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Novartis

VIEWS: 30 PAGES: 28

									         ICON plc
        Goldman Sachs
25th Annual Healthcare Conference
          June 8, 2004
                           www.iconclinical.com
Forward Looking Statements


Certain statements contained herein including, without limitation, statements
containing the words “believes,” “anticipates,” “intends,” “expects” and words
of similar import, constitute forward-looking statements concerning the
Company's operations, performance, financial condition and prospects.
Because such statements involve known and unknown risks and uncertainties,
actual results may differ materially from those expressed or implied by such
forward-looking statements. Given these uncertainties, prospective investors
are cautioned not to place undue reliance on such forward-looking statements.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
ICON Overview

   4th Largest Clinical Research CRO in the World

   Unparalleled track record in managing Phase II to IV clinical
    research studies

   Dedicated team model and quality ethos differentiates ICON
    from competitors

   Currently:
        33 operations in 20 countries on five continents from
         which we are managing over 300 projects in over 55
         countries
        Approx $300m in Net revenues in Fiscal year to 31 May
         2004
 Global Reach – 34 Operations In 21 Countries
 Managing Trials In Over 55 Countries
                                                            EUROPE (900+)
                                                            Dublin
                                                            Manchester
                                                            Marlow
                                                            Southampton
                                                            Frankfurt
                                                            Paris
                                                            Amsterdam
                                                            Stockholm
                                                            Tel-Aviv
                                                            Riga
                                                            Moscow
USA (1400+)                                                 Budapest
Philadelphia                                                Barcelona
Nashville
New York X 2
Wilmington
Raleigh
Tampa
Chicago
Houston
San Francisco
Irvine
Baltimore




                             REST OF WORLD (100)
                     Buenos Aires    Singapore   Tokyo
                     Johannesburg    Sydney      Montreal
                     Bangalore       Hong Kong Taipei
ICON’s Current Services in Drug Development

   Preclinical     Phase I     Phase II     Phase III     Registration      Launch   Phase IV



                                                                  Phase III b




             13%   Early Phase and Strategic Development Support




                                   10%            Central Lab (Global)




                                 77%      Later Phase Clinical Research and
                                                       Support
   ICON plc
  January 2003
Market Dynamics


             www.iconclinical.com
Three Elements of Growth

 Growth in Underlying R&D spending
   • Total 2003 spend estimated at > $67bn; 10% growth
     forecast to continue
 Continued growth in outsourcing
   • Large Pharma estimated to outsource approximately 20%
     - 22% of R&D
   • Biotech and specialty players utilizing CROs more than
     big pharma

 Pharma reducing supplier numbers
   • Fewer CROs servicing Large Pharma = Market share
     gains for Global, multi-service CROs
While Bio-Tech, Mid-Sized and Japanese companies are
emerging as significant outsourcers
   Biotech and specialty companies account for a growing percentage of projects in
    development: 55% of 2002 Clinical trials are derived from biotech companies.
   Currently estimated to be more compounds in development in biotech/specialty
    than in all of Top 20 Pharma
   ICON’s sales to non Top 20 pharma companies have been rising strongly:

                              50%
         % of ICON revenues




                                                                            42%
                                                                  39%
                              40%                     35%

                              30%             26%      12%        17%       27%
                                     21%
                              20%    5%       12%
                              10%                      23%        22%
                                     16%      14%                           15%
                              0%
                                    FY2000   FY2001   FY2002     FY2003   FY2004
                                                                           (YTD)

                                      Non-Bio / Non-Big Pharma            Biotech
Fewer CROs Servicing Large Pharma
Over the course of the last few years, ACCELLERATING IN LAST 9
MONTHS, most large pharma, as well as some biotechs, have
concentrated their CRO relationships – for example;

                                   # Preferred
             Company                               Previously
                                   Providers
                 AZ                    6               ?
                BMS                    3               ?
                J&J                    8              72
                GSK                    8              159
               Abbott                  8               ?
               Wyeth                   5               ?
              Novartis                 6               ?
      Pfizer (Still in Progress)       12            >100
            P&G Europe                 3               ?
Preferred Provider Trends

THREATS

 Not making / being dropped from key “Lists”

 Price concessions – Preferred rates / Rebates

 Not penetrating account even when listed

 “Race to the bottom”
Preferred Provider Trends

OPPORTUNITIES

 Market share growth v smaller CRO’s

 Market share growth v larger CRO’s – Penetrating
  new major Pharma’s / Re-establishing old
  relationships.

 Higher staff utilisation rates due to steady
  opportunity flow = improved margins

 Lower Costs of doing business due to streamlined
  business development and operating profits
Preferred Provider Trends

OPPORTUNITIES
 More global business, with better margin mix

 Opportunity to “bundle” range of services
  including higher margin ones

 Utilize cheaper locations

 Develop / Acquire further value added services to
  include in mix
Preferred Provider Trends


ICON View

 Opportunities outweigh threats.

 Strong contract management essential

 Clear margin goals needed to avoid unprofitable
  business
      ICON plc
     January 2003
Financial Performance
  (Fiscal Years ending May 31)


                           www.iconclinical.com
          Highlights                           Highlights
     9 Mths to February   2003             9 Mths to February   2004

   Revenue up 41% (32% Organic)        Revenue up 37% (24% Organic)

   Operating Income up 35%             Operating Income up 40%

   Margins: 11.1%                      Margins: 11.3%

   EPS up 27%                          EPS up 30%

   Pre-tax Return on Equity 20.0%      Pre-tax Return on Equity 17.1%

   Net New Business Wins: $184m        Net New Business Wins: $292m
7 Years of Net Revenue CAGR of 41%



              $350.0                                                               Est.
                                                                                  $298.0
              $300.0

              $250.0                                                     $225.7
 $ millions




              $200.0
                                                                $156.6
              $150.0
                                                       $116.2
              $100.0                           $80.8
                                       $59.9
                               $45.2
               $50.0   $26.6

                $0.0
                       FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY 2004
7 Years of Earnings Per Share Growth….


                                                                                          Est.
               $2.00                                                                    $1.84
               $1.80
               $1.60                                                           $1.50
               $1.40
                                                                      $1.16
  $ millions




               $1.20
               $1.00                                         $0.92
               $0.80                       $0.66    $0.70
               $0.60              $0.48
               $0.40
                       $0.23
               $0.20
               $0.00
                       FY1997     FY1998   FY1999   FY2000   FY2001   FY2002   FY2003   FY2004


Note: EPS excludes exceptionals
…. and In the Last 5 Years Every Quarter Has
Shown Sequential Growth
                                                                                                              (Est.)
 $0.50                                                                                                     47c 48c
                                                                                           43c   44c 45c


 $0.40                                                                               38c
                                                                               36c
                                                                         33c
                                                                   31c
                                                             29c
 $0.30                                               27c 28c
                                               25c
                                     22c 23c
                               21c
                     19c 20c
 $0.20         17c
         15c


 $0.10


 $0.00
         Q1 Q2 Q3 Q4           Q1 Q2 Q3 Q4           Q1 Q2 Q3 Q4         Q1 Q2 Q3 Q4             Q1 Q2 Q3 Q4
               FY2000                 FY2001            FY 2002                FY 2003              FY 2004
Summary Balance Sheet and Cashflow
($ in millions)

                                   May 31, 2003   Feb 29,2004   Estimate @
                                                                May 31,2004
Cash and cash equivalents                 $18.3         $67.1         $74.0

Total assets                             $235.0        $320.1        $325.0

Total debt                                 $7.1          $0.0          $0.0

Shareholder’s equity                     $136.9        $207.0        $213.0

Cashflow from operations                  $21.5         $30.8         $39.0

Capital expenditures                      $15.8          $9.7         $12.0

Fully diluted shares outstanding         11.8m         13.6m         13.6m
ICON Has Experienced Consistently Low
Cancellation Rates

 Cancellations as % of Opening Backlog
 5%
                                                4.3%

 4%   3.6%                 3.6%                                                    3.6%
                                         3.0%                 3.0%
 3%                                                                                       2.30%
             1.8%
 2%

                                                       1.8%
 1%                                                                  1.4%
                                  1.3%
                    0.8%
 0%                                                                         0.6%
      Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04
ICON Net New Business Wins
                                                                                                      1.9
         Net Business Wins
        Book to Bill Ratio
                                    1.4
                     1.3    1.3             1.3                                   1.3           1.3
                                                                    1.2    1.2                                      1.2
                                                            1.1                          1.1          $134
             $100
                                                   0.9                                                       0.9
                                                                                                                    $91
              $90                                                                               $88

              $80
              $70                                                                  $67                        $67
                                                                                          $63
$ millions




              $60                                                    $53 $54
              $50                         $45 $46             $45
                                  $40
              $40   $35 $37                            $34
              $30
              $20
              $10
               $0
                    Q1     Q2     Q3      Q4      Q1   Q2     Q3      Q4     Q1    Q2     Q3     Q4    Q1     Q2    Q3
                           FY2001                      FY 2002                      FY 2003                  FY 2004
ICON Labs Net New Business Wins
         Net Business Wins
                                                  1.9     1.8
        Book to Bill Ratio                                                  1.7


                                  1.4
             $20          1.2

                                           0.97
                                                                             Est
             $15                                                    0.7     $13.5
                                                          $12.0
$ millions




                                                  $10.8
                    0.4
             $10                  $8.8
                          $7.4
                                           $6.6
                                                                     $4.9
              $5
                   $2.8


              $0
                   Q1     Q2      Q3        Q4     Q1      Q2         Q3      Q4

                                 FY 2003                        FY 2004
Total Backlog $Millions


               $500
               $450
                                                                                                                         $450
               $400                                                                                    $422     $427

               $350
                                                                                              $352
                                                                            $336     $327
               $300
  $ millions




               $250                                       $276     $282
                      $241     $246              $235
               $200                     $223

               $150
               $100
                $50
                 $0
                      May-01   Aug-01   Nov-01   Feb-02   May-02   Aug-02   Nov-02   Feb-03   May-03   Aug-03   Nov-03   Feb-04
Backlog To Be Earned in Next 12 Months


                   $300
                   $275
                                                                                                                             70%
                   $250
                                                                                                  78%      71%      66%
                   $225                                                                                                      $241
                                                                                         73%      $221              $219
                   $200                                                         80%+                       $217
                                                                                         $195
      $ millions




                   $175                                                78%      $184
                                                              78%
                   $150                              77%
                                   80%      76%+                       $153
                   $125   80%                                 $144
                                                     $130
                                   $118     $120
                   $100   $110
                    $75
                    $50
                    $25
                     $0
                          May-01   Aug-01   Nov-01   Feb-02   May-02   Aug-02   Nov-02   Feb-03   May-03   Aug-03   Nov-03   Feb-04




Note: Percentage represents 12 month backlog as % of market forecasts.
Client Concentration
Top 5 Clients % of Total Revenue



 80.0%
          68.2%
                     57.6%     59.6%
 60.0%                                  51.3%
                                                  41.1%
 40.0%


 20.0%


  0.0%
         FY2000     FY2001     FY2002   FY2003   9 Mths to
                                                  Feb 04
       ICON plc
     January 2003
Strategic Development


                 www.iconclinical.com
ICON’s Acquisition History
 2000    PRAI, a Consulting CRO based in San Francisco; $6m in revenues

         YRCR, a Regulatory CRO based in UK; $2.5m in revenues



         UCT, a central laboratory organization based in New York; $12m in
         revenues
 2001

         BPA and MCS, specialist CRO’s based in New York; $21m in revenues
 2002

         Medeval Group, a specialist provider of Phase I clinical trials, based in
 2003    Manchester, UK; $15m in revenues



         Globomax, a Strategic Consulting CRO based in Baltimore; $11m in
         revenues
Future Development
                   Increase business from current clients and win new clients

                   Sell more new services - IVRS / Lab / Consulting / Phase I

                   Develop cross-selling opportunities

                   Expand global presence (Including Lower Cost Areas)
   Organic
                   Broaden therapeutic range




                   Add new services and broaden existing ones
                         Centralised Image Management
                         Phase IV
 Acquisitions
                         Bio Analysis
                         Phase I



    Goal           To be the best clinical CRO

								
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