IQVIA Holdings Inc. (IQV) Earnings Call Transcript & Summary

Ladies and gentlemen, please welcome to the stage the Senior Vice President of Investor Relations and Treasurer, Kerri Joseph.

Thank you. Thank you. Good morning, everyone. On behalf of the team at IQVIA, I'm pleased to welcome you to our 2024 Investor Day. I would like to remind you that this event is being webcast and presentation materials will be made available on our website later today. Before we begin, I would like to caution you that certain information discussed by management during the event will contain forward-looking statements. Please take a moment to review the information on the following slide. Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and subsequent SEC filings. In addition, we will discuss certain non-GAAP financial measures, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the presentation. And with that, I would now like to introduce our Chairman and CEO, Ari Bousbib.

Thank you, Kerri, and welcome, everyone, to our 2024 Investor Day meeting. Thank you for coming down here. We thought it'd be safer. I mean we -- it was an inspired choice. Initially, we had thought of doing this in a hotel Midtown Manhattan. And we are happy that you are able and willing to come down here. The goals for today are to update you on our progress and to convey to you what makes IQVIA an extraordinarily well-positioned company in our space with capabilities and a customer footprint that is second to none. Today is also an opportunity for you to meet some of the very talented leaders who actually run the business day in and day out and who will be really the show today. I'd like to get started by simply restating IQVIA's vision, which is to leverage an extraordinary broad set of information, analytics, technology capabilities and therapeutic capabilities to deliver innovative solutions and services to our pharma clients. So that they, in turn, can make a meaningful impact on patient outcomes. Intelligence, innovation and impacts are the guiding principles of everything we do at IQVIA, how we develop offerings and how we bring them to market. And as you know, we play across the full spectrum of the pharma value chain from drug discovery, to clinical development, to lab services, to real-world evidence with a full spectrum of commercial services needed to launch, market, price, promote drugs. As you know, these services are becoming more and more integrated. We are one of the largest vendors to the life science industry. But more than that, as you will see in some of the case examples today, the ability to combine and integrate across clinical, real-world and commercial, those capabilities is becoming a differentiating factor in winning business. As you know, we're organized in 3 segments. Our Clinical Development business represents about 55% of our revenues. It's about $8.5 billion. Our Commercial business called TAS, about 40% of our business, $6.2 billion also; and finally, CMS, Contract Sales and Medical Solutions is about 5% of our revenues. Now before I move further in these introductory remarks, I'd like to pause and share with you that in preparation for this meeting, the Investor Relations team and the marketing team presented to meet different choices for the artwork that you saw around here, and that will be the background of most of the slides today. And I chose this slide. I chose this image. And unfortunately, I was overruled by the marketing team. But I want to share with you why I like this visual. I think it illustrates perfectly well where we are in our journey at IQVIA. You will all remember that we started 8 years ago with the merger. For 3 years, we worked on integrating those 2 companies and bring the promise of that merger to fruition. And in 2019, we were ready to fly. We had clear skies and a clear path to the summit. And all of a sudden, COVID hit, with all the disruptive forces that accompanied the pandemic. 2020, 2021, the post-COVID cliff, the loss of the revenues that have surged in '21. And on top of all of that, further bad weather events. We had sharp inflation, a spike in interest rates. We had geopolitical displacements. We had wars in Ukraine, the Middle East, China tensions. We had the IRA. And despite all of this, we had massive attrition, 22%, 23% attrition, staffing issues at sites, wage inflation, despite all of this, we continue to solder on and we remained sharply focused on our strategy and most importantly, on flawless operational execution. And I think this is why we can proudly look at our record of financial performance over the past 8 years. We grew our top line at constant currency, over 8 years at 7.5% per year. And the reason that's remarkable is, one, because in the latter years, we continued to grow despite the COVID cliff. And two, in the endpoints of this series '23 and '24, we experienced further headwinds. As you know, our reported growth, not too special. The TAS business experienced anemic growth, low single-digit organic growth in the second half of '23 and through the first half of '24, caused by large pharma cautiousness, budgetary constraints and delayed decision-making, all of which hopefully is behind us as we predicted TAS has rebounded and is now back into mid- to high single-digit territory in the second half of '24. But then we got hit by the R&DS issues at the end of '24, with higher level of cancellations and a couple of mega trials that got delayed, and that will impact us fourth quarter of this year and beginning of next. Now, despite all of that high single-digit growth over 8 years on the top line is not too bad. Operating margins also grew over the period. As you know, we always try to grow our profits faster than our top line, and that's what happened over 8 years, our margins expanded 340 basis points, that's a little over 40 bps of margin expansion a year. And what's remarkable here is that we did this despite very significant headwinds. Again, focus -- relentless focus on flawless operational execution is what allowed this to happen. We had massive wage inflation. I think 5 years ago, our total wage compensation globally was about $5 billion. It's this year $7.2 billion. We've had increased costs, data processing. We had mix impact and favorable mix impacts as some of the areas of growth coming with a lower margin. Lately, we had a shift towards FSP, lower margins. And despite all of that, we still grew our margins. EPS growth, 14% a year over 8 years. What's remarkable here is that we had a sharp spike in interest rates that caused us to wipe out a full dollar out of our EPS. And finally, free cash flow, which continued to grow despite continued investments in CapEx, software development, et cetera. If you look at the first full year of operation after the merger in 2017, we more than tripled, the number you see for '24 is last 12 months as of the end of the third quarter, but no reason to expect less than that number for the full year of '24. I want to double-click on revenue for a moment over the past 5 years. And the reason I was spending a moment on this is just to convey to you the importance of operational resilience despite a very troubled environment. 2019 to '21 were the COVID years, where we, I think, gained a larger share of the COVID business worldwide than anyone else in our space. And our revenues grew $1.8 billion over 2 years from COVID-related business. That crowded out the rest of the business, but that still grew $900 million. Now, post-COVID '21 to '24, the past 3 years. I think it's very interesting to look at the numbers. We obviously lost over 3 years, gradually $1.7 billion of COVID-related revenue. We have another $100 million to go next year in '25. But the underlying business grew $3.2 billion in 3 years, that is over $1 billion a year from the core non-COVID business. Now, we've continued to make gains in the market. I hear claims out there in the CRO space, and I want to set the record straight here. We are, we remain the largest CRO in the world. And what we did here -- that's true on a reported basis, but it's even true when you bring back the numbers to apples-to-apples comparisons. So what we did here is that we took the real-world business, which we report in TAS. Our differentiation is that we separate preapproval and postapproval, but all the CROs in the world include real-world business in their numbers. So we added that back to our R&DS business that gives you a $9.9 billion revenue. Now, Peer 1, which is the second largest CRO, next largest competitor, we also adjusted down by about $250 million, that's our estimate of what their data business is. They have a data business. It's not apparent or separated from their financials. We estimate it to be $250 million. And so you see that we are a full $2 billion larger than the next largest CRO. That's 25% larger. If you go back to when the second largest competitor was created through a merger, and you look at the year immediately prior to that, which is 2020, you will invariably conclude that we not only gained share against the smaller players, we also gained share against the next largest competitor. I invite you to go do the math. Now, well, why does this happen? And that is because we simply have the most talented 88,000 employees for the service of the earth. Physicians clinicians, nurses, epidemiologists, software developers, business analysts, data scientists, all under 1 roof. We also are truly at the center of the health care ecosystem. We're connected with a network built over decades. Network of governments, government agencies, payers, providers, HCPs, hospitals, patient forums, patient networks. And finally, as you well know, and I'll let you absorb those numbers, I think 64 petabytes of data with Lucas, is it 6.4 x 10 to the power of 15, add 15 zeros behind. There are many data vendors out there. And in fact, since the formation of IQVIA, there are many new players with much fancier names than IQVIA. And they are good and they offer data, information, analytics. Their web pages look the same as ours. And for some use cases, generally within 1 country, it's good enough. But in life sciences, for almost every case, good enough is not good enough. This has been tried for decades. We remain by far the largest, best, most sophisticated, most granular information and analytics provider in the world. And it is those capabilities that enabled us to continue to grow despite the bad weather, the turmoil, the operational issues and they continue to serve our more than 10,000 clients around the world. There virtually is no one in the world of pharma that is not a client of IQVIA. Each and every one of the top 25 large pharma clients is an IQVIA client. On the clinical side, we have strategic partnerships with 22 of the top 25 large pharma. If you look at this next year, about 80 companies that are more midsized pharma companies, 75% of them are IQVIA clients. We are not concentrated. Our largest customer year in, year out is never more than 5% of our total revenues and it's often not the same client, year in, year out. If you take the top 10 clients at IQVIA, they represent about 1/3 of our revenues. These clients spend over $240 billion a year on the kinds of services that we offer. This is a large, attractive and dynamic marketplace. You'll hear more from my colleagues about what we think about what the market is going to do going forward. But totally biotech funding, fundamentally science and innovation, technology, outsourcing, patient engagement, all of those are forces, reimbursement models, value-based reimbursement models, all of these will continue to drive growth in this marketplace. I'm going to leave you with what we see as midterm growth for our company. And we're taking here into account the turmoil I just talked about, the issues in front of us, the IRA, the new administration, all of that is baked in this to kind of temper our enthusiasm. So R&D spend and SG&A spend for pharma, we forecast will continue to grow between 3% and 5%. Outsourcing will add another point. If you ask me this a few years ago before IRA, before the current administration, I might have said a couple of points of outsourcing. One point, so the marketplace itself will grow 4% to 6%. And if you look at large cap companies that serve the life science industry, you'll see that, that's kind of what they see the market doing under normal circumstances, 4% to 6%. Now, we think we're going to make market gains, at least 1 point. And as you know, we do acquisitions, we were hoping to do 2 points of acquisitions, we're only going to do a little bit more than 1. So somewhere between 1 and 2. If you add it all up, that gives you a 6% to 9% type of midterm growth prospects for our business. If things are positive with the skies clear up, we are able to buy more or to gain more share. We will grow at the higher end of that spectrum, 9%, perhaps more. And if we are in the current circumstances where there are lots of headwinds piling up, as we are reporting now, we'll be more closer to the 6%. But at the midpoint, this is 7.5%, which is exactly what we grew annually over the past 8 years under difficult circumstances. So with that, I would like to present to you the program for today. First, we're going to go to back to basics, and we're going to ask Dr. Spaeder and Dr. Verst to together, show you why we remain the most sophisticated, advanced clinical development provider on the planet. Jon will give an overview of market trends, what's going on globally, the pharma industry just to set the context. We'll then spend a little bit of time with Bernd, Lucas and Susan, highlighting our unique differentiators and emerging IQVIA health care-grade AI and see where all of this is taking us. We then move to the businesses themselves, and we have Bhavik, Frank and Jaime talk about TAS, our commercial business. We'll have Rob and Christina discuss real world, Richard and Eran, R&DS, and then we'll bring it all together with Alistair giving an example of a large pharma company, a biotech and a NGO large business where we are growing in public health and share that with you as well. And then we'll bring it all back with what you're all waiting for, which is the guidance for '25 and where we see that going with Ron and Mike. And we'll have a lunch break, and then we'll have the demos and the little tour of the lab. And with that, I would like to invite Jeff and Cyndi to come up.

Thanks Ari. Ari mentioned on the first slide that our mission of accelerating innovation for a healthy world is important. It actually resonates enormously with our customers and with our employees. It's one of the reasons that we've been able to attract and retain thousands of physicians and PhD scientists whose expertise spans nearly every therapeutic area and biostatistical discipline. As a company, we have provided either services, health care insights or laboratory services for nearly 3 out of every 4 drugs that have been approved by the FDA since 2016. And our impact upon the more global scientific discourse is even greater. IQVIA employees have been authors on more than 4,400 scientific publications in recent years. Well, drug approvals and publications. Those are the combination of years of research. But IQVIA is increasingly being involved and supporting early phase drug discovery. For example, we have developed unique, highly functional, druggable and specific antibodies that are used by scores of clients for their drug discovery purposes or lead optimization. We've also developed and created large antibody libraries, each with more than 100 billion unique antibodies that multiple clients utilize as the basis and foundation for their drug discovery efforts in antibodies. And this includes 3 of the 7 largest pharma companies. Once these and other therapies are ready to begin clinical testing, we apply our unique capabilities to conduct regulatory-grade clinical research.

For example, we leverage our scientific and therapeutic expertise and innovation to operationalize even the most sophisticated clinical trials involving cutting-edge technologies. IQVIA is the leader in delivering complicated cell and gene therapy trials with over 200 trials conducted in more than 70 countries in the past 5 years. Importantly, we've been involved in nearly 80% of approvals for genetic disease therapies since 2016. And while we work diligently to bring clinical therapies to patients with rare diseases, we're also recognized as experts in running very large clinical trials and high-prevalence diseases. Our recruitment of approximately 200,000 patients and over 20 cardiovascular outcome trials is greater than any other CRO. Our work has supported customer approvals of 3 out of every 4 new cardiovascular trials and drugs over 2016. And we've actually set the standard for how large global outcome trials are designed and conducted. In addition, we built upon our breadth and depth of extensive cardiometabolic diseases. Importantly, IQVIA has supported the clinical development including operational, laboratory or clinical services and provided patient access and support programs for all approved GLP-1 drugs. Furthermore, since 2016, we've conducted over 100 clinical trials targeting overweight and obese patients. And this is just 1 example of how we're leveraging our differentiated solutions in action in an emerging key therapeutic area. We are a leader in oncology, having executed 50% more trials over the last 5 years than the next CRO competitor. Our impact is even further amplified in our customer partnerships with asset programs. For example, recently, IQVIA delivered more than 20 trials for a top 20 customer developing a novel therapy for an oncologic indication. And as a preferred CRO partner for this sponsor, we help them generate the requisite evidence to fundamentally change the treatment guidelines globally. Additionally, we're at the very forefront of regulatory science innovation, advising our customers with the right novel trial designs and the right pathways to help them with regulatory clearance. Our scientific expertise is unrivaled. and highly valued by our customers. As is our strategic working relationship with clinical research sites around the globe.

Yes, that's right. We've got more than -- experience with more than 0.25 million investigators around the world. Our experience with this space is just simply unrivaled. And when we combine this experience, along with the -- with our health data insights, we're able to provide to our customers robust options regarding the speed, cost and geographic footprint for any [ conceivable ] study that they would want to perform. With all this experience with sites, we also are able to identify those sites that are particularly good at conducting clinical research efficiently and with high quality. And we have labeled these types of sites as our partner sites. We have about 1,400 of these partner sites around the world, and we have a special relationship with them and utilize them on a regular basis for the -- for conducting clinical research. We also know that as clinical therapies are becoming more sophisticated and complex, it is absolutely essential to have access to tertiary care research medical centers. For this reason, we have made strategic investments and relationships with nearly 60 of these centers around the world, including the 3 here on this slide that we call our prime sites. And having these relationships with these prime sites gives us consistent access to 3 things: medical centers that have advanced medical capabilities to perform the more sophisticated types of studies that are being performed; secondly, a large referral network of patients who can potentially participate in these studies; and then third, highly efficient conduct of clinical research. We're also known for our collaboration with research sites in the developing world. And this is particularly attractive and important for our larger companies, especially those headquartered in Europe, who have made public commitments to and for research in the region. And let me just share with you a little bit of a comprehensive but illustrative example of the type of work that we do in the developing world. I just use sub-Saharan Africa as an example. We were the first large CRO to work in sub-Saharan Africa. And these data on the slide attest, we have significant experience in it. And that also translates not only to the operational capabilities, but also the ability to start studies up quickly in that region. You'll hear a little bit later from Alistair about how we were able to start up a Marburg disease vaccine study in a matter of days, which if we didn't have these types of relationships would have taken much longer. Now with this extensive global footprint that we have, our ability to successfully navigate civil unrest and natural disasters has actually become quite sophisticated. We do this in 3 ways -- we do in some multiple ways, but I'm just going to share with you 3 ways that we do this. First is that we have integrated external risk assessments into our clinical trial technology so that we can track very quickly the enterprise-wide risk of any type of external disruption. We can do this literally in seconds and then translate that into being able to do -- to mitigate the risk. Before we had this technology capability, this would have taken days or potentially longer based upon the severity of the external disruption. Recently, with the hurricanes that hit the Southeast, we were able to seamlessly coordinate our response to mitigate the risks of the operational activities that were disrupted by the hurricane. Second, in regions that have greater risk for instability, we proactively seek sites that are able to mitigate these types of risks. And so 1 example is what we did in Israel. We have been increasing our collaboration with sites in Israel that have additional redundancies and abilities to mitigate risk. So for instance, having inpatient facilities in a shelter or sheltered types of medical centers. And as a result of this, we've been actually able to increase our revenue in Israel year-to-date by over 35% despite the ongoing conflict. And then finally, we have just incredibly dedicated staff. When we have a staff that really resonates with this mission of accelerating innovation, they are incredibly dedicated and probably nothing exemplifies this as our staff in Ukraine, who, despite the ongoing war have been able to conduct all the research activities that needed to be done and actually have more than doubled enrollment in the country this year compared to the prior year. While these capabilities allow us to seamlessly conduct research, our commitment to patients after marketing approval of new therapies continues.

We also provide highly differentiated postapproval patient support programs for our customers to help in 2 areas to improve patient adherence as well as drug access to every corner of this world. And since 2023, we've implemented over 580 patient support programs in more than 45 countries across 20 indications and over 175 therapeutic indication areas. And as a recent example, we've helped a customer ensure drug access with a very hard-to-reach patient population by deploying nurses to apply home oncology infusions in the outback regions of Australia. IQVIA is unmatched in our depth and our breadth of reliable molecule to market services. And as such, across this whole clinical development continuum, we're trusted by over 10,000 customers, including the top 25 large pharma companies.

Yes. IQVIA is also trusted by policymakers who utilize our insights to make informed decisions. One of the places that they turn is the IQVIA Institute, which is highly regarded for the credibility and quality of its research as well as its multiple reports and webinars. And so therefore, it's not surprising that the insights of the institute as well as testimony of our experts is frequently cited in the academic literature or referenced by policymakers. Moreover, we're trusted by more than 25 nongovernmental organizations to help them conduct their work around the world. And the insights of our leaders are frequently solicited by executives in life sciences and health care. Finally, we translate our health data into trusted real-time insights to inform governments and health care systems. One example of this was that we provided intelligence on more than 300 health care products to more than 10,000 hospitals and medical centers around the United States as well as multiple government agencies following the disruptions that occurred following Hurricane Helene that damaged some of the manufacturing facilities. This prompted several written expressions of gratitude including one from a U.S. health agency official, who said, we've been a great partner, had always been a great partner, and it helped them stay informed on issues that impacted multiple agencies. Let me end with a brief example of how we assist clients in developing new sites and accelerating therapies to market. We recently supported a study performed -- initiated by a small biotech company and then in collaboration with Regeneron. The study was for a genetic form of deafness and the treatment involved the surgical installation into the inner ear of a gene therapy product that was encapsulated within a virus. Now initially, our Cell and Gene Therapy Center of Excellence working with an IQVIA otolaryngology surgeon, who is actually in our IQVIA Biotech organization, helped refine the protocol to enhance its operational feasibility. We then helped prioritize the sites that would be utilized for the study by doing a couple of things. First of all, triangulating what were the right types of sites, identifying those sites that had access to the types of patients with this genetic condition. Secondly, the sites that actually had the ability to do this type of surgery and third, sites that had research experience. We then touched almost nearly every aspect of the study in combination with the sites and the sponsors. And let me share with you this brief video of the impact of our work which is one of the thousands of studies that we have in progress every day here at IQVIA and explains why we are so dedicated to accelerating innovation. After the video, Jon Resnick will talk -- will take the stage and talk about some industry trends. [Presentation]

We are partners with more than 10,000 health care companies around the world. We're incredibly proud to service sector with such a tangible impact on patient outcomes and day-to-day life. Health care spend itself represents more than 10% of global GDP. Medicines, specifically, more than $1.7 trillion globally. IQVIA's target opportunity within more than $240 billion, growing in mid-single digits, fueled by scientific breakthrough, growing and aging populations and clinical unmet need. Now the thing that's remarkable about the health care segment itself is how unbelievably resilient it is. I'm going to walk through a few trends. Let's start by looking at revenue growth. In the U.S. market over time. If you look at -- this is sales over the last 40 years, despite market events, economic cycles, endemics, policy disruptions, the industry has found a way to continue to evolve and to reinvent itself. The 1980s, many thought Hatch-Waxman and the onset of generics would slow the long-term business model. Instead, pharma doubled down on innovation and on R&D. The industry continued to grow during the Great Recession, outperforming most other assets and sectors and a return to growth within 18 months following the patent cliffs of the 2010s, when Lipitor, Plavix, Diovan and other blockbusters, lost exclusivity. And even in the past 2 years, after the peaks of COVID, the industry has continued to grow and thrive. In fact, if we look at the top 15 pharma companies, excluding some of the noise from COVID, all of them are reporting growth in the first 3 quarters of this year. It's not isolated to the GLP-1s, healthy performance across therapeutic areas and across the globe. Even within the United States where there is so much concern about Medicare and the implications of IRA, you're still seeing double-digit underlying growth. There's -- I'm not going to stand up here for a second and tell you there aren't challenges. Look, every market has obstacles to overcome. This one does too. I think many of you are asking fair questions about some of the fundamentals. So let's walk through them. But before we do, our overall observation remains that this is an incredibly resilient industry. One that we'll continue to find ways to drive growth and to benefit society. So let's go through some of these questions about policy and portfolio health and funding, where growth is going to come from, and let's talk about some of the political situation. Let's start with Medicare. When the Inflation Reduction Act passed in 2022, there was an initial outcry. Extreme views emerged about the risk of market disruption and stifling of innovation. But if you look at the reality so far, it's been much more balanced. Companies did spend much of 2023, considering the impact. We certainly observed a decrease in commercial discretionary spending last year. And the IRA continues to contribute to a large shift in portfolio and R&D strategy. But on the whole, the industry is navigating through. It's adjusting its strategy and it's adapting. Look, still early innings. But if we consider the facts and the data, the impact to date has not been particularly pronounced. In 2024, there were 10 products that were subject to Medicare price negotiations. Despite all the headlines, the actual impact on net price across the 10 has been quite small. In fact, only 1 of the products that has been subject to the Medicare fair price is outside of the range of existing market contracted prices. Said differently, the price for the other 9 products is basically the same as before the fair price was introduced. And if you look on the volume side of the equation, we are seeing significant uplift in Medicare Specialty volumes. In fact, the Medicare Specialty segment is growing at 8%, a rate much faster than the underlying commercial market. This is likely due to patient out-of-pocket cost going down in 2024. And incidentally, out-of-pocket costs are going to go down further in 2025. So with prices being flat, volume up, the 2024 market impact has been neutral to positive for most of our customers. The IRA did trigger companies to reassess their pipelines. And they're certainly rotating to assets that are aligned to the new market incentives. As companies work through the new incentives, caused a spike in clinical trial cancellations and a delay in new trial starts. But our overwhelming view here is this is transitory. Goldman Sachs interviewed 50 R&D leaders, they found the next 12 months will look much more positive than the prior 12. Our internal beta is also very consistent with this. And although we expect some further churn into 2025, the majority of the portfolio rotation has already happened. New portfolio and pipeline strategies are in place and they're already being implemented. Encouragingly, we're also seeing recovery in BioPharma funding. The 2024 data behind me, you see here is only through Q3 and already, it's 20% ahead of all of last year. Excluding COVID, this is the strongest year on record. BioPharma investment is certainly rebalanced and it's moving in an upward trajectory. This, of course, is a positive leading indicator for future clinical spend. Another question we hear a lot is about the high volume of drugs facing loss of exclusivity over the next few years. The industry's revenue exposure over the next 5 is approximately $100 billion -- $180 billion. This is certainly higher than the past few years, but this exposure is less daunting in a historical context when viewed as a percentage of sales. The industry has also learned an awful lot over the past 20 years from patent exposures. On this chart, every dot represents 1 of the top 15 pharmaceutical companies. The companies with the highest revenue exposure on the top of the Y axis, the X reflects the number of products in Phase III development. As you can see, the companies with the aging portfolios have the largest late-stage pipelines. So those in the upper right-hand quadrant are positioned well for revenue replacement. And it's also worth noting that companies have become increasingly adept at managing the end of life cycle, see AbbVie. And many of these products are biologics, which have demonstrated slower erosion curves. So with expirations looming, the next natural question is where is that next wave of growth going to come from? The IQVIA Institute is forecasting 5% to 8% growth per year in medicines through 2028. However, the growth profile looks different than past years. There is increased focus on newer areas, areas of high need -- high unmet need like Alzheimer's, broader CNS, metabolics, all with room for innovation and growth. Obviously, the GLP-1s have been a major breakthrough. They have helped address the global health and economic crisis that affects more than 10% of the world's population. But beyond that, obesity is also helping the industry lean into new types of thinking. IQVIA is currently running more than 50 trials around the world in this space. And these trials are not business as usual. They're smarter. We're running trials with much more commercial awareness built into the earlier design of the trial, many more innovative direct-to-patient studies, using next-generation digital technology to engage patients and to capture patient outcome data. These new approaches will drive efficiencies and improve the overall likelihood of success. Finally, there's no doubt the new administration will look at policy differently. And I think many of us like you are trying to discern exactly what a new HHS and a new government will look like. And there certainly seems to be a lot of speculation and even market concern. Vaccines grabbed a lot of the early headlines here, but even that conversation is more nuanced when you get underneath it. And for context, vaccines represents less than 3% of new starts in clinical trials. But the administration has shared, at least initially, is their focus in 3 areas: conflicts, the return to gold standard evidence-based and chronic disease. Obviously, we're watching all of these areas to closely understand the exact path forward. But to take just the one, gold standard data, this is a shared value across the industry. At IQVIA, we are literally in the business of providing world-class data through clinical research, real-world evidence and safety surveillance. We pride ourselves on being an independent and leading voice. It's very much what IQVIA was built for. We have talked through a number of the issues which are affecting the industry. And all of these are valid areas and certainly good ones to discuss and to watch. But we also believe that some of the noise here is overshadowing the strong long-term fundamentals of the industry and the things that we are most excited about. Fueled by breakthroughs in data science and AI, we're in the precipice of a major efficiency frontier. Companies now have new tools to become leaner, smarter and better in the way that they operate. AI-powered R&D, new ways to collect evidence and ability to tailor engagement directly to health care providers and to patients. These productivity gains will directly enhance the industry's return on investment. Immediately following me, you'll hear details from my colleagues on how IQVIA is advancing in the industry through innovation. We are incredibly proud to serve this robust and resilient industry. Healthcare's long-term fundamentals are strong. Aging populations, breakthroughs in science and in technology and expansion into new areas of clinical unmet need. You look at the data, there are more companies than there were 5 years ago, more products in development and more products we're launching in the next 5 years. The IQVIA Institute's forecast is we'll have a $2.3 trillion medicines market by 2028 and IQVIA will be extremely well positioned to advance along with it. With that, I want to turn to Bernd Haas, who will share how innovation is shaping the path forward.

As Jon just mentioned, intelligence and AI today more than ever are the keys to the next frontier of productivity in life sciences and health care industries. However, working with customers and organizations in health care and life sciences across the world day in and day out. We see them struggle with 3 challenges. The first one is, do they have the right information as data explodes around them ;The second one ,can they derive the right insights in real time; and the third, can they inject the insights into workflows and technologies to drive decisions and trigger actions that have maximum impact. We can help these organizations and our customers better than any other organization in the world. How do we do that? In his introduction, Ari covered IQVIA's unique integrated capabilities across unparalleled information, analytics, AI, technologies and expertise. Our ability to derive insight and create value Across these is second to none. We call that Connected Intelligence. With Connected Intelligence, we help our customers overcome the barriers to higher productivity. We help them understand what information is available and how to access it, leveraging the largest health care and life sciences libraries in the world. We help them connect the information, the analytics and the technology to drive actionable insights. And we help them embed these insights into workflows and end-user tools that drive adoption and impact. In doing so, we enable our customers to discover new opportunities, take better decisions and unleash new agile ways of conducting business. All of this leads to unparalleled value across hundreds of use cases. We're helping customers almost double the speed of site recruiting. We're helping them achieving site activation 20% faster. We're helping them to reduce protocol amendments by 30%, thus speeding up trials. We're helping them reach 4x more patients and HCPs for rare disease launches. And you will see many other examples of impact in the presentations further on today. But Connected Intelligence does much more than that. At IQVIA, we are proud that Connected Intelligence is the foundation for Healthcare-grade AI. At IQVIA, we believe that Healthcare and Life Sciences need and, in fact, should demand a higher standard of AI that is designed to meet the level of accuracy, speed and trust required in industries that affects patients' lives. With IQVIA Healthcare-grade AI, we set the bar higher than any other organization in the industry. And now my friend, Lucas is going to talk to you about how we do that, leveraging our years of experience in the field and our unparalleled quality and breadth of information.

IQVIA is setting the pace of AI in health care. Traditional machine learning recommender systems like our site selection algorithms have been at the core for how we have selected sites for almost a decade. Our rich site performance data and petabytes of real-world data ensure that our recommender algorithms are second to none. More recently, deep learning and generative AI approaches like our IQVIA AI Assistant are allowing our customers new ways to interact with our data. Think of these systems like ChatGPT for IQVIA information. But we're most excited about what comes next, agents. Agents are small, focused generative AI algorithms that team up, self-organize, to autonomously complete complex tasks. Imagine agents trained on our proprietary information operating many aspects of our organization as well as our customers' organizations and IQVIA's moat positions us to win this next era of AI. Our highly curated pool of over 60 petabytes of information that you've heard mentioned several times and our unparalleled infrastructure that supports it. Our commitment to privacy with data over 1.2 billion non-identified patients, our extensive understanding of the comprehensive workflows across all of health care and life sciences. We have over 1,000 highly regulated SOPs, standard operating procedures, how the system works. Our access to the technology that underpins these -- all of these end-to-end workflows. Our 88,000 employees able to provide active feedback to make our AI smarter. Our trusted brand name and relationships with regulators that are required to bring this change forward and our rich pool of data science talent with thousands of data scientists. And these differentiators are illustrated by our many AI awards. IQVIA's Healthcare-grade AI shows up throughout the entire spectrum of the life sciences and health care industry. The breadth of our AI systems is staggering. From R&D, to real-world, to commercial solutions, no one can match IQVIA's impact on the future of our industry. And while we have hundreds of these examples, we only have time to share a few today. And in a moment, my colleague, Susan Hill, the Senior Vice President of Product Management, will come up and highlight 3 that help our customers tackle the biggest challenges across their clinical and commercial needs. And you can see them highlighted here. First, how they design and plan clinical trials with Strategy Workbench. Second, how they support patients on therapies through IQVIA patient relationship manager; and third, how our clients maximize commercial product performance in market with IQVIA AI system.

Pharmaceutical companies are under increasing pressure to run clinical trials faster and more cost effectively. By applying AI solutions across the clinical trial process, IQVIA helped sponsors achieve their development goals. Strategy Workbench is one of IQVIA's core AI-enabled platforms used to optimize trials from design to execution. Utilizing IQVIA's proprietary algorithms that are embedded into the planning design workflow, Strategy Workbench identifies protocol design challenges, estimates time lines and recommends the right countries and sites for a trial. By utilizing strategy work bench, IQVIA has been able to deliver meaningful speed and productivity benefits for our R&DS customers. Once the product is in market, a critical success factor in the real world is to ensure there's a quick and easy way for patients to start and adhere to therapy. Even after treatments are started, however, patients can still face many hurdles such as securing payer approval or needing to be monitored during dosing. These challenges are what drive the value of IQVIA's patient relationship manager platform, an AI-enabled solution that creates a 360-degree view of the patient to insist in providing complete and quality patient care. The platform utilizes AI to optimize patient experience, including patient sentiment analysis that interprets the patient's emotions and recommends a appropriate response based on their needs at that particular moment. Smart assist that provides relevant material to address patient needs while ensuring it's aligned with approved medical content, which is critical in this very highly regulated environment. And finally, patient summaries that are automatically generated from the conversation between the nurse and the patient. With IQVIA's patient relationship manager platform, our customers have seen a 20% reduction in overall program cost and a 15% improvement in patient retention. So now let's turn to the commercial space. Teams have access to more data than ever before but yet they struggle to derive relevant insights and the speed necessary to optimize their customer engagements. IQVIA AI Assistant is a GenAI-based tool that revolutionizes how brand stakeholders interact with IQVIA's intelligence, providing unparalleled insights and recommendations in moments rather than hours or days. AI Assistant has enabled commercial teams to be 25% more efficient in customer engagement planning and increase engagement activity by greater than 15%. So let's look at how this works in practice with our clients. In this example, you're going to see how our sales team utilizes the tool to optimize their daily schedule and personalize their engagement with the health care professional. So George is a pharma sales rep. He asked for help with planning his activities for a particular day in his territory. The assistant instantly analyzes his current plan for the day and highlights a gap in George's current calendar. It identifies a health care professional that he can call on and automatically updates his planned route for that day. But now George wants to understand a little bit more about that doctor he's added to his plan. So he can ask the tool a variety of questions. Can you show me this doctor's profile? What was the last discussion I had with this doctor? And what do you recommend for the topic for our next meeting? The AI Assistant enables George to drive higher quality and more personalized engagements with his customers to ultimately improve patient outcomes. These are just a few examples of how we use AI in our solutions across IQVIA and will share more as we progress throughout the day. So now I'm going to pass it to Bhavik Patel.

Thank you, Susan. Switching now to a deeper dive on TAS. We operate in an attractive segment and our opportunity for TAS is large and growing, driven by increased launch complexities and digital transformation initiatives. Let me walk you through how IQVIA supports this large opportunity. We offer a comprehensive suite of capabilities to support our customers throughout their commercialization journeys, everything from understanding the market, through to planning their launch strategies and all the way to engaging with HCPs and patients. So what are the trends that we're observing? We're seeing significant investments in information, analytics and engagement to maximize commercial value. Today, there is more information available than ever before. Health care data has been growing at a CAGR of over 35% over the last 5 years. With more data and better technologies, analytics has become increasingly important. Speed and precision are critical and accelerating insights has become a competitive differentiator with AI as a central theme. 90% of health care executives listed digital transformation initiatives as a key priority. Engagement is becoming increasingly digital and personalized for both HCPs and patients. In fact, digital interactions with HCPs has doubled since the COVID-19 pandemic and 60% of new patients on chronic prescriptions do not persist to their treatment plan after just 6 months. Now let's discuss how IQVIA is best placed to support the needs of our clients as they navigate these new complexities. We are continuously evolving our portfolio and adding new capabilities. Our investments in information are centered around 3 key themes: adding more insights to our existing data, adding new data types and aggregating, connecting and streaming data with leading technologies. We continue to invest in analytics and AI to embed our intelligence into our services. We have platformed these analytics at scale to improve the overall client experience, moving from more traditional services to technology-enabled services. And our investments in digital help our clients to engage with both HCPs and patients holistically with the right content at the right time and in their preferred channel. So why is IQVIA best positioned to support our clients? IQVIA has spent over 60 years building a vast network of health care information and extraction capabilities worldwide. We have the largest intelligence offering in the industry that allows our clients to operate consistently at all levels, be it local or global and at a scale that is truly unparalleled. No one else has this level of coverage across multiple data types, from sales and prescriptions, through to HCPs and patients. Developing this network is hugely complex. It is much more than just collecting data. It demands a thorough understanding of health care systems and deep knowledge of local markets. Let's now look at a client case study demonstrating how IQVIA's comprehensive information network supports their commercial processes. A top 5 global pharma company is licensing 630 unique IQVIA capabilities across 87 countries. Our information assets are used by thousands of their analysts, managers and executives worldwide and importantly, across multiple use cases, spanning prelaunch planning, market opportunity sizing, M&A strategies, go-to-market activities and investor relations, just to name a few. So how do these tailored information assets support analytics and engagement? We have developed an industry-leading analytics platform that transforms information into real actionable insights and effective engagement strategies, connecting the dots, so to speak, between information, analytics and engagement. Our algorithms and advanced technologies generate insights that are unmatched. And with this industry-leading analytics platform that is interoperable and modular, we create applications that are purpose-built for our clients. These apps provide AI-driven trusted insights to accelerate decision-making, addressing several client processes such as patient understanding, physician segmentation, resource planning and performance management. We're able to do this because we're infusing years of our expertise into our clients' workflows by having a deep understanding of their use cases and utilizing the best information assets available. Now allow me to walk you through a client case study explaining how we deploy this connected ecosystem of apps to support our clients. A top 10 pharma client was launching its existing asset for a new rare renal condition. The condition is difficult to diagnose and patients are difficult to find. Given these challenges, our client wanted IQVIA's support to find accurate patient populations as opposed to relying on clinical literature alone. They also wanted us to help them identify the right physicians who would benefit most from being aware of this asset. IQVIA deployed our AI-based analytics model to find undiagnosed patients, leveraging multiple connected data assets comprising nonidentified patient information from claims, EMR and lab data, to name a few. We then applied IQVIA's superior AI algorithms on these data sets to lend characteristics of patients with this condition. Once the model validated patients, we enhanced it further by mapping to treating physicians. As a result, we were able to help our client identify 9,500 more HCPs with the potential to treat 25,000 more patients with this rare renal condition. I'm now going to hand over to Frank Lin to go deeper on some of our digital capabilities.

Thanks, Bhavik. The way we discover assets and share information, it's evolving at an incredible pace. And health care is no exception. And one of the most exciting frontier is health care digital marketing and communication. Now this goes beyond online engagement. This is truly about fostering awareness, education and sharing of valuable information to make better health care decisions. Think of a doctor searching for insight on a patient's condition and being guided online to a new treatment option or think of a patient who unfortunately suffer from a rare condition but through a social media campaign, discover a new support program they did not know previously existed. Every day, at IQVIA Digital, we enable millions of these meaningful, personalized and human digital connection across the Internet. As we dive into the digital landscape, take a look at this screen and think about the ones that you engage with and experience with every day, from web to connected TV, of your smart TV at home, the e-mail you receive, online videos that we watch, social media platform, podcasts that we listen to and even out-of-the-home digital billboards. The brands are shifting more and more marketing budget onto these innovative and modern channels. And IQVIA Digital has been on the forefront of this trend. And our unmatched capability of integrating all these channels with doctors and patients. Our cutting-edge solutions enable brands to strategically plan, engage with personalization, measure performance with precision and continuously optimize the media marketing. Our advanced platforms and media technology equips the health marketers to seamlessly connect across the open Internet. And we help the brand to deploy highly personalized messaging. Reaching the relevant audience with the right message, at the right places and that the most impactful timing. And we are only able to do this through our distinctive combinations of Connected Intelligence, advanced analytics and Healthcare-grade AI to elevate overall media effectiveness, delivering impactful messaging to foster stronger human connections. I'd like to share 2 quick studies with you today. The first one involved a top 10 pharma company facing challenging patient adherence requirements. Following prescribed therapy is essential to a treatment outcome. By implementing an educational campaign, we helped this client to have 18% increased fill rate for patient exposed to media and extending treatment by 11 days and 6.2 for web. The second study highlights a top 10 pharma company, launching a new brand in a very crowded and competitive category. They partnered with IQVIA to reach the most ideal physicians and doctors. As a result, we were able to help the client improve 37% in audience quality, meaning reaching the right intended audience of physicians and patients, which led to a 10% increase in incremental new prescriptions in less than 6 months. And these are just some of the exceptional results that we deliver to our customers. Now I will turn it over to Jaime for her to share some exciting innovation that we're doing in patient services.

Patient support is one of the great cornerstones of pharmaceutical commercialization. Our industry spends billions of dollars to bring drugs to market. And yet, patients need help to navigate the significant hurdles we see in order to get on and stay on therapy. Here, you see a GLP-1 for diabetes market in which patients are still having challenges getting on therapy and staying on therapy. And in fact, after 1 year, only 1/4 of the patients are still remaining on therapy even in a space like diabetes. IQVIA recognized that challenge and we have a unique ability to see and impact patients across their journey. Our patient relationship manager software enables our customers to help patients overcome adherence challenges, access and affordability. We help our customers better understand those patients and figure out how to design interventions to support those patients. And with the power of AI our support representatives get help to progress all of the patients through those challenges and our agents are more effective and more productive. In fact, we've shown a 20% improvement in the productivity of those representatives. Our AI-powered patient relationship manager software has specific functionality that helps us, including dynamically serving content based on patient comments in real time, automatically hearing adverse events and completing the relevant paperwork and real-time visual hints about how the patient is feeling. We're able to quickly help those patients navigate through challenges such as affordability and step edits. This helps our clients achieve their commercial goals. In a recent large engagement, we're able to help a client launching in an inflammatory liver disease, achieve a 38% improvement in sales within 6 months by identifying patients that were experiencing barriers to treatment and helping them address those barriers. We increased the refill rate, we increased the overall patient retention and we decreased the abandonment rate. We were able to help this client within 6 months and this resulted in better health outcomes for patients and better commercial results for the client. We'll be sharing this demonstration with you after. At this time, I would love to invite Rob Kotchie and Christina Mack.

Real-world evidence remains critical for our customers' success. Regulators, payers, health care professionals and patients increasingly demand evidence on the long-term effectiveness and safety of therapies used in clinical practice beyond clinical trials. Under the new U.S. administration, we anticipate this need to accelerate. Analyzing how treatments perform in the real world is critical for optimizing care and essential for a full understanding of the scientific evidence available to inform health care decision-making. Real-world evidence is a supplement to and not a replacement of clinical trials. Efficient generation of impactful evidence is important. Equally as important is the effective communication of this evidence to ensure the right decision makers are provided with the right evidence at the right time. This is what IQVIA does every day. IQVIA's leadership in real-world evidence is unrivaled. We are recognized for our expertise in amplifying the patient's voice and for our capabilities to communicate evidence effectively through medical education. We do this across the gamut of therapy areas and on a global scale.

In this customer example for new cancer therapy, we ran real-world research alongside the clinical trials, saving the client time and money and getting products to patients more quickly. With rare diseases and rare cancers, there aren't very many patients. And more importantly, time is of the essence when we're trying to get innovative products to the patients, we have to be as efficient as possible. What was different about the way we did this one is that when we look at a clinical trial, we have to compare a new product to what the patients are currently receiving, which means that up to half the patients receive a placebo and they're randomized to receiving -- they're randomized to receiving no treatment, or they receive the standard of care, which, in many cases, is a treatment that's falling short for patients. Real world data can provide a solve for this. Here, we are able to use data that are collected in the course of routine clinical care, electronic health care records, claims data, for example. And that tells us how the standard of care is performing, avoiding the need to randomize patients into that control arm where they're not receiving a treatment. This study design is called an external comparator study. It's an innovation in study design that regulators have recently leaned in on as a key research tool, particularly in rare diseases. In this example, the real world data was collected from IQVIA's proprietary data networks, providing quick access to relevant existing data across 11 countries and the evidence was provided alongside the clinical trial data, enabling one of our customers to obtain European approval for their new oncology treatment and faster access to treatment for the patients. Real world data can also be used to stand alone and answer the question of, does it work and is it safe, long after the clinical trial is complete. This is increasingly one of the most critical and growing applications in our field. This example is for a cell and gene therapy, which is exactly what it sounds like. We go in with a treatment that actually corrects the cells and the gene in a human, effectively changing the underlying causes of disease and halting progression by modifying or replacing cells within a patient. As you saw in the video earlier, this type of treatment is revolutionary. We owe it to patients to develop these types of products but we owe it to them to do so safely, including understand the long-term risks and the benefits. We do this well beyond the clinical trial, often because long-term follow-up studies are mandated by regulators and our customers are therefore compelled to do this and we also do it because it's the right thing to do for patients. In this example, we use real-world data to extend the clinical trial program into an efficient long-term data collection over 10 years. It was direct to patients. So we used our enabling technology to get data without having to go through a site, which minimized the site burden, it minimized the patient burden and reduced work for health care practices by over 60%. It also reduced costs for our clients by over 15%.

In this cardiovascular example for a large pharmaceutical company, IQVIA helped to generate the evidence required to support a data-driven label claim. Hypertrophic cardiomyopathy is a chronic disease where thickening parts of the heart muscle lead to poorer patient function, reduced quality of life, can lead to long-term complications and financial and social burn. Clinical improvement is the main goal. But when we listen to patients, some symptoms, above others, have the highest impact on their lives and were priorities for them. Capturing the patient's voice is central to everything that we do at IQVIA. Here, our teams created, validated and deployed a novel patient-centered endpoint to capture scientifically accepted and patient relevant outcomes data to inform the regulatory package. Using this newly validated clinical outcome assessment measure led to evidence accepted by the FDA and the inclusion of a product label of a substantiated evidence-based claim of 3x improvement in physical limitations and 3x improvement in the shortness of breath. Driving meaningful change in clinical practice requires the effective communication of evidence. Here, for an emerging biopharma, we published 15 publications in a rare disease that's known to affect 1 in every 50,000 patients in the United States. The ability to be able to identify the right key opinion leaders in the field, engage with patient advocacy was critical to our customer success, leading to a 5-fold increase in their scientific share of voice, an IQVIA proprietary measure, such that patients and providers afforded the evidence upon which to make informed decisions.

It continues to be critically important to do long-term safety and effectiveness studies. Real world data and the methods that we use in this space continue to play a broader role and they'll continue to gain traction as we focus on the long-term understanding of which drugs perform, in what different patient populations. We'll use this evidence to support reimbursement and provide patients with trustworthy evidence that is meaningful to them. There's a constant reinforcement of the connection between clinical trials and real-world evidence, with real-world evidence serving as the tool to quantify unmet medical need, treatment usage, gaps in care and future research requirements. Now we will turn it over to Richard to discuss our clinical development solutions.

All right. Well, let's be honest, the real reason you came to North Carolina is that you wanted to hear an authentic Southern accent. So this is your chance. So during this session, Eran and I will share with you some of our perspectives on the R&D industry and how we at IQVIA are transforming clinical development. We are fortunate to be part of a large and expanding industry with total R&D spend expected in 2024 to be $277 billion, assuming that 50% of the total addressable development target opportunity is typically outsourced, that offers a $73 billion opportunity for us with an annual growth rate of around 5%. So why are we the leader in the CRO space? It's because our capabilities are unparalleled, starting with our extensive footprint. We have over 50,000 employees operating in over 100 countries. And in the fast-growing Asia Pac region, we have the largest footprint, including over 3,000 employees in China and over 3,000 employees in Japan. Our scientific expertise is vast with more than 5,000 physicians and PhDs working across numerous therapeutic areas and across our 16 different centers of excellence. We're actually running more than 2,000 trials simultaneously and we have -- are preferred partners with 22 of the 25 largest pharma companies. Now from a lab perspective, we again have a large and global footprint that continues to grow. In any given year, we conduct over 11 million individual lab tests and produce 4 million lab kits. So we have 3 primary stakeholders in the marketplace. They are sponsors, sites and patients. Our sponsors are facing increasing pressure to achieve commercial value, especially in light of the evolving regulations that John highlighted. And while speed and quality have always been essential, now our sponsors are looking to their CRO partners to provide new flexible operating models. They also need a partner who can help guide them through leveraging technology and AI to optimize their programs. For sites, what we see is that their biggest challenge is actually trial complexity. One perfect example of this is the fact that the vast number of vendors that our sites have to manage has increased by 64% since 2018. Sites are also still dealing with staff shortages, resulting in a decline rate for new studies that's increased by 23%. And then when they do participate, they need assistance in finding and supporting patients throughout the trial. For patients, what they need is a greater awareness of trial opportunities. And then once enrolled, they too are impacted by the burden of increased trial complexity that results in patient adherence or dropout rates increasing significantly over the last few years and are approximately 30%. Now as we know, every sponsor or customer is not the same, regardless of the segment, they're all focused on speed, cost, flexibility and they're looking for their CRO partner to provide them therapeutic expertise. For our large pharma customers, they have increased the emphasis on control, operational control. And so we're seeing a greater use of FSP models. But while the reliance on FSP has increased, what we still see is that almost every one of our large pharma companies runs a model that includes full service, hybrid and FSP. The midsized pharma companies, they have similar needs to large pharma but they tend to lean more into the FSO type of model. And one of the things they're really looking for is a trusted partner who can help them grow to that next level. Biotech companies, which is the fastest-growing segment, is almost exclusively full service and that's due to the limited infrastructure that they have. In addition to looking for budget certainty, one of the things that they need, or are concerned about is getting lost within a large CRO, which is why we established IQVIA Biotech years ago, that has a flat organizational structure that mirrors theirs. So how do we help these customers meet their needs of better speed and quality in their clinical trials? We start by engaging them early in the design and planning phase and we offer a solution called DIPA, which is a data-informed protocol assessment. DIPA analyzes the protocol for numerous factors, including things like patient burden and the inclusion/exclusion criteria and it identifies risk that can be addressed early to avoid protocol amendments later, which usually lead to significant delays of up to 3 months and additional cost of $500,000 or more. From all the DIPAs that we've run over the years, over 90% of those identify risk within a protocol that can be mitigated. Once we have the optimal protocol, we identify the right countries and the right sites that will maximize the enrollment rates and then we target and we accelerate start-up. Our Strategy Workbench tool, which Susan referenced earlier, enables this solution and we also use it throughout the continuum of the clinical trial. Once we've identified the optimal sites, we need to activate them for the study. And since 2018, we've been hyper focused on optimizing our start-up activities, achieving a 20% improvement. And in fact, when we compare our data to the 2024 CMR industry benchmarks, we have best-in-class start-up time lines. We also have implemented AI and ML and automated data reviews to drive greater efficiency in the subject data review process, resulting in 20% to 30% efficiency gains. And then finally, when we get to the end of the study, we've implemented real-time data claiming that accelerates database lock time lines by 60%. So sites are a key customer for both us and our sponsors. Our strategy for developing a strategic site network began over 20 years ago with the creation of our prime and partner sites. We now have over 50 prime sites and over 1,400 partner sites delivering differentiated performance across our portfolio. These sites contribute over 50% of the patients that we enroll into clinical studies. And then to complement what we do with our prime and partner sites, we've also established our own SMO called Avacare, which includes over 40 sites in the U.S. and more than 200 individual investigators. Additionally, we've developed 8 therapeutic site networks with sites specializing in specific targeted therapeutic areas like early phase oncology. And then beyond the site network, we collaborate with over 250,000 investigators across the globe. Our site strategy allows us to streamline site selection, activation and recruitment, all, which are critical to delivering the speed and quality expected by our sponsors. To support our sites, we developed a comprehensive suite of technologies and services to meet their needs. As an example, to help manage trial complexity, we offer tools like our investigator portal, which streamlines clinical trial management by reducing administrative burdens and increasing and improving communication. For patient recruitment, we have tools like trial matcher, which connects patients to the relevant clinical trials using advanced algorithms and data and then we have referral hub, which enhances recruitment by providing qualified referrals directly to the clinical sites. And then lastly, to address staff shortages, we have on-site or remote clinical staff that we can offer. Now let's talk about patients who are the most critical part of any clinical study. From the start, we need to find and engage patients. Once they're identified, these patients are referred to the clinical site and then at the site, they go through the consent process, which ultimately allows them to enroll in the clinical trial. What we know is that retaining those patients in the clinical trial is absolutely critical. We have a number of ways to engage with patients, including our direct-to-patient recruitment solutions, which streamlines and enhances the patient recruitment process from outreach to support. Our complete consent solution provides a flexible and user-friendly e-consent solution to improve the patient's understanding of what is often a complex consent process. And then our extensive suite of DCT solutions, including things like mobile sites, home nursing and Study Hub enable hybrid and fully virtual trials, which allows patients to participate from their homes or local communities. We also provide a WhiteGlove patient concierge service. And then when we get to the end of the study, patients can join our alumni network, allowing us to reach out to them for future studies. Our expansive set of solutions offer comprehensive patient support. And then at our last Investor Day, you may recall, we highlighted the scientific renaissance being driven by AI in drug development. The surge in new targets benefits the clinical lab space. Our global footprint and extensive scientific expertise allow us to support our pharma clients across the entire drug development spectrum. We're expanding into the drug discovery space through the -- through Specifica, offering significant future growth opportunities. But what I really want to emphasize is how we're leading with the science. Our innovative in vitro drug discovery approach speeds up and reduces the cost of developing new therapies without the use of animal testing. Over 50% of our portfolio focuses on oncology and making us the leader in solid tumor and blood cancers. We invest heavily in advanced technologies, developing over 500 new assays annually to expand our capabilities. And lastly, we work with major vaccine developers and support CEPI as a core reference lab. It's through our scientific leadership that we've been able to grow our lab revenues significantly faster than the overall clinical lab market. So with that, I'd like to hand it over to Eran Gordon, who will share some examples of how we meet our customers' needs through our capabilities.

As Richard highlighted, we work across an array of customers in all segments. The challenge is finding the right solution to meet their development priorities and their strategic needs. Recently, one of our large customers underwent a process to change their development strategy and their outsourcing. They wanted to move from an FSP model to a full-service hybrid model. And in this process, we were selected as one of their preferred providers, in large part due to the 10-year relationship in which we delivered with them on approximately 1,000 studies. During the selection process, our customer emphasized the need for speed and simplicity. To meet this need, we established a dedicated delivery hub where we could house all of their services, FSP, full service lab in real world. This model enables us to break down traditional delivery challenges, minimize handoffs and create an optimal oversight model. As a result of this selection, we significantly expanded our lab delivery, we increased our FSP and we added full service. In another example of our identifying the right solution for our customer, we had a midsized pharma who is expanding their portfolio from infectious disease into oncology. They lack the depth in this new therapeutic area and needed a partner to augment their knowledge. We leveraged our Connected Intelligence to differentiate ourselves specifically in study and protocol designs. In one of the first protocols we assessed with them, they were able to resolve 10 out of 14 items that we identified as increasing their risk for a protocol amendment. Over time, they've seen the value in this service. They've had higher adoption and now they actually require it for all of their portfolio. In less than 2 years of initiating our partnership, we are now winning a majority of their outsourced pipeline. We're their partner of choice across their codeveloped portfolio and we're exploring expansion opportunities into new geographic areas with them. In our final example, we are looking at an emerging biopharma who found themselves with an effective molecule and a need to expand their development portfolio. They needed end-to-end global solutions. We have worked with them to establish a strategic partnership with a dedicated resource model. We leverage their expertise and knowledge and our global solutions. We've established performance and partnership KPIs to enhance our data decision-making and we have an operating model that we continue to involve with focuses on start-up, early engagement and the financial structure. These examples demonstrate that each customer has different portfolio needs and strategic priorities. No matter their size or their therapeutic area, at IQVIA, we tailor these solutions to meet their needs and priorities. We deliver value through differentiation with our Connected Intelligence, our dedicated teams and our global end-to-end therapeutic solutions. Looking forward, we are confident in our future as IQVIA remains the premier choice for clinical development services due to our expertise, our dedicated teams, our data and our technology. And with that, I'm going to turn it over to Alistair, who will share some on our customer perspective.

Good afternoon. So I'm going to show some examples of how we are using Connected Intelligence. In other words, bringing together our global capabilities across the 88,000 people that we have in our company, in over 110 countries, to answer our customers' most pressing health care needs. And I'll give you an example from a large pharma customer, a biotech customer but we're going to start in public health. Last year in global public health, over USD 55 billion was deployed, typically but not exclusively by nongovernmental organizations. And some of the areas where those spends went were for novel vaccines for new emerging infectious diseases, for trying -- for putting programs in low middle-income countries to try and lower the health inequalities, or to try and identify novel pathogens to stop and avoid the next pandemic or endemic situation. This segment matters to IQVIA because we believe you can't be a company of our heritage, our size, our scale, our knowledge of infectious diseases and not operate in the global public health space. In short, it's the right thing to do. But the second thing is, it is a significantly large segment and increasingly important for our large pharma customers, many of whom have infectious disease trials but if they don't, they have significant operations in many LMICs, low middle income countries. And what they need is a partner with a truly global mindset. You can't run these programs from D.C. or London. You have to be on the ground in some of the world's most poorest nations, understand the regulatory regime to run them. And what the pandemic showed was if we want to help solve as an industry, the world's most pressing public health challenges, a better coordination between public-private partnerships is required. That's what happened in the pandemic. And 1 example of a PPP that we have, I'm going to demonstrate today is CEPI. And you've heard CEPI mentioned a number of times, the Coalition for Epidemic Preparedness and Innovations, okay? Their job is in essence to build coalitions to bring treatments and vaccines to eradicate the next pandemic or endemic. At the core of their mission is something called the 100-day plan. In other words, when a novel pathogen is identified, how to bring a vaccine or a treatment from lab to jab in 100 days. Why does that matter? It matters because, cast your mind back to '22. The quicker you can inoculate and vaccinate populations, the quicker you bend the curve of mortality. Speed matters in endemic and pathogen situations. And unfortunately, we got a chance to test this hypothesis in September of this year. Many of you will have heard of Marburg. This was a public health emergency identified by the World Health Organization, WHO and Rwandan government in September of this year. For those of you who don't know what Marburg is, it is a horrific viral infection, highly contagious, with mortality rates of up to 80%. Now CEPI, which was founded in 2017 on the back of the Ebola outbreak in 2016 in West Africa and ourselves and with the Sabin Vaccine Institute because Marburg does not have an approved vaccine, we got together as soon as the warning came up from the WHO. We created in sequence as opposed to -- normally what happens is -- sorry, in parallel as opposed to in sequence, a protocol that was highly quality from a scientific and regulatory perspective, in partnership with the WHO and the Rwandan government. What this meant, the speed of action was that we could get and dose the first patient in the trial in 9 days. Now cast your minds back to 2020 with the pandemic, with the hundreds of billions of dollars that was being spent by governments, the first patient [indiscernible] for COVID was 137 days. The following 9 days, we managed to enroll a further 700 subjects. So here's an example of where using our on-the-ground technical capabilities, combined with our technology but the fact that we've been working with these partners for numbers of years and we know the continent of Africa very well, we were able to move super quickly. Now unfortunately, infectious diseases are spreading. And working with CEPI and other partners on this chart here, we're now using a number of other trials such as Mpox, Nipah virus and Lassa fever to try and stop and contain infectious diseases. I'm delighted to, again, share with you today that we have the Chief Executive Officer of CEPI, who's recorded a video for you to show what his view of IQVIA and our contribution has been. If we could play the video, please. [Presentation]

Okay. Let's turn our attention now to large pharma. So large pharma is the bedrock of IQVIA. Last year alone in clinical development, a $160 billion market. But when you add to that the funds to help commercialize these assets, it shows what an incredibly attractive segment this is. These clients demand partners who have got truly global presence and can deliver efficiently and let's face it with the increasingly fluid regulatory environment that exists out there. And they also have incredibly strong pipelines. And this plays to our unique proposition of being a truly global company with end-to-end capabilities, trusted with, as you've seen today, health care-grade AI, but also with, I think, the strongest and most deepest therapeutic knowledge that exists in the industry. Now I've got an example here of a top 10 pharmaceutical company. And why I put this example up is I just want to show you how our services are utilized by this client. And as you can see, they are utilized all the way from discovery through to post-commercialization and genericization. This matters because many of our services are mission critical to the success of this pharmaceutical company. And what we're also seeing is our service be increasingly integrated. So for this particular life science company, we just finished a Phase III protocol design using our proprietary analytical technology and our proprietary real world evidence capabilities, we're not just designing protocols that are solid from an efficacy, safety and tolerability perspective. But in today's very competitive launch environment, launching medicines with a commercial edge really is the thing that's going to differentiate and we think that we have unparalleled data analytic and real-world evidence capabilities to help shape the protocols of the future. Here are some of the data points that we've derived with this client. And I'll just draw your attention to a couple of things. Just look at the clinical data lock there. Look at the trial delivery and look at the speed in which we're in -- we're able to help this customer beat its competition because of our capabilities. In this market that we exist in today, having the best medicine is absolutely vital, but being first to market is equally important. Speed matters. And our health grade data really helps us customer. Now another company that we work closely with is AstraZeneca. AstraZeneca, as many of you know, is one of the most innovative pharmaceutical markets out there. Not only does it have a world-class oncology portfolio with some of the best novel treatments on the market, but it also has a very, very strong cardiovascular metabolic and respiratory pipeline, which is going to be super important for the growth of the future. This is Aratana's view of IQVIA, the Chief Financial Officer of AstraZeneca and just take a moment to read please. Again, the message that I want to convey is scale matters, multi-country matters, the data matters and bringing that together in a Connected Intelligence really makes a difference to these customers. Now finally, I'm going to turn our attention to the biotech segment. As you've heard in previous presentations, not only is this a really large segment and a fast-growing segment. But the reality is most of the medical innovation that exists in our industry is derived from this segment. This segment is also becoming increasingly confident in commercializing its own assets. They have very quick -- they make very quick decisions and they have reality is finite internal resources. So again, they require a partner who doesn't just have global capabilities but can move quickly because they move very quickly. And we are so proud that over the last 5 years alone, we've worked with 5,500 biotech companies to help bring their medicines to market. Their is an example of some of the impact that we've had, again, in a significant biotech company. And what I want to convey here is when we talk about biotech customers, as we do with many of our large pharma customers, we don't just talk to them on our clinical research, our real-world evidence capabilities, particularly in biotech, they want our help in setting up their commercial operations. Again, they have finite resources. They don't have the full understanding of regulatory regimes at United States. And so the end-to-end capabilities that IQVIA can bring, I think, are unique and world-class for this segment. Now one of the most innovative biotech companies we work with is a Boston-based Belgium-based biotech called Argenx. It has an incredible immunology portfolio listed on the Amsterdam Stock Exchange. And I'm delighted that the Chief Executive Officer and Co-Founder, Tim Van Halderman, has recorded a video to, again, share his experiences of working with IQVIA. [Presentation]

So I'll try to give you 3 examples from our Global Public Health, large pharma and biotech segments. The reality is we have the potential to provide all of these continuum services to over 10,000 customers. It's never been a more exciting time to be in life sciences. The innovation is incredible. Thank you very much. I'm now going to hand over to the main event, the reason we're all here our Chief Financial Officer, Ron Bruehlman. Thank you.

Yes. Thank you, Alistair, and good morning, everyone. We've showcased today some of our unique strengths and capabilities. that deliver value to our customers, our very diverse set of customers. But the proof is in the numbers, of course. So let's get on to the numbers here. You'll recall that on our third quarter call, we gave the following guidance, which was for revenue of just under $15.4 billion for the year at the midpoint of our range. adjusted EBITDA just under $3.7 billion, again, at the midpoint of our range and adjusted diluted EPS of $11.15. And -- now all of these numbers were at October 30 FX rates at the time that was the rates just before we had our earnings release. Since the election, we see some strengthening in the dollar it trimmed maybe $15 million or $20 million off of revenue if we continue at the current rate, but no impact on profit. And just to reiterate, our guidance absolutely unchanged today, constant currency. At a segment level, for the year, and these numbers are constant currency ex-COVID, because COVID has had a $300 million impact on our revenues this year. TAS growing about 6%. We've talked about the recovery we've seen in the second half of the year, which we had predicted and in fact, is happening and will carry on into next year. R&DS, about 5% growth. Now the fourth quarter is going to be affected by the delays of mega trials that Ari mentioned earlier in his presentation or as that revenue comes back in the future because those are just delays in CSMS, we're thinking about flat for the year. Let's look at 2025 now, and we do see some headwinds and tailwinds here that I'll talk about. Of course, there's the IRA. We've discussed that a lot. And what that's caused is our -- at least some of our clients anyway to reevaluate their development portfolios, which has resulted in some delays, elevated level of cancellations. But in addition to that, we've had several events this year, which are unrelated to IRA, which are going to be headwinds heading into next year. We had those 2 delays of mega trials which will shift into the second half of next year. And also the 2 large cancellations that we've discussed, the 1 in the first quarter and the 1 in the third quarter. Of course, the pricing environment has been a little bit more competitive. In particular, we've seen a lot of competition out of our smaller competitors and in the FSP area. Finally, we've had a number of our major customers undergo major cost reduction programs, and we've had to respond to that as well. Now against that, we see a number of very significant tailwinds next year. We've had the renewed commercial momentum that should carry into next year with very solid demand next year. The IRA notwithstanding, we see very good strength in forward-looking indicators look at third quarter, for instance, we had mid-single-digit growth in RFP flow in R&DS. We entered the quarter with a pipeline of qualified pipeline in R&DS up over 10% and -- we're looking at 5.5% revenue growth for the next 12 months out of backlog. In the TAS area, we had record new drug introductions, in 2023 or approvals rather. And then that's carried on into 2024 with strong approvals again. Biotech funding environment, John showed you the data on that. Now keep in mind, it does take 12 to 18 months for $1 of biotech funding to turn into $1 of bookings on anyone's order book, but we see strong momentum there going forward. And finally, of course, the declining interest rate environment should help the bottom line. Now what does that mean for 2025? Well, we're going to give formal guidance when we get to our February call when we do our fourth quarter earnings and that's normal and typical. But we did give you a little bit of a tease on the third quarter call, and I'm going to fill in a few more details here. At constant currency ex-COVID, we expect revenue growth overall for the company to be 4% to 7% next year. And within that, let's talk about the currency in the COVID. COVID, we have about $100 million left in our backlog that will burn down next year. So we're going to lose, I call that 6, 7, 10 of a point due to the COVID-burn-down on a year-over-year basis. It's actually burned down this year. It's going to be 0 next year, I should say. We went from $400 million last year, $100 million this year, 0 next year, just to clarify. We also -- these numbers I'm showing you here at constant currency, given where rates are today, if they were to continue through next year, that would probably be another 70 basis points or so of drag on our revenue growth. But, of course, what we know is that the only thing that's certain is that the numbers will be different next year. So we'll update you on FX when we get into February. Moving down the P&L, we expect anywhere from 0 to 20 basis points of EBITDA margin expansion. And if you put all this together, along with some of the below the line items that I'll talk about shortly, we're looking at adjusted diluted EPS growth next year of 5% to 9%. I -- on a segment basis, TAS, 5% to 7% constant currency growth next year, no COVID impact in TAS, there was no COVID-related revenue this year to speak of. none next year. So no adjustment necessary there. R&DS, 4% to 6% constant currency -- now there is a TAS impact. There will be a $100 million year-over-year drag next year. That's about 1 point of growth in R&DS. And finally, we see CSMS being flattish. Net interest expense. Well, you know that we had a huge increase in interest expense in 2023, which knocked 10, 11 points off of our EPS growth. Fortunately, that's flattened out this year as we're showing on the chart. Now next year, we expect interest be up $50 million. You may ask why. And the reason is because of the share repurchase we've done in Q4 to date, we've done about $1 billion of share repurchase in Q4. Now of course, that hits the interest expense. The good news is that it reduces our share count and net-net, it's going to be accretive to EPS next year. Other items. Capital deployment next year. We expect to spend about $2 billion split between acquisitions and share repurchase. And of course, you're going to ask, what's the split going to be? And the answer is we don't know. It depends upon the pipeline of acquisition activity that we have next year, what we're able to get done, that's always uncertain. And our share price is too because we tend to be opportunistic in our share buybacks. CapEx will be less than 4% of revenue next year, slightly less than 4% of revenue we anticipate. All of this, along with our normally strong cash flow should leave us with a net leverage ratio exiting 2025, we're estimating probably 3.5x. Now that's about equal to where we expect to exit 2024, 3.5x. So no big change there going into next year. And with that, I'd like to introduce Mike Fedock, who is going to take a look a little bit further into the future.

I'm the only thing standing between you guys and lunch. So let's shift gears and focus on how we're thinking about our long-term growth framework. . Ari shared with you the growth algorithm, pharma R&D and SG&A spend will grow 3% to 5%. The outsourcing penetration will add another percentage point. We fully expect our go-to-market and innovation strategies to add an additional 1% of growth via share gains. And finally, our M&A program will continue to yield 1 to 2 points of growth annually. These combined strategies lead us to estimate that our top line long-term growth to be between 6% and 9% annually at constant currency, which is in line of what we've delivered since the merger at that 7.5% figure that Ari referenced earlier. Now let's turn to margins. It's worth noting that since the merger, we've already expanded our adjusted EBITDA margins by 340 basis points by far the highest in the industry. We will absolutely continue to be laser-focused on executing our productivity actions, which should deliver up to 30 basis points of margin expansion per year. Now when we look at the below-the-line items, we expect them to be relatively stable. For the next few years, we anticipate operating in an environment where interest rates should be flat to declining. The corporate tax environment should be favorable and growth in our operational DNA will be modest given our disciplined capital deployment program. When you put all of this together in combination with the EBITDA growth that I mentioned, we expect to deliver adjusted diluted EPS growth of high single to low double digits annually. We anticipate continuing spending about $2 billion a year across acquisitions and share repurchase. And as Ron mentioned, the exact split will be dependent on the acquisition availability and the price progression of our stock price each year. Given the expected decline in interest rates and strong cash generation, we will continue to prioritize M&A and share repurchase over paying down our debt balances. We are very comfortable with our current net leverage ratio of approximately 3.5x adjusted EBITDA. But in this period, you would likely see a ratio fluctuates by 0.5 point or so in either direction as we want to retain the flexibility to be opportunistic in our capital deployment. As you've seen today, we are uniquely positioned in the marketplace to continue driving value for our customers and shareholders. Thank you very much. Ari?

Thank you, everyone, and questions. The marketing team overruled be on that slide, and I see that the team in entirety overrule my no hog, no mugs policy. You have the overseas with handshakes and hogs and. Okay. Yes. you're here. Charles?

Charles Rhyee with TD Cowen. Just had a quick question, right? If we think about this growth algorithm, obviously, we're looking at accelerating faster earnings growth and faster EBITDA growth. Can you put that into context? Because I think when Richard gave his presentation about the priorities of large pharma, midsize and biotech, obviously, with large pharma being the bulk of spend having this more focus on maybe FSP. I think in the past, you've talked about your FSP mix being around, what, 15% or maybe 20%. And maybe you can talk about where you see that trending then over the next several years and maybe help us understand a little bit more when you talk hybrid deployments, what does that kind of more entail? And just any kind of color around that as we think through.

Yes. So you are asking about on the clinical development side on RDS. Well, yes, you know that FSP has become a -- at the moment, a bigger proportion of our bookings. I think FSP is about 15% of our revenue, but it's trending -- it's been trending in terms of bookings proportion towards 20%. It's not there yet, but it's maybe 17%, 18%. And the reason for that is many of our large pharma decided to do more of that and to bring more of the work in-house. This is not dissimilar from what occurred 8, 9 years ago, 10 years ago in the industry. Whenever once -- after the LOEs and in the 2014, '15, '16 period, a large pharma decided also to switch to FSP. And I remember right after we did the merger, that was the big theme. The reality is the pendulum swung back to full service after that in the 2017, '18, '19 time frame, totally during the COVID year. So I don't know that this is a permanent trend, okay? I've seen this pendulum go back and forth. I don't expect FSP to ever become very dominant type of service that pharma buys. It's just impossible for a large pharma company to possess in-house all of the capabilities that are required. And if you focus on what we talked about today, all the technology, the data analytics, the AI that is required and that is necessary to lower the cost of delivering the work, it's just very hard for these companies to do that themselves. So I don't expect that to be a trend. Now what is the impact, obviously, it's a -- there is an impact on margins, right, because FSP has lower margins than full service. I would note that the fastest growth you saw that in the chart is from EBP right? Usually, EBP grows 8% to 10%. And obviously, it depends on funding and funding has been coming back. We discussed this before, but EBP is 100% full service, okay? So that kind of mitigates that trend. And then you asked about hybrid. What clients do is that they start by saying, okay, I want FSP and then you realize that they are trying to get more bells and whistles -- more bells and more of the stuff that we can bring, like the protocol optimization and so on. So these are kind of add-ons and it becomes hybrid because it's not really FSP. Obviously, you will do the same thing. You're trying to get full service at the price of FSP. Okay. So that's -- it's a negotiation, and we always end up somewhere in the below Yes. Justin.

Yes. Justin Bowers from Deutsche Bank, and thank you for having us down here. I'm just going to continue on Charles' question with FSP. Like, we've heard from you today and then other industry participants as well as that large pharma sort is -- seems to be towards the end of the reprioritization period. If we pivot to the concept of the shift to FSP from FSO sort of an analogy would be like what inning do you think we are? Or how far has the pendulum swung in terms of this model shift that we're seeing? Is there -- do we still have a couple of more years to go for some of the other large pharma to continue to do that? Or do you think we're nearing that rate of that as well?

Okay. You raised -- you mentioned the reprioritization and so on consequence on the IRA. And just to touch on that, we think, as I think was mentioned by John, we are largely past that activity, and we think most large pharma will have completed that exercise in the early parts of next year. With respect to how far that I don't think it's a strategy. It's not like Pharma company said, well, from now when we're only going to do FSP. It doesn't work like that. It depends on the specifics of the protocols, the specifics of the trial, the specifics of the therapy. But I would like to invite Richard to add maybe some color here. come over

Thank you, Ari. So I think what we would say is, to your question about where we are on that continuum, I think most, if not all, of the big pharma have now placed their FSP models in place. But what we see is that there's still certain therapeutic areas that they don't have the expertise. And so it doesn't fall into the FSP, it falls into a full service model. The other thing that actually where we get dragged in a lot is that they're active in the M&A space. And so when we're already working with a biotech or we're already working on the asset, and we've got all the intellectual property associated with that, they tend to push that out full service as well. So we don't see full service from a market share perspective, continuing to increase other than just the R&D growth that you would have within those companies, we've basically gotten to the end of that. So now it's about whether or not the pendulum swings back too early to tell where that's going to go. But that 20% target that you've seen, I think that's going to be a relative constant from a revenue percentage perspective for us going forward.

Patrick Donnelly from Citi. I guess when you think about the '25 setup, it's helpful to talk through the guidance there. When you look at the R&DS side, that 4% to 6% growth ex COVID, how do you think about the progression here? I know intra-quarter, at one of the conferences you guys talked about that cancellation trend, still building a little bit. Can you just talk about, I guess, the current backdrop? And then again, is that a little bit of a ramp as the year goes and it might be a little bit for Ron as well. But just given the cancellation backdrop currently I guess, how do you think about the progression of the R&DS growth and the confidence level.

Sequentially.

As the year goes and just the backdrop on the cancellation.

Again, aside of the cancelations, the main items that are affecting our growth rate sequentially in R&DS is the delays of 2 very large fast-burning trials. and we announced this at the -- concurrent with the third quarter earnings release. There are -- this is the reason why RD&S will essentially be flat in the fourth quarter. So they went from high single digits to flat. And if you look at '25, it will be exactly the opposite because those trials are expected to resume sometime later in '25. And so we should have -- we should have much higher growth in the second half. So it will be like a mirror image of '24, right? '25 will be slower in the first quarter and a little bit more in the second quarter and then much faster in the fourth quarter -- in the third and fourth quarter for RD&S. That's kind of the sequence. And that's essentially due to that -- those 2 very large fast-burning trials that were delayed, not really the cancelations. The cancelations of course, have an impact, explain why we're more timid in our longer-term projection at the moment, right? We're not suggesting that we are going to grow 10% in RD&S because of where we are now in the cycle. Yes.

Tejas Savant from Morgan Stanley. Appreciate you hosting us today.

Thank you for coming I understand it wasn't easy.

A little bit of fun along the way Anyway, just sort of following up on Patrick's questions in R&D. More from the point of view of the bookings and cancellations, how confident are you that 4Q will be the low watermark for book-to-bill. And starting in the first quarter, things started to trend back towards that 1.2, 1.3x level. And then longer term, on a more positive note on the election outcome and what could happen to the IRA. Are you starting to hear any comments from your pharma customers around small molecule price protections sort of being extended out to 13 years. Maybe some of the projects that got canceled come back into the mix? Any early signs along those lines?

So on the first part of the question, you said that Q4 will be the low watermark. I hope Q3 was the low watermark. I'm hopeful, I don't want to say. We have another 3 weeks here. But I'm hopeful that Q4 will be better than Q3. I just don't know. -- the -- we look at this every day, and it's hit you never know. But -- and things are ongoing full speed type of activity. But -- so I don't know, but I'm hopeful and I expect book a little bit better in Q4. Now the level of cancellation is unusually high. We explained why part of this is IRA, and part of it is we had 2 large trials, nothing to do with the IRA, 1 in the CNS in the first quarter and 1 which was like $250 million, if I recall, and another one, which was about $350 million. in Q3. So that $600 million of trials that were -- would have delivered revenue now. So that's really what happened here is a concurrence of a lot of factors. Our clients revisiting their reprioritization, I don't know that, that's done yet. And plus, there is a lot of caution about what's going to happen here with HHS and who is going to be this. It could be that it's RFK, it could be not. But if it is RFK, we are confident that we have already early engagement with the incoming administration, and we feel very confident that we will be extremely well positioned actually to continue to to raise the bar of what we do best, which is a higher level of scientific rigor in clinical trials, more real-world evidence, more fact-based decision-making on whether or not the drug -- drugs come to market. All of that speaks to our capabilities. But I haven't seen -- I haven't seen any evidence yet -- yes. John?

To the extent that anyone can forecast what's going on precisely now, it's obviously a challenge. But the rumbling eye here is a similar one, more vacant orals equivalent to the biologics, which would be not upside for the industry. Who knows, it's going to be a wild couple of months, but that seems to be the logical fix. I don't think anyone intended to be punitive and have the implication they did.

And then I think to your overarching question about what demand looks like out there. I mean, certainly, the cancellations and the delays have been a challenge for us. But the underlying GNB and Ron referenced of proposal volume pipelines that we see, that all is relatively strong. And so I think when you take that and then you augment it with the recovery in biotech and the pull through of that funding that we've seen improve in 2024 that somewhere, especially in the back half of 2025, that becomes, I think, a very strong market. And so what we need to do is continue to weather through pipeline prioritization, navigate the changes that will happen. But even with everything that we've seen from a GMV perspective, the flow of opportunities coming to us, it's pretty solid for us right now.

Yes.

Mike Cherny from Leerink Partners. Turning to TAS a bit. As you think about the acceleration you've seen in the back half of the year, you had the headwinds tailwind side. It felt like there was a lot more R&DS oriented for' '25. Do you feel like we're kicking off 25 with what should be the right run rate on TAS? And I guess along those lines, maybe a follow-up to that. Regarding your discussions with the administration, it seems like real-world evidence will be heavily in focus. How fast do you think parts of that demand curve can accelerate.

Okay. On the TAS question expect -- we always expected a rebound of commercial activity, that's based on approved molecules. I think there were 55 approvals last year. Generally, it takes 6 months to 9 months after approval to launch and the activities required to launch require our services. Those activities were delayed and customers did not eliminate the projects. They just told us we're not prepared to make a decision yet. So it stayed in our pipeline. This is what led to a lack of business activity and revenue generation to the degree that we had expected originally, right, end of '23 and beginning of '24. We expect 350 or so new launches in the next 3, 4 years. That's 15% to 20% more on average per year than we had in the prior 10 years. So there's a lot of commercial activity that we expect. That bodes well for our commercial services. With respect to '25, I mean, you saw that on the tailwind side, I think that Ron presented, you did have commercial momentum. We do have tailwinds on the commercial side. Then you ask about real world, we already have inquiries from clients on how to support. What's real world about really is to demonstrate the effectiveness of the treatment in the real world, not just the clinical trial, which is really the big issue that RFKs is raising appropriately I think. And secondly, the safety of the drug. And that's what we do. In most real world studies you saw is support the effectiveness, demonstrate the effectiveness and -- of the treatment and the safety of the treatment with real-world evidence. So that, we think, should be picking up soon after the administration is in place and works on policy and publicized, and we expect to be engaged in that process. Yes. Shlomo.

Could you talk a little bit about the expectation for margin expansion now. We're going 0 to 30 basis points. Historically, it's been more than that. Is some of that just you've harvested a lot of the gains from the merger or some of it, the mix of the business and the context that you're in? And then just as a separate question, the last Analyst Day was coming at a different time in the industry. There was a lot of money floating around. And this time, there were at a much more sober point. Would you say or maybe taking a different tact in terms of your outlook versus being a lot more optimistic last time versus pessimistic and where the pendulum can swing after this. Maybe you could talk about that.

I think you made 2 excellent pause. The first one on margins. Yes, it's true. I mean we had the benefit of the large mergers, so we have synergies, and there were some low-hanging fruits that helped us grow margins a lot more than 30 bps a year. In recent years, we faced with wage inflation. We faced with a change in the mix. We spoke about FSP before, but it's a mix also within TAS. And we're faced with different operational challenges. We've had areas of the world where we were doing well with higher margins like China, for example, which we've had a lot more infrastructure expense, not CapEx, but required to address all the issues, the geopolitical issues that we've had. All of those things have created headwinds. And normally, you should have seen our margins a threat because of that. But -- we continue to work on -- it's much more -- it's higher in trees. It's not low-hanging fruits, but AI is a big helper. We automate our processes take a lot of human labor out of what we do internally, and we expect to continue to do that. This is the -- really, frankly, between that and the offshoring activities with [indiscernible] centers in India, in Bangladesh, in Vietnam, in the Philippines in parts of Central Europe, where we are trying overall to decrease the average cost of labor. So decreasing the labor content using AI and decreasing the cost of the labor that we still need to have. And that is what is going to help us offset or mitigate the cost headwinds and hopefully do a little better. Now we may have quarters or we have no margin expansion or even decrease, but we think that we have a good path to continue to grow between somewhere in that range up to 30 bps a year, which we think is great. And remember, we are already at 24-plus percent operating margins. In an industry like ours, it's margin leading and it's very strong. But we are committed to continue margin expansion. Secondly, in terms of the optimism, yes, I mean, you are influenced by the circumstances and the atmospherics, right? I mean last time I was a different world. I mean totally different world. We had free money, essentially, right? Treasuries were at 0. They had still over 5%. There was a total -- there was no IRA. There was no inflation, there's no wage inflation, a totally different world. And of course, you reinforced, yes, are we being pessimistic, conservative in our assessment? Probably. Yes. But we'd rather do that we under promise and over deliver. As I said earlier, this 6% to 9% I mean I could easily have said come here and say, it's 7% to 10%, okay? And we debated. But yes, we ended up with 6% to 9% for the reasons you mentioned. Yes, please? Yes, Elizabeth.

Can you talk to us about where we are in the pricing. You talked about how in certain places and have and many others in the industry have been seeing some pressure, particularly in FSP? Are we -- is that just like a reprice sort of everything once and done. Is that kind of an ongoing pressure? I assume it's in your longer-term guidance that you just outlooked. I just kind of want to think about how you think about that on like a longer-term basis. And then second, could you maybe help us parse apart the sub businesses within TAS in terms of real world evidence versus some of the analytics and consulting and things like that and sort of how to think about those longer term?

Okay. Your question on pricing, which I may decide to switch to someone else. Everyone is asking 2 questions to me. But I want to get to this side over here. So pricing, yes, I mean, look, there are 2 reasons, 2 primary reasons why pricing has been tough. One is in partly in reaction to the IRA, partly in some management changes that have occurred with large pharma, there's been an increased focus on cost controls and cost rationalization. Every -- virtually every large pharma has announced a very large cost reduction program, multibillion dollars. And the first thing you do, we do the same. Every company is the same. The first thing you do when you are going to reduce cost is you look at your vendors, procurement. And we pop up there together with another couple of companies as one of the largest provider to pharma. And so therefore, we need to respond. And we want to be responsive. Generally, those conversations have typically a short-term negative impact on pricing because we are willing and to work with our clients. We are partners and help them. But typically, they -- it results in a strengthened partnership because most of the time, the concessions on pricing come with added volume, right? That's how -- and that has been our strategy. It's not like we have to knock on new doors and find new clients for our services. We already are selling something to everyone. And the strategy for us has been always increasing our share of wallet within our existing client base. And so we always be willing to be responsive in exchange for doing more for our clients. So that's the first reason for price pressure. The second one is -- and that's specific to RDS, is that the industry has been really thrown into turmoil by our merger 8 years ago. Ask Eric who's lamenting the disappearance of all the CROs that were around, they merged, they got acquired by private equity. They've got acquired by large conglomerate, and they melted away. They don't report their numbers anymore. So the smaller players and in this -- so the industry has essentially restructured in 3 large players, us and 2 others, 1 of -- one of which you can tell because they are buried into a larger conglomerate. And then you've got another 3 smaller players, 2 of which are now private. And those 3 smaller players, let's call them, second-tier players have had difficulties in the marketplace. They've lost share, they had bad bookings or other problems. And the result of that is that they have to now try to regain business. We've been there earlier of the merger, and it's very difficult to climb out of the hole when you've had bad bookings for a sustained period of time, okay, below 1. And the -- especially if you're not IQVIA, you don't have the capabilities we talked about at length today in the past couple of hours, you -- where do you go? You go to price. And not that our clients are necessarily going to make the call, but the offer is there. And then very often, we have to us. So there are 2 reasons. One is our clients' cost reduction programs and the other one is the competitive environment. If you don't mind, I'm going to switch to this side, we haven't had any questions here. Yes.

Jailendra Singh from Truist. I wanted to get your thoughts on the 1 percentage point contribution you talked about from increased outsourcing of our clinical trials with pharma companies under pressure from budget and other cost management and also like drug pipeline, more compromising of oncology and rare disease drugs. Why do you not expect an acceleration in more outsourcing than what we have seen in the past. .

You mean in the EBP segment?

Just in general.

In general, Yes, I mean, you're absolutely right. On the macro trend, we should be expecting, and we are. If you look at our growth algorithm, we are assuming an additional point of growth from increased outsourcing. So you're absolutely right. And that's -- now we too conservative? Again, you would have asked me 3, 4 years ago, I'd have said it's going to be 2 points of extra growth from outsourcing. We're only saying 1 point now. But again, because of the shift to FSP in the short term. But yes, normally, you're right in terms of the macro trend we should expect more. And maybe last but not least, Eric, or maybe there's someone else, David? Whichever

Save the best for last.

Yes. .

So Eric Coldwell with Baird. I'm going to squeeze 2 in and I'm going to ask 1 that I'm the least happy about asking, but I'm going to get asked 100 times between now and February. So hopefully, you can help me out. You said fourth quarter net book-to-bill, you're hoping is better than third quarter. You also had a recent conference announced higher cancels again, do you care to take a stab or I guess, somewhere it might play out.

I wish I could, but it's a wide check telling the truth. I don't know is a real answer, but it will be between what we saw in the third quarter and 15% potentially. If everything knocks out. And we look at these numbers every day. And we have conversations with our clients. We've got war rooms somewhere in this building and in a few other buildings. And the last weeks of the quarter and especially the year are importance. I have no idea.

I said, well, I'll just model 1, 3...

Yes, 1, 3 sounds aggressive. No. Because, again, remember, -- it's not -- I think Richard mentioned it, it's not just about winning the business. We are winning the business on a gross award basis. We are winning a lot of business. It's the cancellations that have offset -- and without those cancellations, whether it's for futility reasons or part of the reprioritization, our awards are very good. The health of the underlying business is very strong. Second question.

Yes. And then Ari, the only thing I'd add to that is that we know the large deals always get closed in the last 2 or 3 weeks of the quarter. We've got a nice pipeline of deals, but it's just all -- it's all how they

And the client can say, as they say often. Well, we'll decide in next quarter, okay? So we can -- as you know, we don't take handshakes and awards we only book and include in our book-to-bill that which we contracted for. There's also a time like to do that, there's paperwork -- so it always can switch back and forth. It won't be -- I don't expect it to be a spectacular book-to-bill. I expect it to be better than it was in the third quarter.

Okay. My follow-up is a little more I don't know, open ended, but change orders. We've heard about some change in the change order activity coming at the end of quarter. So have you seen -- how much of your end-of-quarter activity is change order related? And how does that compare to...

So we don't disclose that usually, but end of quarter -- it's not really end of quarter, end of year usually and historically, there is more change order activity seasonally in the fourth quarter seasonal, but I don't know that we've seen a lot of change in that. necessarily, Richard?

We typically see a quarter-on-quarter variation of plus or minus $10 million, and that has really changed in 2024.

So not a big change okay. Thanks for giving a reasonable outlook today.

So Dave Windley, Jefferies. I'm thinking about small biotech in predominantly R&D Sri. So as you said, as we've tracked, funding is improving. What we've heard most of the year is that the companies are a little shy to spend as fast as maybe shocks from the last couple of years, whatever. So they're psychologically impacted and doing that money out a little slower. They're more price sensitive. And we hear they're inviting more into the bids. So the 2-part question is, I guess, one, you have a premium service presumably priced at a premium how do you skinny yourself down to be price competitive in what is a more highly price-sensitive EBP market? And then two, when you're looking at your qualified pipeline, how do you think about okay, our hit rate may be lower because there are 6 players competing and not 2 players competing for the opportunities from EBP.

Yes. I mean just a word on that and then Richard, maybe you want to add some color. Large pharma in the process of addressing costs and in the process of relooking at their supplier base across the board, not just in clinical but across the board. And in the context of their reprioritizations, most of them during '24 initiated large rebid programs. What does that mean? It means that they invited all the CROs, all the main ones to present our credentials and to essentially rebid for becoming a strategic partner. And that includes clients with whom we already had strategic partnerships. So they reopened everything, not just for us, but for everyone. The good news is we went through this process, that's done. And the good news is despite all the smaller players you mentioned coming in and doing their best, we resigned every single one of those strategic partnerships. And in fact, we increased the scope of what we had with those and sign new strategic partnerships. There are only really 3 large pharma companies out of the 25 with whom we do not have strategic partnerships. We still do work for them but not on the strategic partnership level. Strategic partnership is very important because that means we are completely embedded in their workflows. We work with them, we respond to every RFP and so on. So that's the first part of your question. The small players tried and they were only there to -- from the point of view of the pharma client to keep us honest from a pricing standpoint. With respect to our premium services regretfully, we can't really price better because we are better, we just are able to win because we are better, but at the same price. Now there are services that sometimes we sell separately, like the protocol optimization, the DIPA, data-inform protocol assessments, some of the tools that we have are an opportunity to add bells and resource, if you will, to the offering and price separately. You had the second question? Right. Do you want to talk about this?

Well, I was going to address the biotech section as part of that. So I mean we've been bidding in 1 of 6 CROs biotech forever. I mean, that's just kind of how they reach out. And they bid things not only to get pricing, but also to get strategic insights into the therapeutic area, et cetera. So that's not unusual for us. And our hit rate is strong. As you know, we set up IQVIA Biotech, which is basically the formation of Novella or the formalization of Novella within IQVIA gosh, back in 2016. So we've got a dedicated business unit and operating model to meet the needs of those biotech customers. I think from a funding perspective, what's interesting is, at least right now, where we've seen those -- that funding go, and I'm not saying it's good long term or not, but it's tending to go to later-stage assets where they already have positive data. So those programs, Phase I, Phase II tend to be larger, more robust. You need a global footprint, all of the -- you need all the bells and whistles that a large CRO provides. And so we're really well positioned for that. I think what's getting starved right now is early phase pre-IND investment, et cetera. And that maybe has a longer-term impact. We'll see how that shakes out. But in terms of where those dollars are going right now and the RFPs that will come out as a byproduct of that, I think we're pretty well positioned.

Okay. Thank you, everyone. I appreciate your attention and have a great rest of the day. Maybe I'll invite.

Ladies and gentlemen please welcome back to the stage, Kerri Joseph.

Is my mic on? Thank you, guys. Michael Good, good. So we're slightly behind, so I'll be quick. Thank you for joining us for our 2024 Investor Day, but we have more. We have our lab tour and our product demonstrations, which I think, honestly, is going to be one of the more exciting things that you guys are going to see today. We have one of the most innovative labs in the world in this facility, and you guys will see it firsthand. And then from the product demonstration side, we're going to show everything to you from molecule to market, right? So you're going to be able to get that through 5 examples of our product demonstrations. So lunch is now.