Good day, and welcome to the ICON Plc Q1 2018 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jonathan Curtin. Please go ahead, sir.
Thanks, Carl. Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended March 31, 2018. Also on the call today, we have our CEO, Doctor. Steve Cutler and our CFO, Mr.
Brendan Brennan. Would like to note that this call is webcast and that there are slides available to download on our website to accompany today's call. Certain statements in today's call will be forward looking statements. Actual results may differ materially from those stated or implied by forward looking statements due to risks and uncertainties associated with the company's business, and listeners are cautioned that forward looking statements are not guarantees of future performance. The company's filings with the Securities and Exchange Commission discuss the risks and uncertainties associated with the company's business.
This presentation includes selected non GAAP financial measures. For a presentation of the most directly comparable GAAP financial measures, please refer to the press release statement headed to consolidated income statements unaudited U. S. GAAP. While non GAAP financial measures are not superior to or substitute for the comparable GAAP measures, we believe certain non GAAP information is more useful to investors for historical comparison purposes.
We will be limiting the call today to 1 hour and would therefore ask participants to keep their questions to 1 each with an opportunity to ask one related follow-up question. I would now like to hand over the call to our CFO, Mr. Brendan Brennan. Thank you, Jonathan.
From January 1, 2018, the new revenue recognition standard ASC 606 became effective for ICON. Having adopted the cumulative effect translation measures, prior year comparatives have not been restated under this new standard. Instead, we feel that providing comparable Q1 2018 financial results under the previous revenue recognition standard is the best way to evaluate our performance during this transition phase. The numbers we report today are presented on a U. S.
GAAP basis. There are no adjustments to reconcile to our quarterly filing. As such, the only GAAP adjustments we refer to today will be as a result of the implementation of the new revenue recognition standard, ASC 606. In quarter 1, we achieved strong gross business wins, excluding the impact of ASC 606 of $703,000,000 with cancellations of $113,000,000 As a result, the net awards in the quarter were $519,000,000 resulting in a book to bill of 1.28x. With the addition of these new awards, our Q1 2018 backlog, excluding the impact of ASC 606, grew to $5,100,000,000 representing a year over year increase of 17.2%.
Our top customer represented 10.8% of this backlog, down from 13.4% at the end of quarter 1 last year. Reported revenue in quarter 1 was $620,100,000 Excluding the impact of ASC 606, revenue was $463,000,000 This represents year on year growth of 7.1% or 4.3% on a constant currency basis. While year on year revenue growth on a constant dollar organic basis was 1% lower, Outside our top account, year on year constant dollar organic growth was 15%. Excluding the impact of ASC 606, our customer concentration continued to improve in the quarter, with our top customer representing 12% of revenue compared to 24% of revenue last year. Our top 5 customers represented 37% of revenue compared to 45% of revenue last year.
Our top 10 represented 52% of revenue compared to 58% of revenue last year, while our top 25 customers represented 69% of revenue compared to 74% of revenue last year. In quarter 1, reported gross margin was 30.6%. And excluding the impact of ASC 606, group gross margin for the quarter was 41.2%. This compared to 41.3% last quarter and 42% for the comparable quarter last year. During the quarter, we delivered further operational efficiencies.
As a result, reported SG and A was 13%. Excluding the impact 606, SG and A was 17.5 percent of revenue. This compared to 18% last quarter and 18.8% in the comparable period last year. This was the result of our continued leverage of our global business support model. In quarter 1, we reported operating income of 14.8% or $91,700,000 Excluding the impact of ASC 606, operating income for the quarter was $92,800,000 and operating margin 20.1%.
This compared to 19.7% last quarter and 19.8% in the comparable quarter last year. As reported, net interest expense for the quarter was $3,000,000 and the effective tax rate for the quarter was 12%. Net income, as reported, was $78,000,000 or 12.6 percent. This equated to $1.42 in diluted earnings per share. Excluding the impact of ASC 606, net income was $79,000,000 a margin of 17.1%, equating to diluted earnings per share of $1.44 This compares to earnings per share of $1.43 last quarter and $1.29 in the comparable quarter last year, an increase of 11.6%.
DSO in the quarter was 51 days when compared to 49 days last quarter and 47 days in the comparable quarter last year. Cash generated from operating activities for the quarter was $40,500,000 and capital expenditure was $8,300,000 At March 31, 2018, the company had net cash of $4,600,000 compared to net cash of $11,600,000 at December 31, 2017, and net debt of $29,600,000 at the end of March 2017. With all of that said, I'd now like to hand over the call to Steve.
Thank you, Brendan, and good day, everyone. Quarter 1 represented an encouraging start to 2018 for ICON. Strong demand for CRO services seen in 2017 has continued into 2018. With our customers continue to invest in R and D pipelines and outsource more of their development needs, we continue to execute our strategic vision of being a global CRO focused on operational excellence. This is achieved by market leading innovation and providing the best range of service capabilities and therapeutic expertise to our customers.
As Brendan has dealt with the new revenue standard, I'll focus my comments on our performance excluding the impact of ASC 606. During quarter 1 2018, we were awarded gross business wins of $703,000,000 and we saw net business wins in the quarter of $590,000,000 a book to bill of 1.28. Accordingly, our backlog grew by 17.2 percent year on year to over $5,000,000,000 and helped our revenue increase by 7.1% to $463,000,000 It's particularly encouraging that not only did revenue grow by 7.1%, but revenue outside of our top account grew 25% over the same quarter last year. Consequently, our revenue concentration with our largest customer reduced to 12% in the quarter. In dollar terms, we expect this account to remain around this level on a quarterly basis during 2018.
During the quarter, our headcount grew to nearly 13,400 employees, an increase in staff of over 1,000 year over year. Our continued strong business development performance means that as we continue to ramp up activity, we expect our future billable headcount levels to grow as we progress through the year. As this growth occurs, we remain focused on maximizing our operational efficiencies. In quarter 1, SG and A was 17.5%, down from 18.8% last year. As we move forward during 2018, we expect to balance headcount growth with continued leverage of our industry leading global business support model.
As a result of this proactive management of our cost base, we were able to achieve an operating margin of 20.1% in quarter 1 and increased EPS by 11.6 percent from $1.29 in the same quarter last year to 1.44 dollars We continue to execute our strategy of forging innovative partnerships that can help us to address the key challenges in drug development. Last month, we announced our partnership with Intel. This provides a very exciting opportunity to aggregate and analyze data from mHealth and wearable technologies using advanced analytics and machine learning capabilities. Intel's platform can absorb an unlimited amount of data and provide near time near real time analysis and insights on the data being generated. The platform and the partnership itself supports ICON's goal of delivering patient centric trial design and will enhance the overall patient and customer experience.
These capabilities will allow us to better service our customers by helping them to reduce operational costs for clinical trials, increase patient compliance, improve the quality of data and evidence in order to accelerate drug development. This partnership between ICON and Intel also demonstrates ICON's commitment to applied innovation and to collaborating with leading global technology organizations in order to drive speed and efficiency. Finally, Intel's selection of ICON for this partnership confirms ICON's position as the leading CRO in wearables and a trusted partner to the world's top pharma, biotech and medical device companies. We also remain extremely focused on how we can expedite study start up and employ more data driven scientific approaches to identifying the right sites and patients. Our collaborations with TriNetX and EHR4CR continue to be used successfully in conjunction with our OneSearch data platform, which helps improve our investigator site identification and selection process, thus tangibly driving project execution.
We are gaining significant traction using OneSearch. And to date, this has been employed in the design phase in over 3 quarters of new awards. Already, we have seen significant improvement in our startup activity cycle times and productivity levels. In addition, we are continuing to enrich the number of data sources being analyzed in OneSearch to further improve its effectiveness. We're also continuing to advance our relationship with Itchom to support the scale up of their capabilities to build an ecosystem for health outcome measurements and real world evidence worldwide.
Itom continues to advance the standards for outcome measurements by continuously adding experience data to their standard sets. We believe this complements ICON's overall real world evidence strategy and focus on patient reported outcomes and mHealth technologies. We also remain focused on maximizing shareholder returns. As a result, during the quarter, we repurchased $38,000,000 of shares under the previously announced share repurchase program. To date, we have repurchased $281,000,000 of shares overall at an average price of $83.64 per share.
Our intention is to continue to opportunistically repurchase shares throughout 2018. As a result of the share repurchase during quarter 1 2018, we are increasing our earnings guidance by $0.02 to a range of 5.91 dollars to $6.11 Revenue guidance remains unchanged in the range of $2,520,000,000 to 2.6 $4,000,000,000 Before moving to Q and A, I would like to thank the entire ICON team for all their hard work and commitment during the quarter. In particular, I'd like to recognize the efforts of the finance department for all their hard work preparing for the ASC 606 transition as well as the joint team from AMAG Pharmaceuticals and ICON, which was recently voted Clinical Research Team of the Year at the recent Clinical and Research Excellence Awards. Thank you, everyone. And we're now ready for
We will now take our first question from Sandy Draper of SunTrust. Please go ahead.
Thanks very much and good morning or good afternoon maybe for you guys and congrats on a good start to the year. I guess my question is really around the gross margin. And you guys have been talking about that being sort of flat or down. Just curious how much of that is spending ahead of the build out of the strong business versus wage inflation? And then maybe on the wage inflation side, clearly, employee retention is critical.
This is a people business. Besides just paying people more money, which is one way to keep them, how do you look at what things can you do to retain people besides just paying more money? Thanks.
Sure, Sandy. It's certainly we are having there is a little bit of pressure on the gross margin line. And as you said, we've been forthright about that. There's there will be, I think, going forward as we ramp up growth, some further pressure on that. But we're working very hard to make sure that we onboard people as we do for the new projects on a just in time basis and that we make sure that they're available to work and to bring in revenue in a highly correlated manner, I suppose.
So as we incur that cost and as we bring on those heads, we get the revenues as well. And that's something we're working on. We had we've been reasonably successful, I think, on that. In terms of wage inflation, we're not seeing dramatic wage inflation despite the fact that I think around the world even certainly in the United States, our employment is reaching very full levels. We're still able to recruit.
We've been creative in terms of bringing on new graduates. We brought up something like 120 new graduates, particularly in the CRA ranks. These are people who's literally just out of school instead of college. We're training those and we're investing in training those people and allocating the projects as quickly and as effectively as possible. But that allows us to keep our wages at a sensible level overall.
And we're also obviously committed to paying people at market rates. We want to do that. We believe that's the right way to do it. But we don't believe that just money or just salary is the only thing that keeps people out of an organization. So we put a lot of effort into training our managers, to engaging our people, to making training available to them.
We have a number of programs ongoing with the various universities, particularly in Dublin, at UCD, where we use those folks to work through a number of training programs. Our ICON University is very active in the training area. We engage people as well through career development. So there's a number of things that we do to improve and to develop our people and to engage them. That means that we don't just solely rely on throwing money at them.
We paid a reasonable bonus each year for the last few years. We've been able to do that through the efficiencies that we've been able to generate. And we like to be able to reward our particularly our high performing folks in that way. That's the culture we're developing here at ICON to reward the best performers. And we've certainly been able to do that through the performance that we put up over the last few years.
So I'd leave it at that from a retention point of view.
Great. Thanks, Steve. And I'll jump back in the queue.
Thanks, Sandy.
We'll take our next question from Juan Avendino of Bank of America. Please go ahead.
Hi, good morning. Thank you. My first question I guess is, your top customer recently announced the discontinuation of 5 experimental Phase 1 trials. Wondering if you're seeing any impact from that and if that changes your outlook on your top customer accounting for anywhere between 12% to 14% of your revenue by year end?
No impact at all.
Thank you. And you seem to be making a push into the government and public health market, especially after the acquisition of Clinical RM. Can you tell us more about your strategy for targeting the government and public health market and why this makes sense?
Sure. Yes, we bought CRM last year. So it's we've been developing that space. We believe there's a market there. It's a different market to the market that we're in, but it's still a market that we feel we're well positioned to exploit and to benefit from.
CRM has come on board now. The integration is pretty much complete. We've recently appointed a new leader who's making very good strides in that. We've typically in we're very much in the Army, sort of the military sort of side of the government market. We're now making strides to move into more of the NIH part of the market.
So there are various segments of the government market that we're looking at. And it's a business that we feel in the longer term will provide solid and good returns for us as an organization. So it's a I think the rationale ultimately is, I think, organizations like us can make a contribution, can provide a very solid service and solutions in that market space. There's a few of our competitors are in there, but it's not perhaps as cut throat competitive as perhaps it is in the private space, if I can use those sort of words. And we believe there's significant upside in the longer term for us.
So we're committed to that market and feel we're making solid progress moving forward in it.
Thank you.
We'll take our next question from John Kreger of William Blair. Please go ahead.
Hi, good morning. This is John Kaufman on for John Kreger. Could you guys talk about the RFP flow in Q1? How much did that grow year over year? And then what are you seeing thus far in Q2?
Are you seeing a step up of RFPs this quarter?
We don't, John, typically give out specifics on the RFPs because they do tend to vary and can vary and you get a large ballpark and throw the figures out. But however, having said that, we do look at it and we've seen, I'd say, a modest growth in RFPs year to year, quarter 1 to quarter 1. We're pleased with that. And our win rate has been very good. Business development group has done a very solid job in keeping our win rate high.
And so with a modest uptick in RFPs and a very good win rate, it's led to a pretty solid business development performance. In terms of the segments, we're seeing we're making traction. We're making more progress in our large pharma segment. But we're also seeing the smaller companies and the biotechs being extremely well funded at the moment. So they have money to spend and they're willing to spend it, not just on early phase studies, but on later phase studies as well.
So we've made some progress in that segment as well. So overall, I think we see a very solid market for our services right across the segments of our customer base.
Okay, great. And then kind of switching gears here. 1 of your competitors discussed the benefit of virtual trials on their earnings call. Do you buy into that idea long term? Are pharma companies willing to take the risk of doing these types of virtual trials?
I
mean, the short answer is yes. I think we certainly do buy into the concept of virtual trials. I think we recognize that the clinical trial environment is evolving and changing and the virtual trial. And by virtual trial, I mean, trials where we're much more directly connected with patients using wearable technology. And I outlined some of the work we've been doing in wearable technology in my comments.
And we certainly believe that they will be in the long term a very important part of the landscape. However, I would say that this these sort of changes don't ever happen as fast as some people would think they would they're going to happen. Our pharma sponsors and customers legitimately want to make sure that the data they generate from their clinical trials is suitable for registration of their compounds. So the first question they'll often ask me is how many trials have you done before? How many compounds have you got to market using whatever technology, whatever sort of new device or new approach?
And that's a legitimate question. So we work within a fairly conservative sort of set of industry, I suppose, instead of customers. And they legitimately want to validate this technology before they use it. So virtual trials, I suspect, will move forward, probably not as fast, but they're probably starting more the post approval space, where we'll be collecting safety data and data for submission and continuation of information on drugs as they come to market. I think that's the way it will tend and then they'll I think work back into the Phase 3 and Phase 2 space in the longer term.
But it's certainly a concept and certainly a practice that we're embracing and looking to move forward with as actively as we can.
Okay, great. Thank you.
We'll take our next question from Ross Muken of Evercore ISI. Please go ahead.
Hey, guys. This is Luca on for Ross. Just kind of to tally on to that last question. Is there kind of a client base that you see that would most likely be interested in adopting these newer technology offerings, the smaller biotechs versus the large more pharma?
Luke, that's a tough one. I think perhaps at a high level you could make a case that the smaller biotechs might be more willing to utilize some of the technology a little earlier. For starters, they're easier to access their decision makers, I would say, and easier perhaps to put new ideas to and to access the key decision makers for those new ideas. So there's a rationale behind that. Having said that, there are many forward thinkers within the larger pharma space and who are willing to put certain of their development programs and to use the new technology with those programs.
Think it's very difficult to make a sort of general sweeping statement that the smaller companies are incredibly innovative and they're going to apply the sort of innovation they do in their development of their drugs or the research of their drugs to the development of the drugs and the use of the technology for that development. And just a large pharma are all waiting to see what happens. I think that's wrong to move because I think there are some very creative and innovative people in our large pharma. It really depends on the particular company and the particular circumstance. I'll just put it that way.
But I think everybody recognizes we need to do trials more effectively and more efficiently. And that's certainly the case. And I think the technology, whether it be virtual trials or some of the wearable technology that we're advancing has a major part to play in that and I think everyone would recognize that.
Okay. Great. Then I guess the last one, another on the data is just everybody has a data offering and every CRO says that theirs is better different. I guess how do you guys see yours differentiated and setting you up to win share going forward?
I think for us, we're pretty public in the way we've come forward and say we're trying a number of options on the data front. Data, we don't believe we need to own the data. We don't believe that's fundamentally, we believe there is a lot of data around and we can access that data from a number of different sources. Where we're trying to focus is the analytics of that data and using various organizations, trying out various organizations, be it EHR ForeSee, TriNetX. Our OneSearch is our internal data analytic capability around site ID.
We're also doing some pilots. I mentioned the Intel collaboration. We're doing a pilot with SAMA. So we're doing a number of pilots with a number of different organizations to identify the best approach around the analytics of the data that they have access to. In concert with that, we're also developing our site network because at the end of the day, there's a ton of data out there, most of it because of the various privacy laws is de identified data.
We have to work with de identified data. And so a lot of what's going on around the industry is glorified feasibility. And that's fine. It's certainly ahead of the questionnaires to sites, but it doesn't necessarily get the patient the last mile into the site. We're also trying to come from the bottom up and then developing our site network and the databases that our sites have to connect the data that we can gain on a de identified basis back into the system and then actually connect with those patients through our sites.
So we find out where the patients are. We make sure our sites are in those right areas. And then we use our site databases to reach out into those to those patients to actually connect them to the site and bring them into the site for the trial. We've got further work to do on all of that, but our site network is developing. Our PMV, we made that purchase a couple of years ago.
We're also we're developing that within North America. We're taking on some responsibility for further sites there and built some responsibilities there. We're also in the process of moving forward with some work in Europe. We want to build that out to be a global network. So there's a lot of work going on in that within our organization at the site level to connect to patients and at the analytics level to make sure that those patients through electronic medical records are available to those sites.
As I say, I don't have a crystal ball. I don't know which of the analytical capabilities is going to be the most successful. But I hope as we pilot them and as we work through them, we'll be able to find out and then we'll drive down that street, drive down that truck very actively as we find the one that and all the ones that actually suit our business and give us most value, give our customers most value in the long term.
Awesome. Thank you.
We'll take our next question from Tycho Peterson of JPMorgan. Please go ahead.
Hey, guys. This is Dejha on for Tycho. Just a couple of quick housekeeping ones to get things started. Do you plan to keep providing your book under the old accounting standard? Since it sounds like under the new standard, there will be a lot of potential noise in the metric based upon reimbursable expenses.
And calculated that way, it may not necessarily be too well correlated with profitability. So just wanted to get your take on that. Yes.
It's Brendan here. Certainly, over the course of this year, that's our intention. We will be having our 605 comparatives there for the whole year. And as such, I suppose the bookings number that we've traditionally given, which is, as you know, based on what was direct fees in the past, is a good correlator in terms of future revenue. I think you're correct in your assessment that as we move away from that and include pass through costs, it will become less meaningful in terms of what the economic value is to the organization.
So it is something that we'll be looking at. But certainly, our intention for the remainder of this year is to continue to give our business wins certainly on a quarterly basis in the old format, which lines up very nicely with the disclosures. As we go into next year, I think the industry as a whole will have to have a lot of thinking and thought around what the right metric is for business wins. And I'm not sure, to be absolutely honest, we've arrived at that decision point yet. So I think there's going to be a bit of evolution and a bit of learning on all sides to get to that point.
Got it. That's helpful. And then a couple of quick ones here for Steve on real world evidence and then the Intel partnership. So first on real world evidence, can you just share any thoughts on your conversations with regulators outside the U. S?
The FDA seems to be increasingly more receptive to it. But just wondering if you're seeing sort of growing traction for real world competitor arms and structures of constructs of that nature outside? And then in terms of the Intel partnership, what verticals do you see early use cases in terms of their remote monitoring and wearables technology as it relates to your sort of current backlog?
Okay. Let me take the real world evidence. I'd have to say initially, our contact has been more in the with the FDA than with the European or the other regulatory is not real. However, I think the FDA is leading the thinking around the world on real world evidence. And certainly, they've been receptive to the sorts of things you've been talking about in terms of synthetic control groups.
Certainly, the new FDA commissioner is very forward thinking. And I think our customers also see that and we're seeing that as well. So it's I do think there's a lot of traction being gained for some of these new technology around real world evidence and the ability to avoid some of the costs associated with placebo controlled and control groups etcetera, etcetera and allow us to generate solid data via EMR records and then use that as a submission point. I think initially the feedback we have is it's probably more in the post obviously post approval space, but we do see that moving back into the 2, 3 space in the more medium to longer term and the FDA have been receptive to that. Sorry, with the Intel question, I didn't quite get.
Could you repeat the Intel question?
Yes. It was my question was just around where do you see sort of early use cases to leverage their remote monitoring and wearables technology in terms of the various therapeutic areas in your backlog?
Okay. Certainly, we see from a wearable point of view, we see it particularly around the CNS trials at the moment. The ability to monitor patients in sort of well sleep activities CNS activities. And the other one is respiratory as well. And certainly we're doing a small pilot at the moment with Intel in a respiratory setting.
So the ability with the Intel platform is for us to take data from a number of different devices, be it a wearable device, be it a sensor device, be it monitoring in a respiratory case, say, the environment or the pollution sort of levels and have that data feed into the one platform. And then have some analytics and artificial intelligence software playing behind that to identify trends and potential issues as that data accumulates on a very real time basis. So I would say initially it's in the CNS area and the respiratory area. That's where we're trying it out. But I do think there'll be the ability and the opportunity to broaden that well beyond those sorts of areas in the longer term.
There's no shortage of data available with these sort of the question is how you manage it and how you analyze it and what you do with it as it accumulates. And that's always challenged with these sorts of things. But there's a I think a lot of excitement, a lot of receptivity from our customers around this sort of innovation and technology.
Got it. Appreciate all the color, Steve.
Thanks.
We'll take our We'll take our next question from Jack Meehan of Barclays. Please go ahead.
Thanks. This is actually Mitch Peterson on for Jack this morning. So it's obviously been a pretty active start to 2018 in terms of biopharma M and A. I was just hoping you could touch on some of the potential opportunities and threats that you see from some of the recent developments that we've seen in the market. And then maybe just how you're thinking about M and A more broadly as a risk for the business longer term?
Sure. Mitch, we've reasonably sanguine about the M and A environment in terms of how our customers are seeing it. We recognize that there's likely to be some M and A certainly in the next 12, 24 months. I think 2017 was a relatively quiet year in the pharma space, although health care, I guess, from a health care point of view, there was a fair bit. But in the pharma space, I think it was relatively quiet.
The recent announcement around Takeda Shire, obviously, has got things moving. And I suspect the new tax laws and the ability to repatriate income dollars obviously is potentially going to drive some. So we see the likelihood of some consolidation within our customers. How do we feel about that? In the longer term, we don't worry too much about it, because in our experiences in the longer term, actually it leads to more outsourcing.
Certainly in the short term, it can lead to some slower decision making if you happen to be impacted or if it's your customers particularly that are consolidating. If you have a good relationship or a partnership with the customer that is the consolidator, you potentially expand the opportunity. They become a larger company and they tend to impose or put their outsourcing strategies and outsourcing partners across the new partner. If you're the other way around, of course, it can work certainly not so well, though you do have the opportunity if you're not in the with the consolidator to become a partner. So it can work both ways.
And I do I will certainly suggest that in the short term, there's some slowdown in terms of decision making, prioritization of drug pipelines, etcetera. But in the longer term, they recognize that they need to reduce costs and outsourcing becomes an important part of that avoidance of adding further infrastructure and headcount. And our experience, as I said, is pretty positive from a medium to long term point of view. So it's something that we expect and we're prepared for and we're not frightened of it all. And then certainly for the with the particular one that you alluded to, Takeda Shire, it has very a totally minimal effect on us.
We are not a large provider there, less than 1% of our backlog, I think, the combined entity there. So it's not something that we're worried about.
Great. That's some very helpful color. And then just on some of the new strategic partnerships that you, I think, announced last quarter, could you just comment on how those are contributing to revenue and bookings growth in the quarter? And then how we should be thinking about that for the rest of 2018? Thanks.
Yes. I would say slowly ramping up. These things do tend to take some time. So we I think I made it clear last time, we haven't put anything into the backlog when we announced when we announced the fact that we had brought on several new strategic partners. That's starting to change as specific projects and opportunities come through.
There's but it's relatively slow. There's a fair bit of work to do to set these partnerships up around governance, around manuals and working procedures, etcetera, etcetera, which does tend to take some time. And all of the partnerships we've had, there hasn't been work flipping over. In other words, there hasn't been projects that have already started flipping over. We're really starting from scratch out being allocated assets, working through building those as the government the governance sort of relationships, developing protocols.
So I would say slowly, they really haven't had any impact on the quarter as we've just reported. We believe they'll start to have some impact at the back end of the year, but that's we're sort of planning that out at the moment and it will be a modest impact for this year.
Great. Thank you.
We'll take our next question from Justin Bowers of Bloomberg Intelligence. Please go ahead.
Hey, good afternoongood morning and transparency and comparability between 606 and 605. Just wanted to talk a little bit about your approach to Asia. I know your ex U. S. Business isn't huge, but it has been growing nicely.
And just wanted to talk about your approach there and maybe focusing on China a little bit because there is a lot going on there. And I know you have a partnership strategy there, so.
Sure. We're our Asia business has been growing nicely. We're pleased with the way that's developed. Certainly, if you take China to start with, we have around 400 people in China now. That's grown over the last year at over 50%.
So we've been bringing on people in China at quite a clip. As you no doubt know, Justin, the regulations are changing out there. The opportunity that we see in China is very significant in terms of the CFDA really embracing ICH, taking down the times for approval of new trials, taking down the times to register new drugs, really falling much more in line with the world order of pharmaceutical development. And we see lots of positive opportunity out there. And hence, the opportunity to grow our organization has been one that we've been availing ourselves of.
And as I said, we're at 100 people. We've grown very significantly over the last year. And we believe that growth will continue. If I look at Japan, we've seen very significant growth out there, more in the line of around 25% people in Japan. We're almost 300 people in Japan.
We continue to look for opportunities out there to continue to build our organization. India is a very large operation out there for us. We have a number of our staff out there not just in the clinical area, but in the stats and data management, but in our backroom operations part of the reason for our solid performance and progress over the last 5 or 6 years on SG and A is really because of the fantastic contribution that our Indian group has made. We're over 2,000 people out there in India. And then there are a number of other countries we're also developing.
Korea is a strong hub for us. Australia is also a hub and that's been developing. We're taking on new graduates in all of those areas as a focus. It's sometimes hard to make the acquisitions that you want to have out there. So we've been going back to a more organic style of growth and bringing on investing and bringing on new people out there.
So there's no question Asia is important, very important region for us. We're seeing significant growth. Japan and China particularly are areas of focus for us, and we continue to make strong progress there.
And in those two countries, is there an interest to work beyond the global multinationals? In other words, some of the innovators in those countries too and specifically China? I mean, it's certainly nascent, but there's definitely a lot of capital on startups there. So
Yes. We look at those segments of the market and focus our priorities appropriately on them. So I'd have to say that the large multinationals the large multinational pharmaceutical companies whether they'd be based in the East or in Japan's case, obviously, there's an inherent pharmaceutical industry less so in China. They tend to be more local companies. But we tend to focus on the large multinationals and where they want to do their work.
That's a priority. They tend to provide the strongest pipelines, the strongest cash flow, etcetera, etcetera. But we are looking at the in China, at the more traditional local companies, they have some different characteristics, I would say. Some of those characteristics can be challenging at times. But there are a number we've worked with who want to do development programs in the East.
So we want to do work in Europe and in North America as well as in China. And we've been engaging with them and developing our market and our work with them. So it's a little bit of ad hoc, but a case by case basis with those smaller Chinese companies and those national companies. They're companies that we where we feel good with and who have got a track record and who have a solid balance sheet. We feel strongly about helping them and working with them.
There are others that we take a little a slightly more cautious approach with. We essentially do a risk assessment with all of them, I would say.
Yes, makes sense. Thank you. We'll take our next question from Erin Wright of Credit Suisse. Please go ahead.
Great. Thank you. And sorry, I had to hop on late. So sincerely apologize if you've addressed these. But could you give us an update on what you've been able to accomplish to date with the MAPI acquisition?
And did you break out what that contributed in the quarter? Thanks.
We do. You know what, Aaron, we give our usual breakout in terms of revenue. So let me run you through those numbers one more time. MAPI is the only kind of acquired business there year over year that's making the differential. So we said we were year over year, we were up 7.1%.
On a constant currency basis, we said it was 4.3%. So we were aided by currency. And then we said that we were 1% lower when you exclude acquisitions and currency. So on a CDO basis, we're 1% lower. I'll let you do the math, Erin.
It's pretty healthy on that point.
Okay, great. So it's just MAPI in there. The I guess, how much of your business today is FSP, I guess, currently? And how would you kind of characterize the broader demand trends across that sort of segment? And how do you view kind of your positioning in FSP just more broadly?
It's Steve here. FSP is a it's certainly not the majority of our business. Our docs, IFS business is a very important part of our business and it's a growing part of our business, but it's certainly under 20% of our overall business. So it's as I say, I would say the clinical full service is still the majority of our certainly the majority of our revenues and full service is certainly but FSP remains an important part of it. It's a growing part of it.
Certainly, there are a number of customers who are committed to that model and who want to develop that model. We believe we're in a good position to be able to offer both and in some cases a hybrid. There are a number of customers now that we offer both full service and FSP for particular partnerships or particular assets. So we're in a good spot from that point of view in being able to offer either model depending on their preference or requirement.
Okay, great. Thank you so much.
We'll take our next question from David Windley of Jefferies. Please go ahead.
Thanks for taking my questions. And similar to Aaron, I did have to jump on late, so I apologize if this is redundant. But Steve, I'm wondering if kind of at the ground level, if you're seeing any change in award decisions, decision processes among customers in relation to the data technology strategy. So I think if I look at book to bills, it would suggest among the various competitive players that the momentums are kind of the same. But I guess I'm wondering in qualitative discussions, how your read of the customers' appetite and sensitivity for some of these data strategies is evolving?
Yes. It's a good question, Dave. 1, I ask myself a lot and try to get feedback from our business development teams a lot. I would say at this stage, there really isn't much change in terms of the way our customers are viewing our application of the various data analytics and data strategies that we can apply to their programs. I think many of them have seen the heat maps and the patient maps and they know that we can do that and they're a little bit, dare I say, it's skeptical of that because ultimately, as we all know, it's the it's not identifying where the patients are.
It's a clear and coherent strategy for getting them the last mile into the trial. And I think that's where our customers are looking for us to really differentiate us. And I think we've outlined how we're trying to do that with our site network and with the analytics that we're partnering with. And I think as we're able to deliver and as we're able to tangibly execute on those strategies, I think we'll get more traction and we'll get our customers really engaging. I think it's early days for that.
As I said, at the moment, a lot of the data review and a lot of the data analytics out there is glorified feasibility. And that's fine, but it's not really changing the game yet. And we think we have more to do. I hope that sort of answers your question. I don't see much change in the way they're making decisions as yet, but I do think it will happen.
I think we're but it's probably going to take as always a little longer than we initially thought.
Yes. That's very consistent with what I've heard as well. In terms of partnerships, to an earlier question, you talked about some of those in the last call. You've had a nice track record for some period of time now. In fact, as you've tried to kind of rebalance the business visavis your largest customer.
Where would you say you are in terms of your capacity to win additional ones and build the governance infrastructure and onboard the business, etcetera? And am I right in thinking that there are a handful over the balance of the year that are kind of looking at re procurement of partnership vendors in 2018?
Sure. I think in terms of our capacity partnership, I think we have the ability and the capacity. One of the things we learned and one of the things we've developed in terms of core competence in our organization through the partnership with that number one customer is an ability to know how to onboard these partnerships and how to develop these partnerships and how to deliver on these partnerships. So it's been, I think, a very valuable learning experience for us as an organization. And we are now looking to apply those learnings.
And in terms of things of like how you work with other CROs, how you work with their partners. I think we showed a strong track record in that as well. So we're applying that sort of learning. And I think we've been able to be successful in winning new partnerships. And I think we have the capacity to take on more of them.
It's not every partnership is the same. In fact, no two partnerships are the same. Some provide a very significant amount of work. Others, it's more of a less amount, but it's more of a consistent within a particular therapeutic area or a particular asset. There's no sort of one size fits all here.
And so we try to apply and customize our approach to those partnerships and develop our capacity. Obviously, the learning has helped that and the capacity that we have to take on those partnerships is, I think, there and certainly willing ready to be deployed. And as I keep saying, they rarely, if ever, take off at the speed we'd like and even at the speed that the customers would anticipate. So and we certainly see that. In terms of reprocurement, I think we feel we're always on the rack, if you like, for for re upping these partnerships.
They formally come around every 3 to 5 years depending on which one. I don't have in my mind right at the moment the ones coming up this year, although I'm sure there are. So we feel we need to be on our game the whole time because ultimately if they don't if it's not working, they'll find another no matter whether you're 1 year, 2 years or 5 years into the partnership. And so it's a matter of constantly being on our game to deliver on these partnerships. And that's our approach.
Appreciate that. And one last question around M and A. Within the vendor industry, in particular, ICON. So kind of a year ago, a little over a year ago, as you were stepping into the CEO seat, there was a perceived, say, more aggressive, open minded or maybe higher focused, larger focused attitude toward M and A by ICON. I think there was an appetite for maybe one particular asset that didn't play out.
And then you made the illusion in an earlier answer about Asia and sometimes the capabilities you want to buy are hard to buy. And so you've turned to organic. I'm sure those are probably small. But the punch line of the question here is, we're 5 quarters in from hearing a more aggressive attitude about M and A and there hasn't really been that step up in volume. Are you still thinking aggressively about M and A?
Or might we see a more aggressive deployment of capital in share repurchase? Thank you.
Dave, that's a long question. Lots to it. I would just say that we remain very keen to deploy our capital in the most appropriate ways. And if that's a significant transaction, we are open to that and we would be open to that. We want to we obviously get the best return for our shareholders and for our customers ultimately.
So we're certainly willing to look at all types and all sizes of M and A. The challenge, of course, we find out there is the is what's available, what's executable, what's affordable, what's sensible and where what transaction you can do where the benefits outweigh the risks. And that's an individual transaction by transaction decision. But we are anxious to develop our organization. We believe we've got a good base.
We're executing well on the portfolio of work that we have. And we have a strong as you know, a strong balance sheet. And we're anxious to consider all opportunities from an M and A basis. On the share buyback, we're going to be opportunistic. We've done, I think, it's $280,000,000 of the $400,000,000 that we have approved.
And it's something that we would certainly look at we will certainly continue in the absence of suitable targets from an M and A point of view. But I will be very honest and say from my point of view, I'm looking to develop the business and develop and grow the company on an M and A basis. And that's and if that's if the right opportunities come along, we will be very active in that space.
Great. Thank you.
We will now take our next question from Michael Baker of Raymond James. Please go ahead.
Thanks a lot. Steve, I was wondering whether or not you're seeing any meaningful change on the competitive pricing front both in terms of contracting approach and level of pricing?
Michael, nothing significant that we would call out for you over the last quarter or so. This is a competitive industry. It remains a competitive industry. You need to be on your game. There's been talk around fixed pricing and those sorts of things that some of our competitors come out with.
It. I think that's an area we embrace appropriately, I would say, in that you can never take the entire risk. And I don't think any of our competitors take the entire risk there. But that's an area that I think has got some air play over the last probably 6 to 12 months. But in terms of absolute pricing, no, I don't think there's any particular move over the last quarter or so to be more competitive.
It remains a very competitive business and that's the way it should be.
I appreciate the update.
Okay. As there are no further questions at this time, I'd like to turn the conference back over to Doctor. Steven Cutler for any additional or closing remarks.
Thanks, operator. So let me just say that quarter 1 was another strong quarter for Icon. We look forward to building on this progress throughout 2018 as we consolidate our position as the CRO partner of choice in drug development.