IQVIA: A Leading Digital Healthcare Stock

Data is the new oil. It’s a phrase that regular readers will recognize, but we can’t take credit for coining it. The credit actually goes to a British data scientist named Clive Humby. Of course, it took a marketing guy to point out that raw oil must be turned into a product like gas or plastic to have real value. Similarly, data must be refined – structured and analyzed – to be valuable. While some have argued that the oil-data analogy is imperfect at best – oil is finite, while data is not, for example – it’s still a useful way of thinking about how big data fuels different types of business analytics. To really stretch the metaphor, let’s talk about IQVIA (IQV), which is probably the world’s largest supplier and refinery of healthcare data to the pharmaceutical and biotech industries.

A Leading Digital Healthcare Stock

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IQVIA is the result of a 2016 merger between Quintiles, a contract research organization, and IMS Health, a healthcare data and analytics provider. We briefly profiled the Durham, North Carolina-based company last month while reviewing a new digital health ETF from notable emerging tech investor Lux Capital. IQVIA is now the largest holding in First Trust Nasdaq Lux Digital Health Solutions ETF (EKG), sporting a market cap of about $40 billion, with annual revenue of nearly $14 billion in 2021. As we pointed out in that article, digital health startups are hoovering up money, including a record-breaking $57.2 billion in funding in 2021, up 79% from 2020 totals, according to the big brains at CB Insights. Many of these companies leverage big data and artificial intelligence to digitize everything from hospital operations to clinical trials.

Big Data = Big Market

It’s the latter where IQVIA is the heavyweight champion. Its big-data analytics help drive clinical trial development in support of 85% of the world’s pharmaceutical companies. That includes designing the clinical trials, identifying sites, and recruiting patients. It also uses that data to track products in 93 markets, offering marketing and consulting services.

Data cloud by IQVIA
Credit: IQVIA

 Let’s take a look at some of the numbers that make IQVIA a leader in its sector:

  • The company boasts “one of the largest and most comprehensive collections of healthcare information in the world. It consists of 1.2 billion “comprehensive, longitudinal, non-identified patient records spanning sales, prescription and promotional data, medical claims, electronic medical records, genomics, and social media.” So, we’re talking about a massive database of both structured and unstructured data that you could feed to algorithms all day long to uncover insights about therapeutic products (ie, pharmaceutical drugs), clinical trial R&D, and much more.
  • IQVIA “touches” another 100 billion healthcare records annually.
  • Its data platform holds 56 petabytes of proprietary data sourced from approximately 150,000 data suppliers and covering over one million data feeds globally. 

That vast sea of data can make a big splash in terms of both well-explored waters and blue ocean markets. (BTW: That’s a new Nanalyze record for the most water metaphors in one sentence.) IQVIA estimates a total addressable market (TAM) probably north of $285 billion. This isn’t some random number that you find in your typical flashy SPAC investor deck. IQVIA produces its own market research and reports, as well as operates something it calls the IQVIA Institute for Human Data Science.

IQVIA platform
The IQVIA platform does it all. Credit: IQVIA

The company breaks down its potential cut of the TAM into three core sectors that it serves. 

  • Outsourced R&D: Biopharmaceutical spending on drug development totaled approximately $150 billion in 2021. More than half of that money, $81 billion, funneled into clinical development, with about half of that amount, or $39 billion, outsourced to companies like IQVIA.
  • Real-world evidence (RWE) and connected health: The former is an estimated $20 billion market. RWE is defined as real-world data based on sources other than clinical trials – like the info contained in those 1.2 billion long-term records – that provides support for or against the benefits or risks of a drug. Connected health, at $40 billion, includes areas such as “revenue cycle management, payer analytics, and clinical decision-support services.”
  • Technology-enabled commercial operations: This is the $75 billion kitchen sink market that captures everything from data warehousing and software applications to sales and marketing to patient engagement and brand communication.

Based on 2021 revenue of $13.9 billion in revenue, IQVIA owns less than 5% of the available TAM. Let’s look a little more closely at where those revenues come from.

Where Does IQVIA Get Its Revenues?

It would be great if the company breaks down its revenues the same way it dissects its market opportunities. Alas, that’s not the case, leaving us to give you another list of three bullet points (breaking a Nanalyze record for three-pointed bullet-point lists in one article):

  • Technology & Analytics Solutions. Last year, this division accounted for about 40% of revenues at $5.5 billion. There’s a lot bundled in here, including software-as-aservice (SaaS) offerings, including customer relationship management (CRM) solutions. The company also applies algorithms to produce various market and analytic reports that it says are used by “most large pharmaceutical companies.” This is also where it generates revenues from real-world data business, which uses technologies like natural language processing to create structured data from unstructured clinical notes. One particularly interesting part of this business is what the company calls “information offerings.” These include a database that tracks more than 23 million healthcare professionals in more than 100 countries to make sure they get the right medicinal marketing messages.
  • R&D Solutions. This pretty much covers the company’s clinical research division (ie, the Quintiles half of the business), which accounted for nearly 55% of revenues last year at nearly $7.6 billion. It includes decentralized clinical trials, which upstarts like Science 37 (SNCE) claim they can do better than legacy companies like IQVIA. So far, investors think differently: SNCE stock has lost nearly three quarters of its values since merging with a blank check company in October 2021.
  • Contract Sales & Medical Solutions. At about 5% of 2021 revenues, this division raked in $784 million last year. Revenue comes from helping clients commercialize, sell, and market drugs, among other services.

This is what the above looks like broken down by segment and geography from the latest quarterly report in Q1-2022, released just last month: 

Q1-2022 revenues by business unit and geography.
Q1-2022 revenues by business unit and geography. Credit: IQVIA

IQVIA claims to have about 10,000 clients in more than 100 countries. Last year, only one large client accounted for 7% of total revenues, so customer concentration appears relatively small.

Should You Buy IQVIA Stock?

There is a lot to like, but no company this big doesn’t have its problems. The question for investors is to understand whether any of the blemishes are more than skin deep. One more bulleted list is in order:

  • IQVIA posted pretty strong revenue growth of 22% between 2021 and 2020, not to mention year-over-year net profit shot up nearly 250% to $966 million. But was last year the start of a trend or an anomaly? The last couple of years’ revenue growth was closer to 4%-7% per year and net income was relatively flat between 2018 and 2020. In fact, Q1-2022 revenue was more in line with those years, increasing only 4.7%. Net income, however, still jumped 53.3%, which will help when it comes to …
  • … $12 billion in debt. It’s not necessarily a deal killer, as long as the company is managing it responsibly. That’s exactly the opinion of a Simply Wall Street writer who churns out awkward-sounding phrases like IQVIA “can handle its debt as easily as Cristiano Ronaldo could score a goal against an under 14s goalkeeper.” Certainly, all of that data doesn’t come cheaply, with the company committed to spending $657 million on data acquisition in 2022.
  • Any company involved in healthcare data as deeply as IQVIA is will eventually find itself deeply enmeshed in lawsuits, especially the IMS Health half of the business that collects information like every pharmacy transaction that takes place pretty much everywhere in the world. There are at least a couple of ongoing lawsuits in the South Korea branch of IMS Health over patient and doctor privacy issues. In addition, IQVIA has been engaged in a five-year legal battle with competitor Veeva Systems (VEEV), which it has accused of stealing data and launching a rival product. In turn, Veeva alleges that IQVIA is a data bully and has created a monopoly on digital healthcare data.

No one thing is necessarily a deal killer, but taken together, we’d want to continue to monitor IQVIA to see how the revenue growth story unfolds, as well as how the company handles the ongoing debt and lawsuit issues. Less risk-averse investors might be tempted to pull the trigger now, regardless, given the general downturn on tech stocks: Our simple valuation ratio of less than 3 says the company isn’t overvalued, based on current market cap divided by 2022 annualized revenues ($40 billion/$14.3 billion).

Annual revenues and earnings for IQVIA.
Is revenue growth in 2021 an anomaly or the beginning of an exciting trend? Credit: Yahoo! Finance

Our cutoff is 40, so IQVIA stock seems like a bargain right now.


Risk-averse retail investors are justifiably gun shy right now, especially when it comes to tech stocks. On the other hand, that means there is value to be had. IQVIA stock seems to occupy a sweet spot in healthcare data and analytics that have it poised for explosive growth, but its debt burden may be a drag. We already have plenty of life sciences stocks in our portfolio, but we’ll continue to monitor the company to see how things play out.

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