Undervalued global healthcare leader: IQVIA in the spotlight

IQVIA is a leading global provider of clinical research services, commercial insights and healthcare intelligence to the life sciences and healthcare industries. When a large pharmaceutical company needs to do a stage 3 clinical trial on a drug, they will go to a global company like IQVIA for this task. IQVIA was formed in 2016 through the merger of IMS Health, a healthcare data analytics company and Quintiles, a global leader in clinical trials and research services.

We have been a shareholder in IQVIA for about a year now and have watched the markets emotions move the stock price up and down. Large pharmaceutical companies and biotech companies were impacted by concerns about changes to healthcare regulations under the Trump administration, led by Robert Kennedy Jnr. They wound back investments in new drugs for a period of time, but they have started spending again. This allowed us to accumulate shares in IQVIA at an attractive valuation and we watched the shares rally from $170 to $235 as the company delivered strong results, showing good underlying growth. This year however, the stock has fallen 35% from these highs, back down to $170 on fears of the impact of AI on the business. We have increased our position as we think these fears are unfounded.

IQVIA is led by an experienced management team. Ari Bousbib has served as the chairman and CEO of IQVIA since 2016, following the merger between IMS Health and Quintile. Under Bousbib’s leadership, IQVIA’s EPS has grown at a 9.78% CAGR.

  

Under the RDS segment, they operate as a clinical research organisation, conducting both full-service outsourcing (FSO) solutions and functional service provision (FSP) solutions.

They provide value through their expertise, proprietary database, 10,000 site relationships and highly trained staff to enable the efficient coordination and execution of multi-site clinical trials from Phase I to Phase IV. They help with trial planning, patient recruitment and protocol design. Throughout the trial, they support clients by collecting, analysing and reporting data needed to gain regulatory approval.

  

Technology & Analytics Solutions (TAS) (40% of total revenue)

We recently had a call with the CFO of IQVIA and we think the market is wrong about AI risks.

IQVIA’s competitive advantage is rooted in its proprietary data. They have the largest and most comprehensive database with 68 petabytes of proprietary data that covers sales, prescription, medical records and promotional data. Their data base also contains longitudinal treatment and outcome data on 1.2 billion unique nonidentified patient records. This data is sourced from approximately 150,000 data suppliers that covers over 1 million data feeds globally. A business of this scale comprised of proprietary data cannot be displaced with AI since this data is not readily available publicly for AI to scrape and use. Management of IQVIA estimates that approximately 75% of global pharmaceutical companies utilise their proprietary data.

  

Additionally, the CFO of IQVIA estimates that only ~5% of their analytics and consulting segment is at risk to AI. We hold the perspective that this risk is trivial since AI models do not have access to IQVIA’s proprietary data base to provide comprehensive answers to precise questions.

The CFO gave us an example. We were asked to use Claude.ai to find the top 10 prescribers of a specific drug in Boston. Claude.ai failed to do so. This reinforces the resilience of IQVIA to AI concerns.

IQVIA is further leveraging its comprehensive database by developing IQVIA.ai in partnership with NVIDIA, a unified agentic AI platform designed to help organisations accelerate research and analysis, improve operational efficiency and support decision making. We view that generic LLMs cannot replicate this agentic AI platform that IQVIA has built since they lack access to the IQVIA’s proprietary database, built over decades, which is needed to train their models.