IQVIA [IQV] + quick Wizz Air update

IQVIA is the product of a $23bn merger of equals between IMS Health and Quintiles Transnational.  IMS sells access to the most comprehensive post-clinical data base in the healthcare industry. It sources over 1mn data feeds on 1bn patients through long-term contractual arrangements with >150k data suppliers, including physicians, labs, governments, patients, and health plans in over 100 countries.  Quintiles, the world’s largest Contract Research Organization (CRO), runs drug trials on behalf of pharmaceutical companies.

The bulk of IMS’ dataset consists of prescription data, which pharmaceutical companies use to see how well their therapies are selling in different regions vs. competitors, how many sales reps to allocate to each territory and how to allocate incentive compensation among them.  Besides how much of a certain drug is being consumed where, IMS data can also be used to evaluate whether a drug is performing as effectively out in the real world as it did in trials (“Phase IV”).  As the cost of therapies continues to rise, pharmas need efficacy data to justify the prices paid by increasingly cost sensitive government and managed care payors.  Pharma clients, rather than undertake the costly and time intensive process of directly collecting data from physicians through interviews or questionnaires, can use IQVIA’s E360 platform to look for patterns in existing “secondary” data (that is, data formerly collected for purposes other than the study at hand), which can reduce the amount of direct primary data that needs to be collected by up to 60%. The same “Real World Evidence” (RWE) can also identify misleading claims.  In one instance, a new entrant had clinical trial data suggesting that its injectable drug required fewer doses to achieve the same outcome at the same per-vial price as an existing therapy.  IQVIA’s data showed that in the real world the new therapy required exactly the same dosage, allowing the incumbent to protect its position in health plan formularies. 

IMS has been around for 70 years. For much of that time, they and their largest competitor, NDCHealth, oligopolized the market for healthcare data by striking licensing deals with data aggregators.  IMS acquired the third largest peer, squeezed out NDCHealth¹, and licensed more and more deals throughout the 1980s to become the largest player, with what I’ve heard to be somewhere between ~40% and 75% share.  Symphony Health Solutions, acquired by PRA Health Sciences, a competing CRO, is a distant second, with just 10%-12% share, with most of its data sourced from the US.  There are some vendors with better data in specialized therapies or geographies but no one comes close rivaling IMS’ scope. In theory, with enough time and money, a competitor could license data from the very same suppliers, but extracting, scrubbing and linking siloed data sets, and tying that data to specific patients in a privacy compliant way is apparently a massive challenge given the diversity of languages and coding systems, a challenge that IMS has developed patented processes around. 

A decade ago, IMS was a pure-play data company with flagging revenue growth, confined to a modest $5bn opportunity.  But like Google and Facebook, who don’t sell data but monetize it indirectly through targeted ads, IMS came to realize that the real money was in using data to power services higher up the stack.  Recognizing that the market for software that extracted insights from data was 10x larger than the market for data itself, the company, under the guidance of the well-regarded Ari Bousbib, who became CEO when TPG and CPP Investment Board took the company private in 2010, forward integrated into software and analytics.  One of those software initiatives was CRM, where IMS touted data as the key differentiating asset.  As I recounted in my Veeva post, this hasn’t worked out so well for them:

Even with its data advantage, I’m skeptical of IQVIA’s prospects in CRM.  Aggregating data is just a different skillset from building usable software.  Its acquisitions of Incentia, 360 Vantage (which, like Veeva CRM, was built on force.com), Apparture, and Cegedim have gone nowhere.  Its latest effort, another force.com-based solution called Orchestrated Customer Engagement (OCE), seems more promising than prior attempts – IQVIA claims to have won 15 of its last 20 RFPs – though it still hasn’t put a dent in Veeva’s market share.  And according to Veeva, whatever success OCE has seen so far is mostly due to its willingness to provide customized configurations, which won’t scale as well as a standardized product.

A key issue here I think is that IQVIA’s data isn’t really a cornered asset since Veeva’s core CRM also has access to it, and for IQVIA to reclaim that data and render it captive to its own CRM would mean blowing up relationships with its pharma customers, 80% of whom are using Veeva.

The other more promising way IQVIA has joined data with software is in the design and implementation of drug trials.  Before the start of any trial, the sponsoring pharma creates a Protocol that details the objectives, design, safety procedures and methodology of the trial, the criteria used to select patients, the lab measurements that need to be collected and what constitutes an adverse event, among other things.  According to the Association of Clinical Research Professionals, 70% of trial protocols are amended during the course of a study, which can add months and millions in direct costs to a trial.  Oftentimes a Protocol is amended because it turns out to be harder than expected to find a representative group of patients that meets the inclusion criteria.  RWE can get help get around such recruitment hurdles, allowing the CRO to see, for instance, that setting an upper age limit up here will result in a heavy imbalance in the distribution of patients with the target indication in such and such countries.