Slide 1

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 2

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 3

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 4

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 5

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 6

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 7

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 8

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 9

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 10

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 11

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 12

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 13

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 14

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 15

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 16

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 17

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 18

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 19

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 20

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 21

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 22

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 23

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 24

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 25

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 26

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 27

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 28

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 29

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 30

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 31

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 32

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 33

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 34

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 35

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 36

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 37

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 38

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 39

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity


Slide 40

ICON Plc.
2008 Raymond James Institutional Investors
Conference – March 4th, 2008
Mr. Peter Gray - CEO
1

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.

2

Global Full Service Clinical Development

Global
Clinical

Q4 Revenue
by Region
3

US
53%

EU
38%

ROW
9%

ICON’s Global Clinical Footprint

ICON’s Global Clinical Footprint
North America
2 Countries
17 Offices
>1,900 Staff

Eastern Europe / Russia
8 Countries
9 Offices
> 350 Staff

Japan
1 Country
2 Offices
>80 Staff

Western Europe /
Africa
10 Countries
13 Offices
>1,600 Staff

Asia Pacific
8 Countries
10 Offices
>450 Staff

Latin America
5 Countries
5 Offices
>170 Staff

Projects in 60+ Countries

4

Market
Environment

5

Strong Market Environment with...

• Continued R&D Spending Growth.
¯

Phase II / III pipelines strengthening

• Increased Outsourcing
¯

Being accelerated by activity & funding in Biotech / Speciality

¯

Globalisation of clinical research

¯

New strategic thinking / cost containment

• Increasing Regulation

6

¯

More patients/ more studies

¯

Post marketing surveillance

5

Preclinical Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 23%

5200
5100
5000
4900
4800
4700
4600
4500
4400
4300
4200
4100
4000

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

7

Phase I Compounds in Development
The Pipeline continued to fill in 2007

Up ≈ 22%

1380
1330
1280
1230
1180
1130
1080
1030
980
930
880

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

8

Phase II/III Compounds in Development
The Pipeline continued to fill in 2007
Up ≈ 14%

2400
2350
2300
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800

Nov

7

- 07

0
Oct -

-07

- 07
S ep

Aug

07
Jul-

- 07
Ju n

7

-07

7

-0
May

Apr

-0
Mar

-07

- 06

- 07
F eb

Jan

Dec

- 06

6

Source: Pharmaprojects

Nov

0
Oct -

- 06
S ep

9

US Biotech Funding Environment continued
to grow
Biotech fundraising (excluding debt financing)
$45.0
$38.6

$Billion

$40.0
$33.1

$35.0
$29.2

$30.0
$25.0
$20.0

$22.4
$18.1

$15.0
$10.0
$5.0
$0.0

10

2003
Source: Burrill and Company

2004

2005

2006

2007

ICON in this Market
Environment

11

Gross RFP Value by Market Segment
(Including RFPs that never progress to award)

RFP10,000
Value by Market Segment
9,000
8,000
(in millions)

2007 Value

7,000

54% Increase / PY

6,000

Size of Projects
 41 > 20 Million

5,000

168 > 5 Million

4,000

959 < 5 Million

3,000
2,000
1,000
0
2003

2004

Total

2005

2006

Large Pharma

2007

2008

MidSize Pharma

2009

2010

Biotech

12
12

Strong RFP volume growth, with increasing
average proposal value…

Number of Proposals

Average Proposal Size ($ millions)

1200

6

1000
4

800
887

600

1014

1118

5.4

2
2.8

3.1

3.6

2004

2005

2006

571

400

0
2004

13

2005

2006

2007

2007

…which has led to increasing numbers
of awards greater then $5 million.

Number of New Awards Greater then $5 million

50
40
30
46

20

32

10
0
14

8

14

2004

2005

2006

2007

Overall, Strong Gross Business wins has led to…

ICON Gross Business Wins - Last 10 Quarters ($ millions)
$366

$264
$245
$186

$189

$193

Q1 06

Q2 06

Q3 06

$246

$207

$165
$127

Q3 05

15

Q4 05

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

.. excellent Net New Business wins and
very strong book to bill ratios…
Book to Bill Ratio

Net Business Wins

1.9

1.7
1.6

1.6

1.6
1.4

1.3

1.6
1.3

$171

$166

$157

$344

$223

$230

$230

Q1 07

Q2 07

Q3 07

$171

$140

16

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q4 07

…leading to record Total Backlog levels.
($ millions)
Up 49% YoY

$1,300

$1,125

Up 38% YoY

$1,049
$963
$872
$815

$772
$707
$633

17

Q4 05

Q1 06

Q2 06

Q3 06

Q406

Q1 07

Q2 07

Q3 07

Q4 07

From this backlog, coverage of next 4 quarters
revenues is robust……..
% coverage of next 4 quarters forecast revenues
Value of backlog forecast to be earned in next 4 quarters
77%
76%

76%

76%

77%

77%

76%

76%
76%

$589
$542
$493
$470
$395

$415

$360
$296

18

Q4 '05

$307

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 07

Q3 '07

Q4 '07

This has led to a diversified customer base……

Client Diversity 2005, 2006, 2007
Largest Client
Top 5

81.4%

Top 10
72.0%

Top 25

66.0%
62.7%

51.1%
47.0%
42.6%
34.6%
30.0%

12.3%

FY To May 2005

19

9.6%

7.8%

2006

2007

2007 - New Business by
Customer Segment

….and broad therapeutic expertise.
Revenue by Therapeutic Area 2007

20

Quality

21

From 2000 – 2006 ICON has been the fastest
Growing CRO, and this has continued in 2007..
(ICON Growth 2007 = 32%)

33.4%

22.4%
20.5%
16.5%

15.3%
10.5%
8.4%

ICON

22

PRA

* Source SEC Filings

PPD

CRO Ind

KNDL

CVD

PRXL

…but Quality and Delivery remains our Key Focus.

23

ISO9001:2000 Registered Since 1994.

• External assessment of ICON’s Global Quality System
¯

Group registration for the whole company
•

•

¯

Annual random surveillance audits across regional offices to monitor
compliance - audit frequency is based on office size and number of
services
All new offices independently audited to attain registration

2007 audit program
•
•
•

USA: PA, FL, NC, CA-Irvine, CA-Redwood City
Europe: IRL, GER, SWE, RUS, HUN, POL, ITL*
ROW: South Africa, CAN, MEX*, ARG (*new offices registration audits)

• The following accreditations are maintained by ICON Laboratories
¯
¯
¯

24

ISO 17025
CAP accreditation
CLIA (New York facility only)

We Live Quality Internally,….

ICON Internal QA Audits – 2007

25

Division

US

EU

ROW

Total

Clinical Research

221

154

50

425

Central Lab

54

22

0

76

Development Solutions

30

220

0

250

Medical Imaging

23

0

0

23

Quality system audits

18

43

28

89

346

439

78

863

… Clients Check it,….

Client, Regulatory and ISO Audits – 2007

Division

Sponsor

Clinical Research

148

Central Lab

41

Development Solutions

31

Medical Imaging

18
238

26

…Regulatory Agencies Inspect it,….

27

Office

Date

Region

Auditing Authority

Outcome

Redwood City, CA

Oct 2003

US

FDA

No findings (no FDA 483)

New York City, NY

Mar/Apr 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

May 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Oct/Nov 2005

US

FDA

No findings (no FDA 483)

North Wales, PA

Dec 2005

US

FDA

No findings (no FDA 483)

Nashville, TN

Jan 2006

US

FDA

No findings (no FDA 483)

Eastleigh, UK

Oct 2004

EU

MHRA

No critical findings

Dublin, Ireland

Apr 2005

EU

IMB

No critical findings

Eastleign/Marlow, UK

Sept 2007

EU

MHRA

No critical findings

Frankfurt. Germany

Sept 2007

EU

Local regulatory authority: RP
Darmstadt

No critical findings

Singapore

Oct 2005

ROW

HSA - Health Services Authority
of Singapore

No critical findings

…and 3rd Parties Validate it

Survey

Year

Comments

William Blair /
PharmaMediation

2004

Top CRO for quality and execution.

CenterWatch Survey of
Investigative Sites

2005

Top 3 CRO for Investigator relationships and
site management.

Frost Sullivan

2006

Top 3 CRO for timely database lock and key
attributes of overall quality, personnel
expertise, therapeutic expertise, and project
turnaround.

Thomson CenterWatch
and William Blair

2007

Vendor you most prefer working with based on
quality.

Lehman Brothers

2007

Top CRO for quality of global execution.

SGS – ISO Audit

Annual

28

Passed without significant comments since
1995

Strategy

29

ICON’s Core Strategy is Organic Growth,
with acquisitions made to add new services or scale.
Acquisitions to date - 11
•

Revenues acquired $114m

•

Staff acquired – 1,100

•

=> Organic growth >80%

Capitalise on market fundamentals to drive
organic growth in all business units.
Pursue acquisitions to enhance depth and scale
of current operations and to add additional
complementary services e.g.
Phase I - US
Bioanalytical / Biomarkers
Therapeutic specialists
Safety / Phase IV
Patient Recruitment
Staffing
Cross-sell services to grow sales and margin

30

Key Strategic Trends

• Strategic v Tactical Outsourcing
¯

¯

More large companies are seeking to use outsourcing strategically
rather than tactically.
ICON fully engaged.

• Globalisation
¯
¯

Growth in Eastern Europe, Latin America and Asia as a venue.
ICON growing rapidly in these regions

• Greater Scientific Involvement
¯
¯

Customers seeking greater scientific input from CROs
ICON has added TAGS, IDS, Imaging, new Lab technologies etc. to
respond.

• EDC
¯
¯

31

Estimated that over 40% of clinical trials now use EDC
49% of ICON’s Data Management activity in 2007 was EDC

Financial Performance

32

Net Revenue CAGR of over 30% since 2002
22% Forecast for 2008

$760(E)

$700

Millions

$600

$631

$500
$456

$400
$300

$327
$297

$200
$100

$157

$226

$0
FY2002

33

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December, 2007

FY2007

FY2008*

Earnings Per Share Growth

$2.50

$2.32(E)*
$1.88

$2.00

$1.50

$1.35
$0.94

$1.00

$0.85

$0.75
$0.58
$0.50

$0.00
FY2002

34

FY2003

FY2004

FY2005

FY2006

* Mid Point of 2008 Guidance issued December 2007

FY2007

FY2008(E)

Recent Financial Performance
($ millions, except EPS; includes stock option expense)

Q4 ’07

Q4 ’06

% Increase

Net Revenue

181

129

40%

Direct Costs

100

73

37%

55

38

45%

5
_____

4
_____

37%
_____

20

14

43%

11%

10.7%

16
_____

11
_____

40%
_____

53c

39c

36%

29.9m

29.1m

2.7%

SG & A
D&A

Operating Income
Operating Margin

Net Income
EPS (Inc SFAS123R)

35

Weighted Average no. of
Shares (Inc SFAS123R)

Recent Financial Performance
($ millions)

FY2007

FY2006

% Increase

Net Revenue

631

456

38%

Direct Costs

355

256

38%

SG & A

188

137

38%

19
_____

15
_____

27%
_____

69

48

45%

11%

10.5%

56
_____

38
_____

46%
_____

188c

133c

41%

29.7m

28.7m

3.5%

D&A
Operating Income
Operating Margin

Net Income
EPS (Inc SFAS 123R)
Weighted Average no. of
Shares (Inc SFAS123R)
36

Margin improvement is a key focus.

• Approx. 25% of ICON’s business is generating single digit

margins
¯
¯
¯

Further margin growth in Lab
Improve performance from Phase I and Consultancy businesses
Bring Japan to higher profitability

• Expand margins in Phase II – IV through leverage as

growth moderates.
• Currency Movements creating some “Headwinds”

37

5

Summary Balance Sheet and Cash Flow
($ millions)

May 31, 05
(Year)
Net Cash

Dec 31, 06 Dec 31, 07
(Year)
(Year)

$78.4

$82.3

$98

$23.8

Total assets

$347.6

$349.1

$476.3

$693.1

Shareholder’s equity

$233.1

$241.6

$302.7

$388.4

Cashflow from
operations

$23.8

$11.7

$51.5

$42.9

Capital expenditures

$15.6

$12.1

$31.5

$75.4

CAPEX Excl. Dublin Extn.

$15.6

$12.1

$20.4

$36.8

27.8

28.0

28.5

28.8

Shares outstanding
38

Dec 31, 05
(7 mths)

Recent Phase I Acquisition In The US
Completed February 11th, 2008

•
•
•
•
•
•
•
•
•
39

85 bed clinical research unit in San Antonio, TX
Experienced team with excellent market reputation
Clinical pharmacology platform in the US to complement the UK CPU
Requires business development and commercial management support
Cost = $12m (Potential for further $10m if certain challenging targets met for ’08)
Revenues in ‘07 ≈ $8m
Profitable in H2 2007
Expected revenues of $10 - $12m in 2008
Earnings neutral 2008 (Earnout payment will not be triggered with this outcome)

Investment Case Summary

•
•
•
•
•
•

40

Top Global Clinical CRO - #4
Outstanding record of growth
Strong market fundamentals
Excellent strategic position
Strong balance sheet
Margin expansion opportunity