Since joining our model Growth Portfolio in May 2018, IQVIA Holdings (IQV) has delivered a 160% return (including dividends); we now take a look at how the company is doing after recently reporting another strong quarter, notes Kuen Chan, contributing editor to The Complete Investor.

As with many companies, 2020 presented a new set of challenges. For IQVIA, Covid-19 disrupted clinical trials and businesses that required face-to-face interactions.

At the trough, revenue dipped about 8% in 2020’s June quarter, actually not bad considering the circumstances. IQVIA subsequently quickly recovered and has posted double-digit year-over-year revenue gains in three consecutive quarters, including a 36% increase to $3.4 billion in the June 2021 quarter.

To be fair, that last gain is higher than it would have been if the comparison quarter hadn’t been depressed by Covid lockdowns. However, IQVIA’s June 2021 revenue was 18% higher than its pre-pandemic peak, so the growth is no mirage. Nor has growth come from acquisitions.

IQVIA is growing organically as its existing businesses enjoy higher demand. At its core, IQVIA is a data-driven business that supports the life science industry, an industry expected to expand by about 8% per year through 2030.

IQVIA has information on more than one billion (anonymous) patients worldwide, totaling more than 45 petabytes (the prefix “peta” means a quadrillion, 1 followed by 15 zeroes) of proprietary data, a number that will continue to increase over time.

The data lets the company provide insights and information to more than 85% (based on sales) of the world’s pharmaceutical companies. It offers a comprehensive suite of cloud-based applications that support its customers in their day-today operations. IQVIA also provides support to customers during the clinical stage, helping them design and run trials.

As noted, the pandemic disrupted clinical trials. However, pharmaceutical companies are adapting to the new normal. Similar to its impact in other areas, Covid has spurred greater integration of technology into how clinical studies are run.

Even as regular trials resume, more trials are being designed and run using a decentralized format. Rather than requiring patients to travel to a site, clinical activities are conducted remotely in patients’ own homes.

Decentralized clinical trials are not a new idea, but Covid-19 led to more rapid adoption of the format. Even before the pandemic, IQVIA was already developing the relevant capabilities, which put the company in a strong position to seize the opportunity when demand rose.

At the latest earnings call (late July), the CEO noted that so far this year, IQVIA had won more than a dozen contracts for large decentralized trials. Monetarily, IQVIA says that these decentralized trials aren’t needle movers yet — the company is providing service to close to 1,000 trials, after all — but its leadership in a growth area is certainly a plus.

Moreover, Covid spurred a flurry of new clinical activity to find treatments and vaccines, and IQVIA emerged as the leader in supporting related work. The company says it has been capturing market share in some of its end markets.

In sum, there’s nothing earth-shattering to report, but that’s not a bad thing at all for a stable company in growth fields. Unlike pharmaceutical companies, for which success or failure of a clinical study could mean a difference of billions of dollars, as a provider of support services IQVIA doesn’t face the risk of clinical failures.

As long as life science research and development activities grow — and potential regulatory headwinds (e.g., related to drug pricing) are the only reason we can envision why they wouldn’t — IQVIA is in excellent position to continue on its current path.

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