ICON Public Limited Company (ICLR) Earnings Call Transcript & Summary

JPMorgan Healthcare Conference. Pleased to be joined with the ICON management team here. I'll kick it to Steve here for the presentation, then we'll jump into the Q&A.

Okay. Thanks, Casey. So welcome, everybody. Good afternoon. Let me, first of all, introduce my ICON colleagues. To my immediate left, Nigel Clerkin, who's our new CFO. Nigel joined us 2 months ago. So he's relatively new to the role, but brings a perspective from the service-orientated CRO industry and from a number of different companies, and we're very happy to have him with us. To Nigel's left is Barry Balfe, and Barry has just recently been appointed as our new Chief Operating Officer. Barry has traditionally had a view of our large pharma business. He's now going to take responsibility for our biotech business. That's both -- that's full service business as well as our FSP business. Barry has been with our company for over 20 years now. So has a great pedigree with ICON, based in Dublin and has made a major contribution to our organization over that time. On the far left is Kate Haven. She's Head of our IR group and does a very excellent job shepherding us through these sorts of conferences. So Kate is part of our management team as is obviously Nigel and Barry. Let me start by talking about the forward-looking statement, the mandatory forward-looking statement. I think you've all seen this many times through the presentation, so I won't spend a whole lot of time on this. I do want to switch to a video that will hopefully work for us, and we will give an overview of our company and what ICON does as part of our clinical research service group. [Presentation]

Okay. So I hope that gives you a flavor for what ICON does. Those of you who are less familiar with our industry and our business, you understand that we help to develop and commercialize drugs and platforms for pharmaceutical companies. We released our guidance this morning. And those of you who follow our industry closely, or our company closely, will recognize that we've set fairly wide guidance ranges, both on our revenue line and our EPS line, reflecting some of the choppiness that we're expecting to go through in 2025. Q3 was a little bit of a challenge for us. And subsequently, we provided some information as to why we believe '25 will be a transition period, really due to a combination of market and customer-specific factors for ICON. So think of '25, as I say, as a transition period moving into the longer term, medium term, '26, '27, where we do believe normal growth will be resumed. We have a strong management team. I've introduced 2 of them. We have a good, strong and stable management team, which we believe can work through some of these choppy waters that we anticipate happening in the next 12 months or so. And we believe we have a good strong track record of delivery over the last 10 to 15 years, really particularly around cost management, which will be a very important part of what we do going forward. But we also believe we can leverage that technology, the automation and the overall management of cost to make sure that we deliver on those expectations and on that guidance for 2025. And ultimately, we do believe as we work through this somewhat choppy period, that we do have a very strong opportunity in a growing market to capture market share, to grow our market and to get back to solid revenue growth over the medium term, particularly as we go into '26 and '27. We're encouraged by the RFP flow. We're encouraged by our performance in quarter 4 from a business development point of view. We have strategic partnerships with 20 of the top -- 17 of the top 20 pharmaceutical organizations, and we're seeing a demand for our services continue to grow. RFP flow is starting to move in the right direction. So overall, we see long-term optimism and plenty of constructive opportunity in our market as we move into the years '26, '27 and of course, beyond. So where is our market and how is our market developing? Clearly, as I said, there is some choppiness. But we are supported by strong scientific innovation, and a need for efficient development. The cost of developing drugs is high, is expensive, and we believe we can help to make that a more efficient process. Our market is in the vicinity of $50 billion to $60 billion. It's growing at a sort of low to mid-single-digit rate, and we believe that will continue. We do see, as I've talked about, some near-term volatility and challenges around the core drivers there. However, there is continued investment and prioritization of late stage. So despite maybe some challenges in the preclinical area, we don't see that necessarily correlating with late-stage development, which is the market we serve, particularly around the Phase II and the Phase III. We do see R&D spend continuing to grow at very -- at sort of low to mid-single-digit rate within the industry, and we see opportunity to take market share in that front. The biotech market funding does appear to be improving, although it is volatile. I think we've seen that. Certainly, 2024 was significantly up on 2023, but it's -- the number of deals and the number of companies securing capital was more measured and more limited. And so we do see an element of risk in the biotech market, and that is, to some extent, fueling some of the choppiness that we're seeing in our business. We're seeing a rise in the novel and complex therapies that's impacting our backlog. Rare diseases, oncology tend to be a large part of the business that we do, but the FDA is playing their part. I think about 50 drugs got approved last year, 55 years before. So there is a pull-through on drugs and innovation and companies are willing to spend given the patent clips that they see coming through. They are prioritizing late-stage development and prioritizing late-stage trials to our benefit. And we are seeing, as I said, increased innovation and development, the technology that's able to be applied to trials now, the efficiency, I'll talk about that in a few more slides and tell you about how we're actually deploying that, not just from an efficiency point of view, but from an operational advantage and a unique selling point of view as well. And finally, from a -- in terms of clinical trial starts, we're certainly seeing some uptick in that space, particularly around Phase II, which we think augurs well for progress into Phase III over subsequent years. We are a global player. I think the video gave you a sense of the fact that we play -- we are one of the top 3 providers. Our union with PRA Health Sciences about 3 or 4 years ago now brought us into the real world in terms of being a significant player in the clinical development space. We lead in full-service approach. We are the world leader in functional services provision, FSP. We also have a dedicated biotech group, 7,000 people that focus entirely in the biotech space. We think that gives us an advantage in that space. We're well ranked in early phase and also in the late phase or real-world evidence area. Over 40,000 people around the world in 50-plus countries. And we have, as I said, 17 of the top 20 pharmaceutical companies in a strategic alliance, an alliance where there are limited partners and a more consistent spend of their outsourced dollars. So we believe we're well positioned as an organization to benefit from the opportunities coming forward in the market. We're structured in a way that allows us to focus on the key aspects of the market. On the left side of the slide there in terms of pharma, a focus in the top 60 companies. They have a way of doing things that differs from the biotech division where we have those 7,000 people. They are much more agile, smaller companies that require us to move more quickly. We have a different level of expertise and of resource applied to the biotech group. And on the far right there, our development and commercialization is really around our early phase group, our lab group and our consulting group. And they, of course, support our full service and stand-alone work that we do for companies. It's underpinned by a very strong global business support service group, our IT, our HR, our finance group that is globally centralized that gives us the opportunity to really leverage that spend and apply it in a very efficient manner across our business. We've been able to reduce our SG&A expenses over the last -- realistically, last 10 years from well north of 20%, I think, 10, 15 years ago now to well under 10%. And that's an area that we continue to focus on, and we continue to do extremely good work. In terms of our competitive strengths, we're a company that, as I said, has a global reach. In the clinical development space, you need to be able to work across various geographies with various functions and have a range of therapeutic expertise that allows you to prosecute our customers' projects in a way that's efficient and effective and brings them to their time lines and bring them to their deadlines in a way that's effective. Having that global strength, being that scale player is an extremely important part of that and 40,000 people in 50 countries around the world bring -- gives us that sort of horsepower. We have a singular focus in clinical development, okay? We're not getting into -- dramatically into data. We're not in various selling in various machines and those sorts of things. We focus in the Phase I to Phase IV space. That is the area that we put our entire attention. We believe that gives us a unique selling advantage. Our blended delivery models relate really to our full service as well as our functional service group. Increasingly, we see our customers wanting blended solutions. Barry can provide a little more detail about this in the Q&A session, but we see these sorts of models being very important to our customers as they work through the ways they want to develop their drugs. We are fairly agnostic in the way we want to do it. We allow them to ask us and to bring to us ideas. We, of course, have input in that. But our ability to provide that blended solution, being the #1 FSP provider and being #1 or 2 in the full service really gives us that sort of horsepower and that sort of ability. Our site and patient-centric model, our Accellacare site network, you saw it referenced in the video, is really starting to deliver us a significant number of patients. We've doubled the number of patients that we've recruited through that site network in the last 12 months. And we believe that's really starting to bring a level of execution and delivery to our trials. We'll show in a moment that we really believe we're improving our delivery and our execution. And that's partly because of the site network that we have. These are sites that we have people, ICON people in those sites, making sure that every patient who goes into those sites becomes a candidate for our ICON clinical trials. We have that deep expertise in complex trials, in oncology, in immunology, in rare diseases. It's important we have that breadth of therapeutic knowledge and expertise to apply to our customers' projects, particularly in the biotech space, where, of course, many of those companies don't have the expertise necessarily, particularly around the specific areas and particular geographies to allow them to prosecute their trials. So we have that. We can bring that to all of our trials. And then finally, in terms of integrated technology and AI, we deployed something like 3.5 million hours of technology, of automation to our business in 2024. That brought us about a $70 million to $80 million saving right across our business. We see moving up in the more medium term to 8 million hours in 2027. We're planning for 5 million hours in this year. So we're really starting to move. It's not just AI. There's an AI component. I'll talk about that in a moment, but it's around the technology and the ability for bots and OCR and algorithms to help us be more efficient in the way we deliver work for customers back to our plan to do more for customers and to allow our customers to get their drugs to market in a more efficient manner. On that basis, we have embraced the digital disruption and the drive to innovation. And you can see in the middle of that slide, there are 5 of the systems and the applications that we brought to the market. One search around the right sites and bringing the right sites to market, making sure that the sites we bring into a clinical trial recruit patients effectively. And we've shown -- we'll show in a moment some data to show that, that is actually playing out nicely. We're bringing in the right sites to our trials. There are fewer 0 recruiting sites, which, of course, introduce a cost without a benefit. I won't go through all of those systems, but Cassandra helps predict what trials need to be done based on past evidence from FDA and other regulatory bodies. Tokenization is in a way that we can follow a patient on a much reduced intensity basis that allows them to bring forward information on the patient on a long-term basis. Particularly important when you think about the GLP-1 agonists and the follow-on trials from that. The safety profiles of those drugs will need to be flawless. Tokenization is a way to help us to ensure that, that data is delivered to regulatory bodies and to sponsors as well. And then the final one there, our ICON digital platform. That's our decentralized platform that we've been developing and will allow us to do decentralized trials in a more effective and efficient manner. You can see the number of hours there that we've been able to deploy going forward. It's growing at a rapid rate, and we really believe that this is one of the areas that we'll be able to help make us a much more efficient organization going forward. In terms of the industry challenges, you can see on the left there, clinical trials don't meet their time lines on a very regular basis, something like 40%, 41% through the top school don't meet their enrollment projections. 30% of sites fail to recruit a single patient. So it takes -- it can take 6 to 12 months to get a site to a point where it can recruit a patient. And there's clearly a lot of expertise and expense required. If they don't recruit a patient, it's a very ineffective way of doing it. As you can see on the -- to the right side of that slide there, we've been able to speed up our site initiation, 10% over the last year. That's a material benefit to our customers through some of the systems we've been -- I talked about on the previous slide, but also through some of the processes that we've been developing within our organization. We have fewer nonrecruiting sites, significantly fewer than the industry average. And that's a metric that we measure on a very regular basis. So we have less sites who don't contribute. And that's an area that we continue to focus on and continue to work on very hard. And ultimately, we also see a significant benefit in terms of the number of trials who make that final deadline. That's ultimately what our customers want us to do, deliver the trial effectively with the appropriate quality on budget, but particularly on time. We need to be on time, and that's the value that we can bring through some of the systems and some of the technology and the global organization that we are as ICON. My final slide really relates to a specific study with a strategic partner that we brought on board a couple of years ago and looked at the 6 areas of their business around partners, the partnership structure, their centralization and hubbing of their operations, integrated data analytics and ability to analyze the data that they had coming in through their organization, site ID and activation, monitoring efficiency and then ancillary services. And you can see through those various initiatives, and again, Barry can provide a little bit more detail on this in the Q&A section, we were able to provide some very tangible outcomes in terms of what we were able to do for this particular strategic customer in terms of reducing their monitoring costs by over 20%, by reducing their study cycle start-up times back to getting sites up and running and able to recruit patients in a very timely manner. And then their CRA productivity was increased substantially, too. So we were able then ultimately to command something of a premium price from this particular -- because we were delivering really effective outcomes. And that's really the key to our business. People ask me about pricing competition. Competition is always significant with respect to price. But where we can provide tangible outcomes and evidence of delivery as we have in this particular case, we have a much easier ride on the pricing discussions. So our guidance, as I said, we published this morning on a revenue basis, we reiterated 2024 guidance, the midpoint being at $2.80 and the adjusted EPS at $14. Our full year guidance for 2025, you can see there, the range is wider than normal, as I said, reflecting some of the choppiness that we see in our business and in our environment at the moment, particularly around biotech funding. And we've also talked publicly around some of the challenges on our top 2 customers and the change of the model that they're going through at the moment. Those are still playing out. And so our guidance is by necessity, wide on the revenue side. And of course, as that plays in, it's wide on the EPS line as well. As I said, ultimately, this is a transition year for us. We will continue to work through the choppy waters. We continue to deliver. We believe this guidance is prudent but sensible. We also believe that we have a good team that can deliver this, that can work through the opportunities, the upsides and mitigate the risks that are always involved in our business. And ultimately, the long-term, medium-term opportunity for our business is very strong. The green shoots are showing in terms of RFP opportunities that came through in Q4, our business performance in Q4. While we're not announcing Q4 results today, we've seen some strong business performance. We're in line with our trailing 12-month book-to-bill at 1.2. And we see things like, as I said, clinical trial starts, Phase II opportunities, et cetera, move in the right direction. So in the medium term, we see plenty of optimism for our business and for our industry while we work through the transition year of 2025. With that, I'll hold up and go to Q&A. Thank you.

Thanks, Steve. That was a great overview. Maybe just to start where we left off on 2025 guidance. I wanted to try to get an apples-to-apples comparison of what the range implies from an organic constant currency standpoint, given FX movements have been a theme throughout company presentations today. So during 3Q, you talked about low singles to mid-singles, organic top line growth in '25. Today, the guide assumes 1% growth at the midpoint. So just curious on what your guide assumes from an organic standpoint and if there's anything different between the outlook you gave during 3Q to what you put out today.

Yes. I'll take a crack and then maybe Nigel can add on with respect to FX, et cetera. We did talk about low to mid-singles Q3 and then in the later conference in the year. What we see is, particularly on the biotech side, a little bit of softening and softening of the backlog. Cancellations ticked up modestly in Q4. The net number actually was greater. And of course, the gross number was better than Q3. So we were -- we felt good about the wins. And as I said, the RFPs are there, but the cancellations did increase a little bit, and that took out of the backlog work that we thought would burn initially in 2025 and replaced it with work that probably is a little bit longer in terms of the burn process. So it's the changing composition of the backlog that probably changed that, and it was really around some of the biotech uncertainty and softness. Nigel, do you want to add on the other side of things?

Yes, sure, Casey. So on the organic and FX components, so organic, firstly, the guidance, as Steve said, doesn't include any incremental M&A. So that's truly organic in that sense. There is a small M&A tailwind from some of the transactions that we did during 2024, but that's probably less than 1%. And going the other way, actually, FX for us is pretty neutral, frankly. So there is a slight headwind from FX for us coming into 2025. But again, that will be less than 1%. So I would say the M&A and the FX sort of cancel each other out. So that's essentially an organic picture that you're looking at.

Okay. That's helpful. Can you elaborate on the growth contribution you're assuming between your 2 largest customers and the rest of the portfolio? I think last quarter, you noted that outside of the top 2, you would expect mid-single-digit growth in '25 from the rest of your customers. It sounds like maybe biotech would be a little below relative to your prior expectations. But just curious what's assumed in the guide there between your top 2 and then the rest.

Yes, we did talk about mid-singles outside of top 2 previously. Again, with the softness on biotech, that's probably come down a little bit outside of the top 2. So the biotech challenges continue, notwithstanding, as I say, some positivity in terms of capital allocation or the capital raise, we're seeing some delays in terms of allocation and spend. And that's what's causing that to come back down towards sort of the lower single digits outside of top 2 going forward.

Are you seeing different trends between pre-revenue and post-revenue biotech? And then maybe just walk us through the elongated decision-making that you saw in 3Q. It doesn't sound like that that's abated. Kind of how should we think about that in '25?

I don't think we're seeing dramatically different trends. We don't tend to break that out, but I don't think we're seeing significantly different trends between the pre-revenues and the post revenues. We have about 10% of our business in the pre-revenue. We think that's a relatively sober conservative number, and it's a number that we see continuing. I guess, the biotech industry as a whole has suffered -- is going through some challenges. Even with the significant uptick in capital raise this year, we see those deals being concentrated on perhaps fewer companies, which introduces a level of caution from our point of view. So overall, it's the biotech space, particularly that's changed, I suppose, a little bit in the last 2 to 3 months and it has become a little bit perhaps more uncertain, notwithstanding, as I say, a pretty solid end of year capital raise. So it's -- I'm getting whiplash basically looking at the up and down on the biotech funding at the moment. It's uncertain, and we're a little cautious about declaring victory just at this point.

Got it. That's helpful. Last quarter, you talked about the business going through a 2- to 3-quarter transition period. Is that still the right way to frame things here, meaning you'd assume a step change improvement in the second half of the year versus the first half? And maybe just walk us through how you're thinking about the phasing of the guide in ' 25 and the moving parts.

I think that's still the way to think about it. Nigel might want to be able to sort of give you a little bit more of a flavor for the revenue and the margin sort of side of things going through 2025.

Yes, Casey, I mean, again, the factors that Steve talked about before certainly are consistent in terms of it will be a few more quarters of uncertainty, we think. We're starting to see some leading indicators for sure on the biotech side, in particular. Funding was certainly stronger in 2024. We started to see RFP flow over the last couple of quarters be stronger as well. And we'll report Q4 fully in a few weeks. But certainly, our bookings in Q4, we saw some improvement in terms of the biotech bookings as well. So all of those are nice indicators for the future, but are probably more towards the back end of this year or into next year. So that really hasn't changed in terms of that picture. In terms of the shorter term, again, Steve touched on it, it is sort of a transition period. We are still seeing biotech biotechs take a while to move from an award to actually really getting stuff into starting the work. So you're seeing the backlog burn percentage still continue to track down because of those sort of elongated decisions, et cetera. So hence, that plays into the wider range that we have for this year. So I think in terms of phasing, you're going to see H1 certainly be a bit weaker certainly than it was last year and then starting to see that turning into growth, hopefully, in the second half as we work through all of those issues.

Okay. That's helpful. Just on that backlog burn piece, can you quantify what you're expecting in '25? And if we should still assume book-to-bill in that 1.2 to 1.3 range on a trailing 12-month basis for '25?

I think that's a reasonable 1.2 to 1.3 for trailing 12-month book-to-bill. There may be some, again, some volatility in that. As I say, quarter 4 was a solid quarter for us. We haven't released quarter 4 results, of course, but you can tell from our 1.2 trailing 12 months that we were a little up on quarter 3. So we were pleased about that. In terms of backlog burn, perhaps Barry might give an opinion there in terms of what -- where we're seeing the projects go and the opportunity to improve the backlog burn.

Yes. Thanks, Steve. I think it's fair to say that backlog burn is a product of a couple of different factors. We've obviously spoken about some of that slight delay in biotech decision-making and some of the issues with our larger 2 customers. But the underlying dynamics ex those 2 categories are actually relatively positive. We've seen good uptick across those sectors in recent times. And obviously, it's a focus for us to continue to work with those customers. The operational metrics that Steve addressed in his presentation are central to that. if we can select higher-performing sites on a consistent basis, activate them more quickly and have a lower percentage of nonrecruiting sites, then these trials are being conducted faster. It helps us with burn rate, obviously, but it also speaks to the value we create for customers and their ability to broaden their investments across the whole portfolio.

Got it. And then just shifting back to the headwinds you've seen with your top 2 customers. Just can you elaborate on your conversations with each of them and visibility into spend next year -- or this year, I'm sorry.

Yes. I don't think there's a huge update there from our remarks in Q3. We would see our second largest customer continuing to go through some challenges as we go through 2025, so no change there. The largest customer, I think, were in the stabilizing phase. We're hopeful to see that bottom out. I think by and large, as a unit, we certainly feel we're closer to the end of that process than the beginning. Maybe we're in the sixth or seventh inning, maybe a bit further than that. So it feeds into our assessment of 2025 as an adjustment period. And once those numbers normalize, the underlying growth in the business, I think, will be borne out on the top line.

And then in terms of large pharma outside of those top 2 customers, what gives you confidence that there won't be further restructuring activities from some of these other customers in '25? And just any comments on visibility into budgets across the large pharma group as we enter this year?

Yes. I mean, we see in the top 25, some customers are spending significantly more with us next year. Others are coming down a little bit, as we talked about, certainly in the top 2 there. We don't see a fundamental shift in the amount of FSP business we're doing going forward into 2025. We don't talk -- we haven't been hearing from customers that they're going to fundamentally increase their internalization of work. We've won a couple of the last 2 partnerships we've won have actually shifted from more of a functional outsourcing model to a more full-service outsourcing model. These are customers that have portfolios that really are extremely large, and they are needing to spend and get projects done in a very effective manner. So we don't see a structural change in the industry. Certainly, we've been disproportionately impacted because our 2 largest customers have had some challenges and have moved in that direction, certainly with budget cuts. But we're not seeing that across the portfolio.

Going back to the commentary on RFPs in 4Q, can you just break out the growth rates between each customer group in 4Q? And then how those RFPs informed your outlook for '25?

Yes. We don't break out RFPs by segment so much, Casey. The RFPs on a trailing 12-month basis have been pretty flat. But we see -- what we have seen and what we're optimistic about is sequentially quarter-on-quarter, we saw some uptick. And then year-on-year from a quarter basis, we've seen something of an uptick. So again, cautiously optimistic on that note, but also recognize that some of these RFPs, RFPs are a little bit of an inexact biomarker, if that makes sense, around our business. One RFP can be a ballpark for a company wanting to go out and raise money in the markets. Another can be for a project that's going to start next week. And they have a very material difference in terms of revenue for us. So it's -- I get -- I want to be a little cautious about that. But the green shoots are there, and we're optimistic that they'll really start to produce probably towards the end of next year and into '26.

Maybe just an add-on to that, to your prior question about confidence and Steve's remarks just now. One of the things we do have visibility into is the rate at which we've been aggregating partnerships in the large pharma space. So we have reasonable confidence around the market share we have there in terms of incumbency and the RFP source and where they're going to flow from. And that certainly supports our modeling in that regard. Obviously, the biotech is slightly different dynamics.

Yes.

That's helpful. On the bottom line, you're guiding to $13 to $15 in adjusted EPS in '25. Curious if you can share any color on what your range assumes for adjusted EBITDA margins and how you expect recent buybacks and other below-the-line items to contribute to adjusted EPS in '25.

Yes. So Casey, I mean, let's start with the midpoint, first of all. So from a margin perspective, we'll exit Q4 '24 at an EBITDA margin of about 20.6%. Margins for next year -- for 2025, sorry, at the midpoint would be probably about 0.5% below that, mainly driven by mix effect. Frankly, we are doing more work on vaccines this year, COVID vaccines with BARDA. That has a significantly higher pass-through component than our normal business. So there is a mix sort of drag on margins this year. Absent that, margins would have been fairly steady. So that's kind of where you are in the midpoint. To the lower end of the range, obviously, it gets back to the factors we're talking about earlier. It depends on the backlog burn rate, which, in turn, depends on do we see particularly our biotech customers feel more confident to get studies starting and get moving. And obviously, hence, we have widened the range to Steve's comments earlier. And obviously, the flip side of that is at the higher end of the range, if we start to see better decisions or decisions moving forward into studies and people getting on with things that will push you towards the higher end of the range.

Got it.

Just on, sorry, the capital allocation front, we don't assume any additional share repurchases in that range or additional M&A, just to clarify that point.

Got it. No, that's helpful. I want to ask one just on the long-term targets from your Analyst Day, the 7% to 10% top line growth, inclusive of 1% to 2% M&A and margins of 22.5% by 2027, low teens -- low to mid-teens EPS growth. Last quarter, you pointed the Street towards the lower end of that range. Just can you walk us through your latest thoughts on the LRP given the current market environment here?

I don't know too much has changed. We still believe those targets are challenging, of course, and will be towards the end of that period and perhaps not on a CAGR basis, but on a sort of annual basis or even exit the quarter basis. We believe, honestly, that the -- there's plenty of positivity and plenty of constructive opportunity in our business and in our industry. We've hit a little bit of a speed bump in Q3, particularly related to our top 2 customers. And I think we believe it's relatively isolated. But in conjunction with the biotech uncertainty, it created a little bit of a challenge for us, particularly in 2025. As we work through that, we believe we'll be back to sort of more normal growth rates in 2026 and certainly in 2027. And at that point, I think that those targets are doable, challenging but doable. And it's certainly something we're targeting as an organization.

Got it. Maybe one just on the competitive landscape in biotech right now. Is that where you were seeing the most pricing pressure? You talked about a little bit of pricing pressure during the presentation. And then what's ICON's competitive advantage in biotech? How do you compete with other CROs there? And has the current market environment kind of like driven a heightened environment there competitively?

I mean, our competitive advantage is we have 7,000 people absolutely dedicated to biotech. There are very few other organizations. I can't name one that has that sort of level of resource and expertise focused in the biotech space. So we believe there's -- that's a good message for a biotech. They'll typically -- there's always an element of the biotech, smaller companies want to go with smaller CROs. I think that model and that argument is a little old, quite frankly, because I think we've got our business in a place where we have people who understand the biotechs, who understand that they have 1 baby or 1 drug or 2 drugs that need to make it. And our performance really -- as our performance goes, their company goes. So that's an understanding, and it's a level of expertise that I think we have and that we can bring to bear in the biotech funding -- the biotech projects. In terms of pricing, I don't think there's any greater pricing pressure in biotech than there is in large pharma. I'll let Barry comment on the large pharma side of things in a moment. But biotech is competitive. It's always competitive on the pricing. I think large pharma is probably similar.

I would totally agree. Certainly, in my 25 years doing this, I don't remember it ever not being competitive. But I guess from the inside looking out, we tend not to be selected or not selected solely on the basis of rate or price. We're really looking at value drivers around the ability to demonstrate confidence in the time lines, confidence of the pricing and real predictability across the portfolio. So we do see a high level of competition. That certainly hasn't changed, particularly in the large alliance partnerships given the volume of work that tends to flow through them. But I'm not sure we see that as a departure. And the more we're able to demonstrate the sustained progress on delivery that Steve alluded to in his opening remarks, the more we'll continue to aggregate those partnerships and see that revenue flow over time.

That's helpful. We're coming up towards the end of the session. Just quickly, maybe what are you most excited for in 2025?

Well, I think the opportunity to work through the challenges and to come out of it a stronger organization. I think these sorts of challenges are good for us. And I think it's good for our organization to be able to double down on execution we talked about, and now we have Barry in charge of the overall full service and FSP business. I'm excited about that change to the organization. I think that's going to bring huge benefits to us. I think he's -- we're going to be able to quote some of those metrics more widely going forward. And I think that's going to deliver huge value for our customers. So sometimes, these little stumbles give you a chance to really focus in and build your business and reconstruct your business. And I think that's going to give us a big opportunity for '25 and beyond.

All right. Great. Well, we'll leave it there. Thank you to the ICON team for joining us today. Thank you all for joining, and have a great rest of the conference.