<THE BORING PORTFOLIO>
Quintiles Call, Part 5
ALEXANDRIA, VA (Sept. 3, 1999) -- This is the fifth part of Quintiles Transnational's (Nasdaq: QTRN) second quarter conference call (RealMedia link). Just as a reminder, this is old news. I'm just getting up to speed on this company and these are my notes. I'll provide in the last of this series an integrated piece, which should make the notes easier for reference later. By the way, Standard and Poor's announced today or last night that Quintiles will be added to the S&P 500, which is a high compliment for the company. I guess this is taking a little long, but we try to keep all these pieces under 1,000 words. This is a longer conference call and I'm probably writing down more stuff than for a company which I know well.
10. Could you comment on the backlog in a qualitative sense? How much of that business would you characterize as decisions being made strategically. And related to that, you talked a lot about cross-selling, are you seeing any interest yet in the concept of fully integrated CSO/CRO outsourcing?
Dennis Gillings: I'm not sure whether I can hazard a guess... My instincts are that about 35% of our backlog would be classified as "strategic." At this time last year, it was probably less than 5 percent, maybe 10 percent. Of course, the [Hoechst Marion Roussel] deal represents about half of that, but even if you take that out, there's still probably a doubling of percentage that is strategic. With respect to moving across both contract research and contract selling, the real leverage across both of them is I think the full service and the relationship of the customer rather than the leverage of individual programs. We have had a few and we expect in the future to get more, but I don't feel that cradle-to-grave type business with individual products is particularly the driver. The driver is much more relationships and partnering, and that does sometimes involve partnering components, but I think it will also increasingly involve partnering larger and larger segments and I think it remains to be seen just how many drug development programs where we actually launch the products. We have announced one such situation and we do expect to announce more in the future.
11. On the Quinternet side, another element I'd like you to comment on is the concept of online detailing. Is that a threat or an opportunity for you?
Dennis Gillings: It's a definitely an opportunity. It will be an evolution and that's why we are talking a lot about our Web enablement, a lot about all our physician linkages, because we think the next phase will be the ability to follow up detailing with health education sorts of things. I think some of the acquisitions that we've announced very recently do help a lot with that. We have an ability now with both Medcom and Meditrain to do training and to do other aspects of the commercialization, and we think that's a very strong thing. There will be health education follow-up and training follow-up, and then of course the direct-to-consumer or direct-to-patient begins to feed into that. We're looking at that intensively, too. It's part of the reason we have the ability to communicate messages and we're working very strongly on our intranet and being connected with groups like drkoop.com. We believe the evolution of the role of direct-to-consumer and direct-to-patient will also fit into these activities. We expect that and we have very strong plans to be part of that.
12. You cited an impressive statistic with respect to your knowledge-rich sales calls. It seems to me that would have enormous implications for the profitability going forward of your commercialization segment. I just want to have a sense of how much of that effect is due to the improved knowledge you have from your calls and not just from more salespeople making more calls.
Dennis Gillings: I don't have all the data on the number of sales calls made under the customer and under us, but my sense is that volume is about the same. It's my understanding that either all of it or almost all of it is due to the knowledge side. If there's any change from that, we'll tell you about it.
Greg Connors: My guess is that it's a combination of both.
13. On the strategic partnerships you've been discussing, I'm trying to understand if that's an opportunity for you to capture share of business that's already being outsourced versus capturing incremental business that's not currently being outsourced.
Dennis Gillings: It's both. I think the other thing to realize is that, one, off individual project outsourcing slowly evolves through a sponsor or customer organization into strategic outsourcing. So, there's a bit of both and there's also the evolution.
Question: Do you get the sense in the sponsors' minds that there are a lot of potential organizations (other CROs) that could handle the types of arrangements they are talking to you about or do you pretty much have that field to yourselves? Do you get the sense that they're talking to multiple parties about trying to scale up to handle that kind of business or is it just a couple [companies] involved?
Dennis Gillings: We certainly have examples where no one else has been talked to, which is very unusual. That illustrates the degree to which we have a strategic role. I also think it's fair to say that we assume in the majority of situations that other parties are being talked to.
Call Your Boss a Fool.
|Recent Boring Portfolio Headlines|
|10/30/00||American Power Conversion's Ugly Earnings|
|10/23/00||Cisco's Formidable Challenge|
|10/16/00||Cisco, Apple, and Probabilities|
|10/09/00||Perils and Prospects in Tech|
|10/02/00||Learn From Mistakes|
|Boring Portfolio Archives »|