In creating its outlook for 2020, IQVIA identified the coronavirus outbreak affecting China as a barrier to near-term growth. As IQVIA CEO Ari Bousbib explained on a fourth quarter results conference call with investors, the barrier stems from decisions individuals are making in light of the threat posed by the virus.
Bousbib said, “Patients are simply not going. The patients who are enrolled in a trial are simply not going to visit the hospitals where all the sites are in China, because that's kind of the more dangerous spot right now.”
China is a relatively small piece of IQVIA’s clinical trial business, with the region affected by the viral outbreak containing less than 0.1% of its worldwide sites. Yet, China is significant enough for IQVIA to quantify the headwind created by the coronavirus outbreak.
IQVIA expects the outbreak to deliver a $25m (€23m) hit to revenues in the first quarter. As IQVIA will still incur costs in China over that period, Bousbib expects the revenue hit to put a similarly sized dent in first quarter profits.
As it stands, IQVIA is predicting all of the negative impact related to coronavirus will hit in the first quarter, although Bousbib acknowledged the company faces “an evolving situation.”
Potentially, the disruption caused by the outbreak and the Chinese government’s response to it may drag on deeper into 2020 and continue to constrain sales growth at IQVIA. In light of the current level of disruption and potential for ongoing problems, IQVIA is taking steps to counter the effects of the outbreak on its financials and the progress of its clients’ clinical trials.
Bousbib said, “We obviously have contingencies and we're working on mitigating all of these issues. We are also internally working on mitigation plans, we're reorienting certain sites, opening up new sites outside of China et cetera. So, it's not like we're just sitting and waiting for these sites to be open blindly.”
Despite the anticipated hit from coronavirus, IQVIA delivered 2020 guidance that led analysts to dial up their expectations for the year. The midpoint of IQVIA’s revenue range is around $40m higher than the consensus, according to analysts at Jefferies. Analysts at William Blair responded to the guidance by adding $39 million to their 2020 revenue estimate.