overview
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A history of growth & delivering shareholder value
Annual Revenue ($m) Earnings Per Share
3
0
400
800
1200
1600
2000
2400
2800
* midpoint guidance
0.00
1.00
2.00
3.00
4.00
5.00
6.00
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A global platform & execution capability
4
Established footprint across 38 countries providing
access to patients and execution capability
c4,100
c4,850
c550c2,800
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Comprehensive services across the product lifecycle
5
Consulting Services
Laboratory Services
Clinical Research
Services
Site and Patient
Recruitment Services
Resourcing and
FSP Services
Commercialisation
and OutcomesEarly Phase Services
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Comprehensive services across the product lifecycle
6
Consulting Services
Laboratory Services
Clinical Research
Services
Site and Patient
Recruitment Services
Functional ServicesCommercialisation
and OutcomesEarly Phase Services
– Pre-clinical/Non-clinical
– Strategic Clinical Development
– Chemical & Manufacturing
Controls (CMC)
– Business Process Improvement
– ICON owned site networks
– Alliances with specialist site
networks
– Enhanced site feasibility via
access to EMR & data analytics
– Firecrest site & patient solutions
– Phase II-III Clinical Trials
– Project Management
– Clinical Risk Management
– Clinical & Data Operations
– Adaptive Design
– Medical Imaging
– Site & Patient Recruitment
– Scientific & Safety Operations
– Technology Services
– Clinical Pharmacology
– Clinical R&D/Protocol
Development
– PK & Biostatistics
– Peri-approval & Observational Research
– Pricing & Market Access
– Health Economics
– Epidemiology
– Clinical Outcomes Assessment (COA &
eCOA)
– Language Services
– Scientific Communications & Managed
Markets
– Medical Device & Diagnostic Research
– Real World Evidence
– Central Laboratories
– Bioanalytical LC-MS/MS
– Immunoassay
– Biomarkers
– Functional Solutions
– Strategic Resourcing Solutions
– Government Services
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Differentiated solutions: Enabled by market leading technologies
Outstanding project teams &
culture of operational excellence
Applied Innovation to reduce
development time and cost
Industry leading partnership
models
Global therapeutic, scientific &
regulatory expertise
Targeted data assets address
specific development challenges
7
Investigator & patient engagement
Adaptive trials
Risk based monitoring
Technologies
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Capital Allocation Priorities
ROIC of
x%
Balance Sheet strength & flexibility to enhance growth
8
Internal Investment
c$20mp.a.
External Investment
c$650mon M&A
since 2008
Enhance Returns
c$816mshare Repurchases
since 2014
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2: Market Trends and Opportunity
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Specific CRO Market Drivers: Fundamentals Remain Healthy
Source BCG. Company estimates
Biopharma Outsourcing
Current
Worldwide
Development Spend
(Addressable Market)
c$72bn
Outsourced
$40bn
c55%
c$127bn
Global R&D Spend
Market Share
Top 5
c42%
c$30bn
Outsourced
c48%
c$63bn
CRO Addressable
Development Spend
Biopharma Outsourcing
2020e
c$148bn
Global R&D Spend
2-3%
2-3%
Market Share
Top 5
c46%
c$40bn
Outsourced
c55%
c$72bn
CRO Addressable
Development Spend
10
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Where will this market growth come from?
11Source BCG/PWC Company estimates
Market Segments
Mid-sized, Specialty, Biotech fastest growth
Large Pharma slower growth but biggest outsourced segment
Medical Devices small but niche growth opportunity
Outsourcing models
Growth expected across all outsourcing models:
– Strategic partnerships
– Functional Service models evolve
– Transactional services still important
Services
Growth across all phases of development
Service sub-segments with above average growth
– Late Phase observational studies
– Medical Affairs/Market Access Consulting
– Pharmacovigilance
Regions
Growth across all regions
West Europe and North America set to remain largest
single markets
Faster growth rate expected in APAC
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3: ICON Strategic Focus
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Vision
“To be the global CRO partner of choice, delivering best in class information, solutions &
performance in clinical & outcomes research.”
Partnership,
Customer &
Market Focus
Enhanced
Capabilities &
Expertise
Operational
Excellence &
Quality
Talent ,
Leadership
Development &
Culture
ICON Strategic Pillars
13
Enabling Technologies & Data that improve development outcomes
M & A Strategy to enhance organic growth
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ICON’s Enabling Data StrategyApplying targeted data assets that address specific development challenges
14
ICON Sources of Data
– EHR/4CR
– IBM Watson
– TriNetx
– PMG
– ICONik
– Firecrest
– Wearables
– ICHOM
– EHR/4CR
– PMG
– Genomics England
Data Required
Patients that meet inclusion/exclusion criteria
Clinician & patient generated trial data
Patient reported & provider outcomes data
Identification of suitable patients for study programmes
Development Challenge
Real time assessment of patient safety, drug efficacy during trial
Assessment of patient outcomes in “real world” settings
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ICON’S Enabling M&A StrategyA history of M&A to enhance service capabilities & global reach
2008-2016:c$650m Investment
M&A: Potential Future Areas
– Patient Engagement/Access
– Niche Therapeutic Areas
– Targeted Geographic Expansion
(APAC)
– Late Phase Services
– Medical Devices
– Enhanced Data Services
15
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4: Financial Performance
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1.10
1.22 1.21
1.00
1.211.18
1.171.18
1.13
1.16
NBB NBB TTM
440502 510
434
521514
622572
605 580
Q1 16 Q2 16 Q3 16 Q4 16 Q1 17
Net Gross
Net Business Wins & Net Book to Bill Ratios
17
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Quarterly Net Revenue
18
$401 $411
$420 $435 $432
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
7.8%
$’m
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Client Concentration: % Revenue
19
75%
58%
45%
29%
74%
58%
45%
24%
Top 25 Top 10 Top 5 Top 1
Q1 2016 Q1 2017
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Reducing customer revenue concentration
20
18%26%
31% 31% 26% c15%-17%
48%
53%53% 49% 45%
c35%-40%
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2012 2013 2014 2015 2016 A 2017 e
Revenue Other Clients Revenue Top 5 Revenue Top Client
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Quarterly Operating Margin
21
19.0% 19.0%
19.3%
19.5%
19.8%
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
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cent
* Includes circa 7c Tax Upside
112114
119
126129
7
Q1 16 Q2 16 Q3 16 Q4 16 * Q1 17
E
Earnings per share
22
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Financial Guidance Ranges Full Year 2017
Range % Increase
Revenue $1,700m – $1,750m ▲2% – 5%
EPS $5.06 – $5.26 ▲6% – 10%
23
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Investment Summary
Guiding growth for 2017
– ICON with scale, capabilities & people to
capitalize on favorable market trends
– Innovation focus in areas of differentiation
that enhance ROI of R&D
– Clear strategy of organic growth
supported by targeted M&A
– Financial strength & flexibility to support
growth plans
Revenue
+2 to +5%
EPS
+6 to +10%
Top customer concentrationreducing to
c15-17 %24