As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the drug development inputs & services industry, including IQVIA (NYSE: IQV) and its peers.
Companies specializing in drug development inputs and services play a crucial role in the pharmaceutical and biotechnology value chain. Essential support for drug discovery, preclinical testing, and manufacturing means stable demand, as pharmaceutical companies often outsource non-core functions with medium to long-term contracts. However, the business model faces high capital requirements, customer concentration, and vulnerability to shifts in biopharma R&D budgets or regulatory frameworks. Looking ahead, the industry will likely enjoy tailwinds such as increasing investment in biologics, cell and gene therapies, and advancements in precision medicine, which drive demand for sophisticated tools and services. There is a growing trend of outsourcing in drug development for nimbleness and cost efficiency, which benefits the industry. On the flip side, potential headwinds include pricing pressures as efforts to contain healthcare costs are always top of mind. An evolving regulatory backdrop could also slow innovation or client activity.
The 7 drug development inputs & services stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.1%.
In light of this news, share prices of the companies have held steady as they are up 2% on average since the latest earnings results.
Weakest Q3: IQVIA (NYSE: IQV)
Created from the 2016 merger of Quintiles (a clinical research organization) and IMS Health (a healthcare data specialist), IQVIA (NYSE: IQV) provides clinical research services, data analytics, and technology solutions to help pharmaceutical companies develop and market medications more effectively.
IQVIA reported revenues of $4.1 billion, up 5.2% year on year. This print exceeded analysts’ expectations by 0.5%. Despite the top-line beat, it was still a mixed quarter for the company with constant currency revenue in line with analysts’ estimates.
IQVIA delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 3% since reporting and currently trades at $211.
Is now the time to buy IQVIA? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Medpace (NASDAQ: MEDP)
Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ: MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.
Medpace reported revenues of $659.9 million, up 23.7% year on year, outperforming analysts’ expectations by 2.7%. The business had an exceptional quarter with a solid beat of analysts’ organic revenue and full-year EPS guidance estimates.
Medpace delivered the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 8.3% since reporting. It currently trades at $593.02.
Is now the time to buy Medpace? Access our full analysis of the earnings results here, it’s free for active Edge members.
Charles River Laboratories (NYSE: CRL)
Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE: CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.
Charles River Laboratories reported revenues of $1.00 billion, flat year on year, exceeding analysts’ expectations by 1.1%. It was a satisfactory quarter as it also posted a narrow beat of analysts’ organic revenue estimates.
Charles River Laboratories delivered the slowest revenue growth in the group. As expected, the stock is down 3.1% since the results and currently trades at $172.41.
Read our full analysis of Charles River Laboratories’s results here.
Repligen (NASDAQ: RGEN)
With over 13 strategic acquisitions since 2012 to build its comprehensive bioprocessing portfolio, Repligen (NASDAQ: RGEN) develops and manufactures specialized technologies that improve the efficiency and flexibility of biological drug manufacturing processes.
Repligen reported revenues of $188.8 million, up 21.9% year on year. This number topped analysts’ expectations by 3.8%. Overall, it was a strong quarter as it also produced an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ revenue estimates.
The stock is down 10.1% since reporting and currently trades at $144.50.
Read our full, actionable report on Repligen here, it’s free for active Edge members.
West Pharmaceutical Services (NYSE: WST)
Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services (NYSE: WST) manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.
West Pharmaceutical Services reported revenues of $804.6 million, up 7.7% year on year. This print beat analysts’ expectations by 2.1%. It was a very strong quarter as it also put up a solid beat of analysts’ full-year EPS guidance estimates and a beat of analysts’ EPS estimates.
The stock is flat since reporting and currently trades at $275.34.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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