Good afternoon, ladies and gentlemen. My name is Jonathan Curtain. I am ICON's Vice President of Corporate Finance and Investor Relations. You're all very welcome here, either by webcast or indeed in person to the Nasdaq offices at Times Square. I would now like to draw your attention to the cursory forward-looking statements, just as a disclaimer, nothing new to anybody. We have a very busy agenda this afternoon and one which I think everyone will find very interesting and very informative. We'll begin presentations momentarily, and go straight until 2:30 P.M., then take a break, and that will last until 3:35 P.M., during which time we will conduct a series of demonstrations at the back of this room. That is an on-site demonstration. For those that are on webcast, the line will go on mute. Please do not disconnect. There's no need to redial back in.
After the break, we will commence again at 3:35 P.M., and we will go straight through to 5:00 P.M. There will be a Q&A session webcast before that. I'd like to introduce our CEO, Dr. Steve Cutler. Thank you.
Thanks, Jonathan. A warm welcome to all of you here today. You can see we've turned on the Irish weather for you. A little different to what's been happening in New York over the course of the summer, but we certainly, as an Irish company, feel very much at home with the rain. What I wanted to do, and what I think is an important part of today, is to introduce you to a number of our management team, the ICON management team. I do want to make sure that you know who's running the company and who has our hands on the wheel, I think, as we go forward. You know, of course, myself, and you know Brendan.
I'll introduce Brendan again in a moment, Jonathan, of course, our Chairman, Ciaran Murray, who's here, I think at the back of the room. You know us, I think, quite well. There's a broader range of talent that runs ICON, I wanted to make sure, as I said, that you get to know them a little bit today as well. A number of them will be presenting through the afternoon. We have a number of demonstrations, as Jonathan mentioned, that we'll be putting forward, I want to make sure that you get the most out of those. Let me start, I will reintroduce Brendan again. Brendan Brennan, our Chief Financial Officer. Brendan's been with ICON for about 12 years now. Six years as our Chief Financial Officer.
I believe he is, despite his youthful good looks, the longest serving of the chief financial officers within the public space. He has a number of claims to fame beyond his financial acumen. He actually played standalone trombone at the Royal Albert Hall at one point. We're not too sure how many people were in the hall when he was playing the standalone trombone. Not sure how many people were in the hall at the end of the position. He does hail from a musical background. I think you know Brendan well. I want to also introduce George McMillan. George, our Chief Commercial Officer at the back there. George has been with ICON for six years. He has held C-suite positions at a number of CROs. He was the CFO at PharmaNet.
He has an Ivy League background at Stanford, an MBA and JD in law from Harvard as well. He is our Ivy League academic, and he's been driving our commercial success over the last year and a half or so, certainly since the start of 2017. George is a very important part of our approach to partnership, and he will be talking more about partnerships and how we've developed those partnerships in his presentation this afternoon. Next is Nuala Murphy. Nuala's at the back there. Nuala is six years with ICON as well. She was born in Dublin. A proud Irish woman, but now lives in Paris, and so she represents us, obviously, in the French office. Nuala is the head of our phase II, phase III business.
The largest part of our company is run by Nuala, and she's been a very important part of the success of the organization over the last five to six years since she joined us. Next is Colin Stanley, again at the back there, who will be presenting this afternoon as well, talking about our FSP business and the contribution that that's made to the growth of the company. Colin's been a long-termer with ICON. Has been with us for about 17 years. Joined us as a project manager. He's been someone who's worked his way up through our organization. Has lived in the U.S., has lived in Australia, and now is based in Dublin, in Ireland. As I said, runs our FSP business, and we'll be talking more about that during the course of the afternoon.
The next person I want to introduce is Tom O'Leary, our Chief Information Officer. Tom, again, will be presenting some of the robotics and automation innovation that we're very proud of and very pleased with how that's progressing. Tom's been in charge of that and been driving that. He hails from a big pharma background. He spent some time at GSK early in his career and has previously been in charge of our lab group and our data management group. He has 17 years at ICON, a well-established person within our organization. He's been our Chief Information Officer for the last five years or so. Next to be introduced is Don Craft. Don is at the back there. Don is in charge of our strategic initiatives. Been with ICON for six years, initially within the HR space.
He was our global head of HR, moved into the strategic partnering area. He's been working with George in building our partnerships. He also has a big pharma background from Abbott, but also big CRO. Spent some time with Covance as well. Don is in charge of our strategic projects, and he's able to bring that expertise to us as an organization. Next is Jim Miskel. Jim's at the back there. Jim, five years with ICON. Is in charge of our laboratories, our bioanalytical laboratory, and our central laboratory, and our early phase team as well. Jim has a background within the CRO business at MDS and at Harlan. He also spent some time at Wyeth, and he has a consulting background as well with McKinsey. He's well qualified to represent our labs and our early phase group.
Finally, on the executive team, Ramita Tandon, who's next to Jim. Ramita's been with us for three years. Has big CRO experience at Parexel. Ramita's based in Boston. She looks after our Commercialisation and Outcomes group, so our late phase team. She's also a Patriots fan, we usually forgive her for that when she comes to New York. The last three people I wanted to introduce are at the back of the room, Gareth Milborrow, Nicole Trewartha, and Marie McCarthy. You'll meet them during the break, during our demonstrations. They are responsible, in Gareth's case, for driving forward our data analytics approach. Gareth is a physician with an IT background. He brings very different but very complementary, he believes, skills to our business in terms of how we apply data and how we look at data, interpret data, and analyze data in that medical setting.
Gareth brings us a lot of capability in that area, and he's very well supported by Nicole and Marie. You'll meet them in the demonstration. The three people who aren't able to attend today who are on the management team are Simon Holmes, many of you will know who was Jonathan Curtain's predecessor as our head of IR now looking after our corporate M&A. Dermot Cunningham, who is our Chief Administrative Officer who's recently moved back to Dublin. Dermot looks after our global business services group or a number of the administrative groups within that group and he's also our general counsel. Joe Cronin, who's our Global Head of HR. None of those three were able to make it today, we have the rest of the management team, and I'm very pleased to be able to introduce those to you.
Let me continue with an overview of the agenda that we have for you today. You can see I will give something of an overview, executive overview. There won't be too much new to many of you there, we'll work through that. We're going to focus on a couple of things at the data. On partnership, the importance of partnership for us, particularly around our customers and the commercial success that George and his team particularly have been able to extract through our partnership strategy. He will go into that and provide some details on how we've been able to develop that and develop strong outcomes there. The execution focus is our mantra. We look at ourselves very seriously through our metrics and through our performance, our obligations to our customers. Nuala Murphy will talk about that.
She's going to speak particularly about our patient insight strategy, our integrated SMO strategy. We believe, I think, is an area of interest for the analyst community, and we're going to provide some details on how that's moving forward. Tom will talk about innovation. You'll see, as I said, some of the demonstrations that we'll give during the break to allow you to see tangibly what we're doing in that area. We're relying on that innovation not just to improve our performance from an operational point of view, but also across the global business services group to continue to drive and leverage our SG&A spend. Tom will be able to provide some more details about that. I mentioned the demonstrations. We'll do that during the break. We'll be offline for webcast for an hour or so as we do that.
That is an important part, I think, of showing you what we're doing. On the integrated FSP model, this is a model that we believe we're well-positioned to be able to benefit from in terms of the way the market is moving. Colin's going to speak to that and how that model has been integrating within the full service business as well, and how as a company, we feel, as I say, well-positioned to benefit from that trend. Brendan will spend the last 25 minutes or so providing a financial update, providing you with some details of where we think we can go and what our targets are as an organization going forward, given the success we've had to date. We believe there's further upside and there's further opportunity for us given the way the market is at the moment.
Of course, we'll spend at least a half an hour, hopefully 40 minutes with a Q&A session with the whole management team who will be available to take your questions. I'm going to work through these slides reasonably quickly. I don't think there's too much here that you won't have seen before. You know ICON is a global provider of services, outsourced services to the drug and device development communities. Pharmaceutical companies, biotech companies, device companies. We're also in the government space and the public health space. We specialize in managing large-scale clinical trials, consulting that goes around that, but moving particularly focused in the clinical area around phase I and phase IV clinical studies. Our mission is to accelerate the development of drugs and devices that save lives. Our vision is to be that CRO partner of choice.
Partnership is a theme you'll hear a lot today in terms of how we're developing partnerships, what we tangibly do to move those partnerships forward, how we secure them, how we broaden and deepen as we move forward with those partners. Journey so far has been an interesting one. We've been in place for 28 years. We were established in Dublin in 1990. John Climax and Ronan Lambe, our entrepreneur founders, still with us. Actually, Ronan, just recently, you'll have seen the announcement, retired from the board. John Climax, still a very important part of our board. Over the last 28 years, we've developed, as I'll outline in a moment, to be a first-line CRO powerhouse at the top of our game from a public company point of view. We've made a number of acquisitions, as you can see there, and a number of milestones.
We've been listed on the Nasdaq for the last 20 years. We were lucky enough to have the opportunity to ring the opening bell this morning on the Nasdaq, and it was a nice milestone for us. Being our 20-year anniversary of being listed on the Nasdaq and having the opportunity to celebrate that with the opening bell today. Where, as I said, over the last 28 years, we've moved from a small two-room office in Dublin with five staff to well over 13,500 staff worldwide in something like 93 offices and 37 countries. From a half a million dollar operation to a $2.6 billion operation and a market cap of certainly approaching $8 billion. A global platform and execution capability has grown dramatically over that time.
If I compare this slide with the slide we provided a couple of years ago at our Analyst Day that we had in Dublin, the main growth really has been out in the Asia-Pacific region. You can see we're over 3,500 people now out there in the Asia-Pacific region. All of that has been DOCS growth. Colin will talk a bit about that. We have our facilities in India as a large part of that, but we're also seeing significant growth in Japan and in China as well, as well as a number of the other Asian countries. There's no question we are a global powerhouse in terms of a large-scale development organization with capabilities to run trials really in any part of the world that we like.
We have a comprehensive service portfolio supporting all aspects of drug development services, from consulting to clinical research that, as I said, Nuala looks after, the functional services that Colin looks after, the laboratory with Jim, the commercialization and outcomes with Ramita, and early phase with Jim as well. All of those particularly focused around the clinical space, and we intend to stay very much within the clinical space as we believe that is where, obviously, a significant part of the market is, but also it's an important component of the development landscape, and it's, I think, an important focus for us to have. We don't necessarily concur with the theory of following the molecule.
The companies that we work with do tend to be typically make decisions in silos. Being focused in the clinical space we believe gives us credibility and that ability to execute in a strong and a forceful manner, which allows us to gain our repeat business and develop our market share. We do leverage a number of differentiated technology solutions and data collaborations and partnerships. You can see these will be fairly familiar to many of you from a patient identification point of view with organizations like TriNetX. Our OneSearch capability, you'll see a bit more of this afternoon. Within the real-world data, Practice Fusion, ICHOM, Genomics England, and Saama has been providing partnership and collaboration.
Ramita can talk more about that in the question and answer session in terms of how her organization in the late phase space is particularly piloting and using some of that technology and some of that access to real world data as that part of the market develops. We have a number of collaborations. UCD's an important one where we fund the chair of analytics at that organization, and on a research basis, we look at the components around site startup and how we improve that process and the data that we need and the algorithms that we can develop and can use to help us improve that process. Such an important part of any sort of drug development program.
On our solutions side of things, ICONIC, FIRECREST, we'll talk a little bit more about that in Tom's session, and our AdPlan software, which includes our MCMod pharmacokinetics plan, allowing us to improve and to modify the way we do clinical trials as we go through those trials. The adaptive approach, still underutilized in the industry, still, we believe, a very important offering in order to differentiate us from our competitors. As we try to drive better execution in our clinical trials, we look at our top-down, bottom-up approach. You can see from the bottom up our healthcare alliances and our integrated site network.
Nuala will provide more information about that, but identifying sites that are receptive to that clinical trial option, that have ICON people in them, that make sure that every patient that comes through the door is a candidate for an ICON clinical trial. Working to make sure that the candidates that come through the door are not just the patients that are associated with those sites, but that are driven to those sites through the various tools and techniques and applications that we have up on the top line there through TriNetX, through Saama, through our OneSearch tool, EHR4CR, and ICHOM.
Identifying those patients, being able to have access to the electronic medical records that allow us to identify those patients, to push them to the trials, to do our feasibility correctly, and allow us to increase the rate at which we recruit patients into our clinical trials. We believe that's a comprehensive solution, and it differentiates us from an organizational and competitor point of view in that it is comprehensive. It allows us to improve the performance significantly of the sites that we have involved in our clinical trials. As I mentioned, our vision is to become a CRO trusted partner of choice for drug development. The number of components there that we look at to make that happen. We are a global organization, as I've outlined. We are an organization that has resources and capabilities right across the world.
We believe we have some experience with these partnerships that benefits us and allows us to provide learnings for new partnerships. We have flexibility in terms of how we approach our full service versus our FSP. We have a number of innovative technologies, again, some of which you'll see this afternoon, and a focus on excellence and delivery that's really unremitting and unrelenting. We measure ourselves against the industry. We aim to be 20% better than the industry. Those are the targets that we have, and we measure ourselves every month on how we're approving and how we're moving against those targets. Then, as I mentioned, we have that clinical focus, which I believe also gives us an extra leg and an extra dimension to our service, and I think it gives our customers a feeling that we really are focused in the right space.
We have delivered significant shareholder value over the last four, five, six years, really over the last 28 years, as I'll show you in a moment. From a backlog point of view, from a net revenue point of view, earnings per share, operating margin, all of those have grown and increased substantially, in this case, over the last four years, but really, as I'll show you on our slide, we're over 1,800% up against the Nasdaq Biotechnology Index and the Nasdaq index. You can see we've performed well as an organization from a share price point of view.
We are widely recognized as an industry leader, a number of awards that we've been given, and I think Nuala and Ramita have just been recognized this year in the PharmaVOICE 100, Nuala for raising the bar on clinical performance and Ramita for her work as an advocate of late-phase clinical research and the benefits of using real-world evidence. We're very proud of the two of them having been recognized in the PharmaVOICE. I'm also very proud of the Forbes award there as the best CRO employer. We ranked number 200 in the Forbes Top 500. That's our employees voting as well. I was very pleased to see that we were the top-ranked CRO in that area.
In a business, in which we ask a lot of our employees, we ask them to work very hard, many long hours over extended periods of time, and there's always the tendency that can go a bit beyond what you want sometimes. We've been able to manage that, I think well, and we, as I say, have been noted by Forbes as one of the top employers, and again, that's a big endorsement by our employees, and we're pleased with that. Let me walk through the market trends and opportunity, having given you the sort of up-to-date overview of ICON and what we are as an organization. Market trends and opportunities I don't think will be a huge surprise to you. We are in a great time from a market point of view. We're seeing a number of tailwinds, whether it be the R&D biopharma spending remaining robust.
You can see 3.6%, the low single digits, that continuing to grow at the moment at about 4%. Going forward, Evaluate, talk about a 3.1% growth rate. That's as good as it's been. That's certainly a bit better than some of the volatility we've seen in previous years. We see solid continued growth in the R&D space. I don't think that's any particular news to any of you. We also see the CRO industry expecting to grow again at around about the 6% mark. That's essentially made up of two areas. First of all, an increased penetration of CRO services. We continue to see pharma customers outsourcing their development dollars. I believe the industry continues to get better in terms of the delivery, and that's right across the spectrum of CROs. We're better at delivering than we were certainly 10 years ago, probably five years ago.
We're more consistent as an industry, and that certainly applies to ICON. That's certainly a very good thing for our industry and a very good thing for our company. We also see about approximately half of that growth coming through the volume of new trials, different trials, of course, and we'll talk about that in Tom's presentation around the virtual trials and how that market's moving, but also on the value growth, the prices as well, going up as well. Overall, about a 6%, which is moving us from about a $38 billion-$39 billion market at the moment over the next four to five years, up to close to $50 billion as a market. We see that market continuing to grow nicely. Those attractive fundamentals, essentially, as I mentioned, the increasing CRO penetration, the momentum in phase III, phase IV. There's also momentum, particularly in the late-phase space.
We also seen a very strong funding environment in the biotech space. Again, that won't be news, but we continue. I don't think we've seen a better time for the raising of money to develop biotech drugs, particularly around these oncology projects, and the ability to use the technology and the medical science that's out there around immuno-oncology particularly, I think has fueled a significant amount of that growth, and we're very encouraged by a number of the technologies out there. We believe we have some specific expertise in the CAR T space, in the CRISPR area, where these trials are particularly complicated from a logistic point of view. You recognize you need to take cells away, take them to a manufacturing facility, then bring them back to the cold chain storage. The logistics of that is very complicated and very challenging.
We've been early movers in that space. We've got some significant experience in that space, and customers are coming to us to do that sort of work. We feel very good about where we are in that particular space, and we certainly see that growing quite dramatically. Then, of course, the FDA have been playing their part as well. I think it's something like 34 new drugs approved year to date. That's well on track, I think, to be around the 45-46 they were last year. In fact, probably even a few more. Scott Gottlieb has been something of a breath of fresh air within the FDA, and he is moving things along there. Certainly, I think our entire industry is encouraged by some of the things he's doing, and also very much encouraged by those approval rates within the FDA. Our strategy revolves around partnership.
As I've mentioned, we'll talk a lot about that today, about that relentless operational excellence and quality, a focus on delivery, a focus on our metrics, enhancing our capabilities and expertise, and of course, talent, developing our leadership and our culture. As I've mentioned, George will spend some time on partnership and customer focus as he takes over from me in a moment. Nuala will spend some time on the operational excellence and the quality part in her presentation around our SMO integrated strategy. Tom will spend some time on enhancing our capabilities around our automation, robotics, RPA.
I will spend a little bit of time now in terms of what we're doing from a talent point of view, in terms of how we're fostering that culture of high performance, how we're developing the careers, how we're attracting the right people, developing them and developing their careers, engaging them in our organization, and enabling them. There's a number of activities going on here. We do an engagement survey actually every second year. We're due to do one in the next month or so. We've been able to identify areas of concern for employees that we've been able to tangibly move forward. For instance, last survey we did was around a career hub, giving employees a sense that they have a career and a career path and a career progress within ICON.
Very important that we give people that sense of where do they go next. Can they move across departmental lines? Can they move across geographies? What's the path up within the function that they're working in? We've been able to put in place a career hub that shows them what they need to do in terms of training, what experience they need, and how they should go about moving their careers forward. It's an area I think that we've seen some significant benefit from already in terms of our retention, and retention in our industry is a very important part of what we do. Obviously, customers like to have the people who start their projects complete their projects.
The turnover within project teams is always a bone of contention with customers, we've practically been able to move that forward and to develop that and to improve that going forward. We'll also talk about, the ladies at the back can talk to you about how we're using artificial intelligence and RPA to help us recruit the right people, to help us do screening of CVs so we get the right people into the recruitment process. Even on a video basis, how we rate and assess interviews with potential recruits. We're trying to apply artificial intelligence in that way. Obviously, at the end of the day, we have a decision that's made by a manager, we're trying to get better at how we screen candidates using that.
That's very much a part of how we're improving our ability to hire and recruit the best people. Our values, we've had a refresh of our values over the last 12 months or so since I came into the role as CEO. I felt there was a need to sort of reiterate the sort of company that we are, and we decided on these four values around this own it at ICON. Owning the issue, owning the challenge. Our customers want us and need us to own their problems and own their challenges and own the solutions that we put forward to them. We've moved that forward in a number of ways with tangible events that have our employees thinking about what they do and how they help to enable this culture within ICON.
Accountability and delivery, taking pride in what we do, back to that execution focus, that relentless pressure, that relentless focus on getting it done. Our partnership and partnering with our customers, not just with our partners, but with our suppliers as well. Collaborating, being one team, and how we interact together and help each other out. Integrity, making sure we do the right thing. In our business, when we're working with people in a research environment, doing the right thing, doing it right first time is very important, and we want to make sure that our employees know that that's the expectation when they work at ICON. As my final slide, I'll just reiterate essentially the themes for today. It is around partnerships.
It's what we do to partner with our customers to build that relationship, to build that partnership, to have them trust us and become that trusted partner. Our relentless focus on execution, I mentioned a number of times. We target to be 20% better than our industry metrics. We watch and we carefully measure ourselves on a regular basis every month to make sure that we're making progress on that, whether it be around our first patient in time, our last patient in time, the number of sites that we have that are not recruiting patients, et cetera. We have a number of detailed metrics right across the operations that are very much focused on and very much expected to move forward on an annual basis. That leads, we believe, to a story of sustainable growth.
We believe we have the SG&A, the GBS services, the backlog, the commercial division, the operations in place to build long-term sustainable growth as an organization over the next five years. Brendan will give you some more information on what that means, specifically on the top line and on the bottom line. We believe we're well positioned to continue to grow and to continue to offer a really strong and solid service to our customers in that partnership component, but also to be a great investment for our shareholders as well. With that, I will hand over to George, who, as I said, will start to get into and dig into the presentation a bit more from a partnership point of view. That's what's led to our significant commercial success over the past couple years. George.
In this section, I'm going to focus on the first of Steve's themes, partnership, and its connection to our recent commercial success. In this section, there are really three key takeaways you can take from this particular session, and I will drill down sequentially on each one of those. First takeaway is that ICON's competitive differentiation is being built around the theme of trusted partnership, which we have found resonates very well with both large pharma and small, but I think encapsulates and communicates ICON's ability to respond to their specific needs and with an approach to clinical development that is tailored to meet their specific requirements or interests. The second, which is ICON's consolidated commercial division, which was created in early 2017, and as we'll see, has met with significant success, tailors its commercial strategies around three distinct market segments.
Very large pharma, which is very typically characterized by formal partnerships, mid-size pharma, some of which opt for the partnership, others just opt for long-term sizable relationships, then the emerging and biotech world. For us, the center of gravity, our involvement in that space tends to be concentrated on those biotechs and development companies that have significant cash from venture capital or from co-development deals with large pharma. That's where we have made very significant inroads in the space at a time, as Steve said, in which those markets are seeing very strong funding and very strong fundamentals. The third relates really to the decision process. While the process for selecting and renewing CROs changes slowly, sponsors are showing intensified interest in three general topics.
The first is innovative patient recruitment strategies, particularly ICON's strategic initiative in that space, which Nuala will cover at greater length. Second, an awful lot of interest and open-mindedness to discussion around the topic and the exploration and validation of diverse data strategies and new data tools and data strategies. Probably more than we've seen in several years, a real openness to talking about what's working, what's not, and what we think. Third, flexible and innovative models that blend together FSP and full service. In a world which was traditionally fairly binary in its approach to that, Colin Stanley will talk more about their openness to a blending of those together slowly in a way we have not perhaps seen before. Let me spend some time on that, let me start with partnership.
As Steve said, our core strategy is built around the four legs Steve talked a moment ago about. The first of those is partnership and the customer and market focus of the business in a way that we have never done as well before. Let's talk more about that. Before we go there for a minute, I wanted to connect that theme of partnership back to Steve's value slide a moment ago. Partnership, as you can see, is one of our four values, as many of you know, how we work and what our values are do become important discussion topics with sponsors, either existing sponsors or a new one, and the fit between the way we work and the way we work. The partnership theme comes out of that.
I think in the background, if not explicitly, that aspect of our mantra that we own it and its connection to accountability and delivery play very important roles. The thing which our sponsors want, among other things, is that the team from the CRO feels a sense of ownership and accountability for delivering that in the same way that their internal people do. When they see this slide, they will pick up on that because that's what we are trying to instill internally. That's what we communicate to that we are not only their partners in shaping their clinical development, but we infuse in people the sense of accountability and ownership for their work as if it were our own. All right. What does that mean from a differentiation point of view?
We position ourselves as the sponsor's trusted partner, that means four sets of behaviors that we work very hard internally, but in demonstrating to them in the CRO RFP process and in the selection process. They are listening carefully, understanding, and anticipating their needs as they describe it to us, either in their RFPs or in the process of working our way through to selection. Second, very flexible views on resourcing, organization, including governance of the relationship, and our approach to meeting the very specific needs that they identify and articulate to us. The third is to provide innovative solutions that improve the outcomes of the studies themselves, be it data or quality or timeliness. Fourth, and will be picked up later, delivery excellence. Our sort of obsession with trying to be 120% or more better on key metrics than any other competitor in the industry.
Those are the behaviors and the themes we push on hard on trusted partnership. Okay. When that comes out of our mouths, what does that communicate to the sponsor? I sort of summarized it on one slide. That really means we own your goals. It goes back to accountability. The goals that you set for the development work become our goals, of our team and the senior leadership. Second, that we are easy to work with. That our focus is on figuring out how we work together with them in a way they're comfortable with, not telling them how we do development work irrespective of their needs. The third, we solve your problems. A great deal of focus on proactivity around problem identification and proactive solution together. Finally, delivery.
The work is done in a timely manner with the appropriate quality, on time, and on budget. When we do those four things as their partner, the outcomes are improved, not only from our point of view, but particularly from theirs. Okay. What's important about this, I think, in part, and the reason I think it is working is because I think it connects very much with what their hierarchy of needs are. We have summarized here from the December 2017 McKinsey study, the most important criteria ranked from top to bottom for their process for the selection and the retention of CROs. I'll connect it in particular to two points, the concept of partnership. The first is the highest-ranking category there under the rubric fundamentals very much goes to the relationship and the executional side as opposed to the competency side of the CRO.
That's timeliness, that's service quality including communication, and it's technical proficiency. By that, I fundamentally mean the expertise, the clinical expertise, not necessarily, although not without benefit of IT. Those are very, very fundamental, and at the end, the final decision tends to get made around those criteria. The other aspect I would point out here is in the bottom right-hand corner, which is with the increasing complexity, duration, cost, and complexity of the trials, a lot more focus on getting the CRO to talk to them about how they make complicated studies simpler. Nuala will spend time on that.
That ability to think in an innovative fashion and in a way that saves time or cost becomes an increasingly important discussion point as the $ and time frames get bigger at a time when it's more important for them to get the studies done sooner and translate them into revenue. I think we skip one here. All right. Let me give you a real-world example of that. In early 2017, we were asked by a top 20 international pharma company who had really never been a meaningful sponsor of ours before to participate in their refresh. They had three primary goals in their decision to shake up their CRO relationships, and those objectives were, they wanted to centralize and then consolidate the number of CROs working with them from 25 or more to two.
Second, they wanted to standardize the protocols and the processes for consistency and quality because they had no set way of doing things, and they had in fact had some quality problems internally and with regulators because of the heterogeneous nature of the way in which they managed quality. The third was they wanted to find two CROs that they felt could work together with them, the two of those and themselves, for what I call the envisioned future. They knew where they wanted to go. They weren't sure how to get there, but they wanted two CROs they knew would partner together and with them to figure it out with them along the way. We won. We were one of the two they chose, even though we were the only one at that time of the six major CROs who were not working with them.
Why did we win? We won for four reasons. Our intense focus and our going back to them repeatedly in the process on the topic of partnership and how they envisioned it and what their needs were, which did in fact differentiate us from others who primarily talked about their capabilities. Second, we do in fact have a reputation in the industry for having a track record of partnerships that work, and particularly and partly because of our culture and who we are, our ability to collaborate with other CROs and work together with them in order to achieve a result. Something not necessarily true of the larger CROs in our space.
We were willing to blend their SOPs and their IT, which was an evolving view, in a creative way that would ultimately be worked out between us and them, but we would be flexible in adapting to where they wanted to come out on the combination of SOPs and IT. Finally, even though it was a little unclear at the time how large the dollars they had to spend by their own admission, we were willing to offer up a fully dedicated team to this effort and the active involvement of the C-suite of this company, including people who are in this room today. For those reasons, given their needs and the match between the solution we offered and their needs, they chose us. Let me switch to the second, which is the commercial organization we're talking about.
ICON's recent commercial success is attributable in no small part to its focus on addressing three market segments with discrete teams and discrete approaches. It can be summarized as follows. We focus very intensively on the large pharma relationships, which are typically engaged in the formal preferred provider model that you would be familiar with. That is the foundational element of both our relationships and also our ongoing recurring revenue. We have prioritized carefully the medium-sized pharma companies against a series of criteria and put differential levels of focus on them. Some of them will end up being in the 1 category, that they're medium to large companies that ultimately opt to have more formalized preferred provider relationships.
Others have a significant amount of recurring revenue, choose to operate in a long-term relation form that is less structurally a strategic alliance, nonetheless represent a second layer of ongoing recurring relationships, which makes our ability to grow our organic revenue faster. Third, as I mentioned a moment ago, the rapidly growing biopharma space, particularly our focus on the heavily funded opportunities that are located principally on the West Coast and increasingly on the sort of Princeton to Boston axis as well. We have seen significant success there as well, working for some smallish companies with very large balance sheets, often who are involved in co-development relationships with other big pharma who are sponsors.
Each of those is addressed through a distinctive team configuration and a set of processes that's really designed to make the definition of partnership adapt to whether they're very large, moderate to large, or they're in the emerging biopharma space. From the point of view of producing success, our objectives that we set then and now on the left are largely three. Win and develop more strategic alliance partnerships. Those will most characteristically be very large pharma. Second is to diversify our customer base by expanding relationships among global accounts, which is what we label the mid-tier, to produce an increasing base of predictable revenue. Sitting on top of your large partnership relationships are a large number of other relationships as well. Third, accelerate growth in faster-growing and strategic market segments. What has been our progress from mid-2017 to the present?
One, we have seen a sustained level of higher booking levels resulting in a trailing 12-month net book-to-bill ratio of right around 1.3, which drives revenue growth. I think the operative word there in this presentation and Steve was sustainable. Our goal is to continue to put in quarter-over-quarter solid results on gross and net bookings right now that will fuel our long-term growth, not just a single or periodic big number followed by less impressive ones. Second, we have seen growth in both our formal preferred providerships in the top 30, but also a very solid group of new partnerships among the mid-size pharma companies, which is achieving both the first and the second growth. Third, and sometimes overlooked, is we have been able to drive strong across-the-board demand for ICON's key service lines.
It's not enough simply to get large net bookings for the company as a whole, but since we have a multitude of service lines underneath the company, drive the diversification of where we're winning that revenue. If you will, all of the service lines are seeing their fair share of that. We've had very good success with that in our FSP business, in our labs business, and our early phase business. Perhaps better than at any time in the past, which enables individual service lines to prosper, not just the company as a whole. Steve showed some, Brendan as well. I'll just put up one slide here. You can see from Q2 2016 to Q2 2018, the growth in ICON's gross business wins.
As you can see, they moved from in 2016, the mid to high fives into the sixes, and now they're running in the sevens. As you can tell, our goal is to continue to grow them systematically and gradually quarter-over-quarter, and that produces a gross book-to-bill ratio that's gone from about 1.39 to mid-1.4s and now into the mid-1.5s. Our goal is to continue to predictably and sustainably do that quarter-over-quarter for the balance of this year and beyond. Okay. It has helped, I won't be able to drill down on it.
It has helped that we have continued to add new product and service initiatives to the company, some of which we'll touch on today, that gives those of us in commercial the opportunity to go back to new customers and existing customers and talk about new things and new opportunities we have that they can take advantage of, extending the relationship with them. The objectives are clearly to be competitive and to build capabilities to enhance those partner relationships and grow the revenue with the capability to give them new things to be involved with, and then to track areas of potential market disruption and develop strategies to address them.
While I will not go through the ones on the right, across the board, whether it's in the drug development area, whether it's in ACC, in our late-stage business, or in some of the initiatives Tom will talk about, we have been involved in a number of product and service offering innovations which they find interesting and creates a pretext for us, even in large established relationships, to extend the relationship further across their businesses and across ours, and that helps us sell in more work. Okay. The third topic, which is what is changing, and is what is on their mind. As I mentioned at the outset, the decision process that sponsors go through around the selection of CRO changes. It changes gradually over a period of time.
What I have seen in my six years at ICON and in the 18 months I've been doing this role, is the things that they're interested in talking about that almost transcend the RFP or the bid defense proposals tend to shift over time. I condensed those down really into three, and they really are set ups to some degree for some of the material that you'll see in a few minutes. I would put them into three categories. With the growing size and complexity of the studies, a great deal of interest in the site and patient recruitment strategy of the CROs and of ICON's, and a tremendous amount of interest in ICON's investment in the integrated SMO network. Nuala will talk more about that.
Without exception, when it comes to the time to sit down and talk about why they want to select us, they will say, "Talk about this investment and why you're making this initiative," which is in fact quite distinct from most of the other CROs. The second is a tremendous amount of interest in data ownership and data interrogation, including our own experiences. Steve put a slide up talking a good bit about some of the initiatives or the collaborations or consortia that we are involved with. The sponsors see us and see CROs as people who can come in and talk to them about what they're working on, who they're collaborating with, and to be perfectly honest, which one they should spend their money on and which ones they probably ought to pass on.
There is a lot of interest in that, in our point of view on that, and in whether some of these initiatives, which they may in fact be dabbling in, are worth their time and they want to understand our experience. At 30,000 feet, our point of view on data overall is that we should focus on the data analytics and the power we have in partnership with them to extract learnings that are beneficial to clinical development from that data, and not from the aggregation and the ownership of the data itself, which we fundamentally believe will democratize. That is a point of view that is distinctively different, at least from the largest player in our space, but I think it engages people intensely, and I'm inclined to believe, frankly, at this early stage, they're inclined to believe that point of view more than the notion of buying data.
Last and finally, Colin will spend more time on this in a few minutes, innovative and integrated outsourcing models. As people are focused increasingly on consolidation of their spend and on the way in which they think about development, there is interest on their end and thinking on our end about how you can think about outsourcing models that are not binary, not just full service or not just FSP or staffing, but combinations of capabilities that will meet their needs. That is resonating with them as they look more creatively at how to do that. I don't want to steal any more of Colin's thunder, but he will talk you through how we see that and what our point of view is on that. In short, I think our point of view is that trusted partnership is our point of differentiation, and it is working.
That we've seen commercial success by virtue of focusing on that and really focusing on meeting the customer's needs, not on simply presenting our capabilities. We are seeing a connection between the areas that Steve and others on our team are going to be talking about in terms of innovation in our space, and those things that seem to be on the minds of the sponsors when they go out to talk to CROs. With that, I will turn over the podium to Nuala Murphy, President of CRS, to talk more about the second leg.
Good afternoon, everybody. When we think about operational excellence, I think it's fair to say that there are multiple dimensions to it. Really my remit over the next few minutes is to do a deep dive into one part of operational excellence, which is clearly very close to my heart, but also very close to ICON's ethos and indeed strategy around driving continuous improvement in the industry. Steve, in his opening, made reference to this slide. Sorry, I should probably get nearer to the mic. Steve, in his opening, touched on this slide and really made reference to our top-down approach and indeed bottom-up approach to actually driving differentiation in data partnering.
I guess when we think about this slide, we can think about it in different ways, but I would probably define it really as the ability to combine and couple epidemiological data with real-time data from sites and converting it or indeed translating it into predictable outcomes. Philosophically, why would we focus on principal investigators, or why would we focus on building alliances and relationships? It's ultimately about creating stakeholder value. I think when we think about this, we can define it in many different ways. If we think about the environment in which we operate, we are constantly developing new treatments, new therapies. We are constantly innovating in medicine. You've got to ask yourself, why would you not want to bring those opportunities to patients?
We actually owe it to patients to bring them new ways of actually improving their own healthcare, but also new ways in actually working with the investigator population and really contributing to the science itself. The second is really around healthcare institutes. Why would we as an organization not want to make it easier for investigators not only to access patients, but also to deliver patient trials and ultimately deliver on data outcomes? Last but not least, the industry is faced with challenges around cost. Whilst we're seeing more drugs coming to the field year-on-year, or at least in the past year, we're still challenged by trying to run trials differently, running trials better, and ultimately taking the cost out of the development costs. A few data points really just to set the scene.
Less than 2% of principal investigators in the U.S. actually conduct clinical research. When you look at the patient population, less than 1% of patients actually are aware of clinical trials or indeed participate in clinical trials. Most importantly, and indeed perhaps the area that we can have most influence upon, is around how sites actually enroll patients. What can we do as an organization to ensure that we're accessing the right site from the outset and we're not seeing 37% of sites who finally come to the table not enrolling a site? Whilst we see a lot of diversity in the various different therapeutic areas, clearly working in vaccines is not quite the same as working in oncology. Really our opportunity is to get that number down to a significant and acceptable level.
How can we address the issue or indeed the problem at hand? Really it's about working with sites, working with investigators, and having a tailored solution to their needs. This slide depicts the four different models that exist or indeed the models where we actually operate today. As you move from the left to the right, it's really about increasing patient access, and it's really about increasing our access to electronic medical records and ultimately directing patients into trials. On the left, we work with primary care providers. Generally speaking, one investigator in a community operating in primary care. We also work with multi-specialty sites. We also work with site management organizations who really focus on bringing clinical trials to investigators.
Our approach is really around shifting from being passive to really being proactive and actually bringing patients to investigators and ultimately providing more data, more outcomes, and bringing more trials to market. In 2015, ICON acquired a site network called PMG. Today, that site network actually operates out of 14 cities in the U.S., out of 53 research clinics, and has access to over 175 principal investigators, but more importantly, provides us access to 3 million patients. We also work with healthcare institutes across the globe and really strive to assess the healthcare institute to assess whether they would want to be part of our integrated study model. In doing so, we've access to 45 organizations across the globe, 450 research clinics, and over 70 million patient lives.
In working with these healthcare institutes and indeed with our own site network, we have the ability to match patients to clinical trials, we have the ability to provide recruitment and retention services, and we also have the ability to provide digital solutions that allow it easy for the investigator to enroll patients. Clinical research is far easier than this pointer. There we go. Where are we today? We are clearly expanding. We are clearly operating with different models, whether it is working in states with healthcare institutes or working with states with site networks or indeed working in states that actually offer both. This gives you a flavor for the spread and indeed the outreach that we have today in North America. We are also expanding across Europe, wherein we see huge opportunity in terms of assisting investigators in participating in clinical trials, particularly in the field of oncology.
We also find in Western Europe, there is far more competition than perhaps in the East of Europe, and as such, we are really looking to establish longer-term partnerships and bring trials to these investigators. This provides an example of a site that we brought on board recently in the organization as part of the PMG Research Network. Really the point here is that from the time you actually integrate a healthcare institute into the PMG organization to 12 months or indeed 18 months into the game, it does take time to actually understand the investigators, it takes time to actually understand their needs. It takes time to actually establish how they can actually develop a patient database and ultimately how they can direct patients into trials.
What this shows you is that over a 12- to 18-month period, we had tremendous success in actually increasing the number of investigators that joined the network, but also the number of patients that were participating in trials. Let me now delve into our integrated site network a little bit further. Really how do we work with these networks? From the outset, it is really about building infrastructure. It is about positioning our highly trained clinical research staff at the sites. It is about helping them to understand how you can actually develop contracts, how you can actually negotiate budgets. Ultimately, how you can actually access your electronic medical records, query the electronic records, and really direct the patients into trials. Oncology represents a significant area of focus for us as an organization, and it also represents a therapeutic area when there is most competition for patients.
Recently, we expanded our network with DuPage Medical Group in the Illinois area, providing us with access to 700 physicians, providing us access to additional 1 million patient lives, and also providing us with access to data that could actually help us understand how many new cases of tumors were actually coming through the organization on an annual basis. Again, we started working with this group in March. We have actually positioned our people within the organization. We are seeing more investigators wanting to come on board to actually conduct clinical research. More importantly, we have access to these new cases where we can actually assess whether we can direct the patients into trials. Quite a few data points here, but really, the point here is that it is one thing to have access to big data, it is another thing to be able to bring the patients through a clinical trial process.
Like most things, once you start to measure, once you start to define the baseline, you start to see improvement. What we are seeing is that year-on-year, our ability to access patients via EHR is increasing, our ability to match patients into clinical trials is increasing, and we are also seeing lower screen failure rates. Perhaps the point or indeed the data point to call out most on this slide is the fact that now 46% of randomized patients are actually coming from the databases that we have built with this network. What do we do with the data once we've actually accessed it? I mentioned in my opening comments, it's really about delivering predictable outcomes. Once we have actually accessed the various different sources of EMR, we then work with our teams to actually run Monte Carlo simulations.
Our intent is to ensure that we can be predictable up to 90%, so that we can actually really think about what we would need to do to mitigate risk in the event that trials do not actually deliver on time. Furthermore, we have the ability to work with the investigators directly to have input from them and also from their patients around protocol inclusion and exclusion criteria. We also have the ability to interview patients to actually have input from them or indeed listen to them as to what would be feasible for them in terms of participating in a clinical trial. The impact of this is rather than waiting for protocol amendments during the course of a protocol, we have the ability to actually assess upfront how feasible a trial will be.
We also have the ability to provide our customers with information that may perhaps make them think differently as to how they want to run their protocols. In the event that trials are particularly complex, in the event that investigators need additional help, we also have what we call clinical enrollment managers who tend to have a background in medical research to actually go out on site to actually work with the investigators, to actually work with the nurses, and to really help them develop tailored recruitment strategies that, again, will actually allow us to bring patients in on or ahead of the targets that we have agreed with our customers. We are often focused on looking for creative solutions, looking at broader patient outreach, looking at whether we can actually refer patients in from a broader community into the trials.
Last but not least, it's also about ensuring that investigators have the ability to conduct clinical trials with ease. Our FIRECREST portal allows investigators to sign on, allows investigators to walk through the corridors with a tablet that allows them to discuss with patients why they would want to participate in a trial, to actually agree on the consent into the trial, but also to have the ability to pre-screen patients, to train their research staff to ensure that they are GCP compliant. In doing so, we've seen a dramatic improvement in the ability of investigators to spend less time in terms of training. We've seen a tremendous impact, or indeed, we've actually seen a tremendous improvement in terms of their ability to comply with training. We've also seen a reduction of protocol deviations. Last but not least, a reduction in the cost of development.
In summary, we've come a long way. We believe that we have a long way to go. We believe that we can bring more innovative research to patients. We believe that we can actually make it easier for investigators to access patients and to deliver trial outcomes. We ultimately believe that we can run trials faster by focusing on our site network. What does the future hold? We've been successful in North America. We've been successful in Europe. We'd like to continue to expand in Europe. Steve mentioned in his opening comments that we're also seeing significant growth in China, in Japan. These are also areas where we'd like to consider to expand the model that has been successful thus far.
Our therapeutic area of focus continues across all therapeutic areas, but our particular focus at this moment in time is really conquering the problem in terms of patient recruitment and oncology, but also in focusing on CNS disorders, cognitive impairment, where we're beginning to see a pickup in interest in clinical trials as well. Last but not least, clearly an area we want to focus on in the future, is to continue to assess how we can actually improve trial delivery. Clearly, focusing on virtual visits, virtual sites, bringing your own devices to clinical trials is certainly an area we are focusing on at this moment in time. I think Tom O'Leary will actually delve into that a little bit more. On that note, thank you, and I would now like to hand over to Tom.
Thank you, Nuala. Good afternoon, everyone. I'm delighted to be here. I think as others have indicated, I'm going to take you through three main areas. The first area, we're going to talk about automation and digitization. I want to delve into that in a bit more detail. The second area then also referenced is in regards to metrics and performance, and take a further drill down on that. We'll cover some of this in the demos as well. You can see some of this live, you can see videos of what we're doing. Last but by no means least, virtual clinical trials and some of the advances that we've been making there with collaborations and relationships that we've been building up in order to get greater capability within our own organization, helping sponsors. In doing so, driving greater partnership opportunities with our sponsors.
I think it would be widely accepted that we are in the throes of the fourth industrial revolution, the first being propelled by steam, the second being propelled by electricity, the third being propelled by electronics and IT. Today, we are being driven by digitization. All of these revolutions, though, sought automation and sought ways in which automation could better achieve outcomes in terms of productivity, reduce cost. The organizations who were the first adopters of automation were the ones who realized most of the benefits. They're the organizations who are with us today. I've given an example here in terms of the car manufacturing industry within the U.S.
You can see the numbers that were involved in the car production cycle through the 1800s and into the early 1930s, and the numbers that has reduced to today in terms of global players and how they have leveraged automation to better produce new, faster capabilities that meet more of the expectation that we have today. Digitization. As I mentioned already, this is the fourth industrial revolution. Digitization is driving a huge amount of change, and it's at various stages of maturity. You can see here the areas that are depicted in green are ones that are fairly well established. The blue-green are in the process of becoming more established. Then those in black, we would say are still some years out yet. But we at ICON are looking across the full spectrum here to understand what application all of this has in the context of clinical trials.
Our sponsors are coming to us to find out what are we doing in one or more of these areas. What knowledge and experience have we built up? Have we piloted it? Would we partner with them in what they are doing to understand what application these capabilities have? We will show you through the demonstrations that we have lined up around the room, what we have come to know and understand, where we see the opportunity to apply this and are applying it today in pilot proof of concepts and some live studies. This is an area that I think we've got some strength and depth in terms of the people we have within our organization.
The fundamental understanding that they have in terms of what's needed from a clinical trials perspective is being further complemented by how they're bringing these capabilities into the clinical trial process now. What they're looking at is, how can we make the process faster? How can we get more insights from the data that we are collecting as an organization? How do we use that internally? How do we use that and share it with our sponsors? This is a really exciting area, and the team at the back of the room will show you much of what we have come to apply and where we intend to take this even further. Going back to automation, though, as I think many of you will accept, it comes in many different guises. These are a number of the areas that we're progressing within our own organization.
The one I would call out most is robotic process automation. I call that out because the clinical trial process really lends itself to rules and rule-based processing capabilities. We see a lot of application for robotic process automation within the clinical trial space, and we've a demo of a couple of the areas that we are progressing at the moment at the back of the room. We also have, we are affectionately calling her Pepper still. We have a physical embodiment of a robot here at the back of the room. I gave my team the challenge of Making sure that Pepper understands after three months in our organization what a new employee would understand about ICON, and being able to share and articulate that back. What was most informative as we did that was as people saw throughout the organization, they saw other opportunities.
We ran some open innovation forums where people brought forward ideas that we haven't even yet considered. That has been a real empowerment of the wider organization. AI and artificial intelligence, the OneSearch capability that Gareth has at the back of the room is a perfect example, and we've touched on this already to what George and Nuala have mentioned. This is a capability that we have been developing now for just over 18 months within our own organization, bringing together our own sources of data with external sources of data that are really giving us the opportunity to improve the accuracy and efficiency with which we are recruiting patients. One of the best outcomes of that is that year on year, we have seen a 10% reduction in those non-recruiting sites.
We're nailing the opportunity to bring more productive sites into the clinical trial process and avoiding those that have characteristics that we now see that might lead to those being poor enrollers or otherwise non-performing sites. We're continually focusing on big data and looking at the opportunity that that provides more generally. Metrics and what we are focused on in terms of the KMR metrics and the target that we have of being 20% better than KMR is really coming into its own in terms of the big data focus. FIRECREST is looking at augmented reality in a whole range of areas, they are enhancing the services that they provide to sites and patients by explaining mechanisms of drug action, by explaining the way in which the body absorbs drugs into its system through virtual reality capabilities. Blockchain is another exciting area.
We see the opportunity there to leverage that and possibly in the investigator payment space. This is a really exciting area. It's full of a wealth of opportunity, these are areas that our sponsors are coming to us on a continual basis to say, "Can we partner with them? What do we know? How is it that we have selected the capabilities that we have advanced with others?" This has become a really exciting and differentiating area for us. Yes, it leads to transformation of the roles of people within the organization, but these are roles that people, and activities that people are calling out that they want to be relieved of.
Some of the more mundane tasks that they are having to do on the day-to-day basis, they're identifying automation as having the opportunity to take that away so that they can do higher value add activities in their day-to-day, that they can provide better insights into what's happening, that they can act faster and not be inhibited by those administrative and mundane tasks. This is achieving quite a lot of engagement right across the entire organization. I've touched on already, the first-mover advantage is very significant. We have the opportunity here to reduce the overall administration burden. We have the opportunity here to reduce costs, the opportunity to be more competitive, to better leverage the SG&A of our own organization.
We are able to get better insights on that data in more real time, which is a huge demand for our own staff internally, as well as sponsors on what they want to see in terms of the trials that we are managing on their behalf. We are now bringing more disparate sources together in real time than ever we have done in the past. Disparate sources that are emerging from much of the wearable capability, as well as some of the additional external data sources. We will come onto that in a bit more detail. OneSearch, as we already mentioned, this is a huge conjoin of multiple different data sources within our own organization. It is one that we use now on a routine basis as we go through the whole feasibility process. It is delivering performance benefits. It is enabling us better select sites.
It's enabling us to be more competitive. We would like to take you through the demo of that in the break so you can see firsthand how it is operating. We see a very exciting roadmap to build this out even further, and it can be further enhanced by some of the AI and machine learning algorithms that we are developing elsewhere within our organization. This is a very exciting area for us as an organization, and it really is enabling us to differentiate the opportunity to get patients into trials faster and to be able to leverage that, achieving last patient out to database lock in greater than 90% of our studies on time as per the commitments that we've given. This is a huge opportunity. Managing and monitoring performance.
We have gone back as an organization. Well, before I get into that, I guess the old adage is, if you can't measure it, you can't manage it. That's something that Steve reminds us on a day-to-day basis, and we've got a relentless focus on our metrics and a relentless focus in terms of are we making effective decisions? Is it giving us better insights? The metrics that we have are ones that we continually evaluate and question whether they are the right metrics for us in the future. Aiming to be 20% better than KMR metrics, I think is something that has been a stretch, but it is serving us very well in terms of the efficiency and the whole focus and approach that we have in the data sources that we are looking at.
Gareth and his team have really doubled down on ICONIC over the past six months and looking at where it is that we can get better insights from the data that we're collecting. Looking at how can we better align some of those data sources, and looking particularly at risk and being at the forefront and being able to predict risk is a big area of focus for us. Risk is to clinical trials what a recall is to the automotive industry. The more focus that you have about predicting risk and identifying the early indicators of where risk might be arising, the greater the opportunity you have to be out ahead of it and ensure that those sponsors are engaged in the plan that you're considering as to how you're going to deal with that risk and ultimately make sure that the trial is successful.
That's a big area of focus, doubling down on ICONIC and leveraging that capability. What are the results of this? This is giving, as I said, greater transparency, it's giving much greater insights. It's giving a better data currency, and this has been one of the challenges for our industry. We have been, at times in the past, trying to reconcile multiple data sources, the data from the lab, the data from imaging, the data from clinical, and all of that being at a different point in time, and leading that to generate queries that in many cases didn't make sense. We're now moving away from that. We have the data currency, and we're able to reduce the volume of queries that go out. We're able to better target those queries, and identify where it is that the focus is going to make a meaningful impact.
We certainly see areas to further improve this, and it's driving a better overall engagement score with our sponsors. They're more engaged with us. They see a willingness to cut the data in ways that haven't been considered before. They're using their data in conjunction with our data to look at where it is that we can be more effective and more efficient. Some of the big indicators of this is from a site perspective, 93% of our sites now rate ICON as their number 1 and number 2 provider CRO of choice in terms of who to do clinical studies with. That's a huge outcome in terms of the focus that we have around this data. Also, looking at the KMR metric from last patient out to database lock, we are 50% better than the industry average in delivering that metric. This has huge benefit.
This has huge saving for us, and this is something that enables us to differentiate and enables sponsors to really see the value of what we do on a day-to-day basis. Virtual trials. This is the buzzword of clinical research at the moment. Everybody wants to be doing something in the virtual trial space. I would contend that we're doing quite a bit as an organization in the virtual trial space. It's an expectation that has evolved through other changes that are happening in the world. When you look at Uber runs a taxi service and owns no vehicles, Airbnb provides accommodation throughout the world, and yet it doesn't own any properties. Clinical trials, as we go forward, there is the opportunity to be able to run those without necessarily owning the same quantity of sites.
This is an area that we see as a need that has got to be addressed, fulfilled. It's an expectation that's out there, particularly from a patient perspective. The majority of patients that participate in clinical trials are happy to do so, provided they can go about their daily lives in a seamless manner. They don't want the interruption, or they want to avoid the interruption of having to take time off, go to an investigator site, get the data and information recorded on them, if that can all be captured through devices that they can wear as they go about their daily lives and can get captured in their home and pushed to the cloud, and we can incorporate into the clinical trials that we are providing.
One big key area, I think we see most of the inquiries in this area from our sponsors, is to understand what is the process that we have for evaluating so many of the providers that are in the market today. This is a big challenge. We've invested a huge amount of time to understand who is providing what capabilities. Where does that integrate with the capabilities that we have? How do those capabilities integrate between themselves, who are those who are going to be around in the future? Clinical trials, by their very nature, are long in duration, you have to be able to pick those providers who are going to be around at the point in time that the clinical trial is going to be reporting out.
You have to have a huge commitment there, they've got to be able to back it up by the capabilities, the technical platforms that they offer, the financial backing that they have. Picking the right partners is certainly a key area. We think we've done a pretty robust job in doing that with all of the partners that we are working with at this point in time. Sure, others are going to come in the mix, we have a process that we go through to determine who's best in class at providing the capabilities, be it sleep and movement, be it spirometry data or otherwise. These are what are important, our sponsors are very keen to collaborate and partner with us in understanding where it is that they can derive most benefit from the application of these capabilities.
Wearable and sensor capabilities that we've built internally are depicted here. We've gained a huge amount of knowledge and information in terms of the use of accelerometer data. We've done a huge investment in terms of machine learning. We've developed a capability that will better measure pain, better measure gait, Marie will take the opportunity there through the use of some insoles in the break to show you, for example, how we measure gait movement on patients. That's key and that's critical in some of the CNS areas that we find ourselves now looking to support from a clinical trial perspective. The whole passive monitoring, the Internet of Things, being able to show that you've got the ability to track multiple sources of sensory data is very key.
One of the things that you will have seen an announcement on is what we did with Intel. With Intel, we brought together the sensor and movement data across six different devices concurrently. It's easy to do one device, to bring it together concurrently across six devices is difficult. That is something that we were able to do. We looked at weather data, we looked at patients' sleep data, we looked at spirometry data, we looked at pollution data. We brought all of that together now to look at what are the correlations across those data sources that may have never been understood in the past, that we can bring to the scientific community that would enable them better understand what's happening at a patient level as we test the drugs and devices in the context of clinical trials.
Partnerships are key, these are much of the partnerships that we are working on today. This is a long road in terms of better understanding where this is going to be in the future, where is this going to get traction in the context of what sponsors are going to use what capabilities. The partnerships that we have built up here and the opportunity that we see this having in the future is very vast, I think there is a huge way in which we can use that to partner with sponsors and derive further benefit in terms of the application of this in clinical trials. With that, I will hand over to Jonathan. I look forward to talking to you further in the break. Please take the opportunity to speak with Pepper.
It's got a lot of knowledge and information that it's ready and willing to share with you. Gareth as well in terms of the focus that he's brought around analytics, Marie and the use of wearables and devices. We've got some videos on RPA capability in the back corner of the room that we'd also love to show you and show you what it is that we have advancing on a day-to-day basis within our wider organization. Thank you. Drawing on themes of efficiency and timeliness in true ICON style, we're actually ahead of our schedule. I think the easiest thing for us to do is we'll go for a break now. We'll not disconnect the line. We'll reconvene at 3:15 P.M. Everybody on webcast can, if they can stay online, the line will just go on mute.
In terms of the group here, we'll go outside for, say, 10 minutes, have our coffee, tea break, then we'll reconvene here. We've three different stations. If we can group in teams or groups of, say, five to six individuals at each station, we'll just rotate every 15 minutes. Okay? We'll reconvene again at 3:15 P.M. Thank you.
Welcome back, everyone. Hopefully, refreshed and ready to go again for the second session. We have two presentations. Colin, who I'll introduce momentarily, followed by Brendan, our CFO, after that we'll have a Q&A session. Without further ado, I'd like to hand over to Colin Stanley.
Good afternoon, everybody. I lead ICON Functional Services, which includes DOCS. My objectives today really are to go through a couple of areas. You can see them here on the screen. I guess I'm conscious that we may not have talked a lot about DOCS in the past, so I'd like to give you a little bit of context, a little bit of background about DOCS, what we do. That will lead into some observations around the market, some trends in the market, some of the things we're hearing from our customers in our daily discussions. That hopefully will then allow me to talk a little bit about our strategy. Also then getting into this concept of enterprise-level solutions, integrated solutions between FSP and full service, something that we see as an opportunity and something that we feel we're very well positioned to deliver on.
Just in terms of a little bit of background and history, DOCS, actually the origins of our FSP business in ICON was the acquisition of Barton & Polansky, which was a small CRO based down between 44th and 45th Street a long time ago. I'm not sure if any of you remember it. ICON acquired Barton & Polansky back in 2000. It had a small staffing group called MCS, Managed Clinical Solutions, which was part of that, and that was really ICON's first exposure to a classical staffing business. Over the years, that business, even though Barton & Polansky was integrated into ICON, that business was independent and grew quite successfully. In 2007, beginning of 2008, ICON actually acquired DOCS, which was a European business, again focused on staffing. Those two businesses came together to create a fledgling global resourcing business.
We organically grew or began to organically grow our Latin American and our Asia-Pacific businesses. I actually joined ICON a very long time ago, but started working with DOCS in 2011. We really got our Asia Pac business growing. We've grown it organically. In 2013, based largely on feedback from our sponsors that our U.S. presence wasn't significant enough, we acquired a division of what is now currently Cross Country Healthcare, which is a U.S. staffing business focused mainly on nurses. They had a life sciences division, which broke into a couple of pieces, ClinForce and Ascend. We bought that and integrated that into our now truly global DOCS business. That was something of a catalyst for us. It gave us a scale that allowed us to compete strongly against the big players in the FSP space, and we've enjoyed solid growth since then.
Now we have global coverage. We have 43 FSP partnerships ongoing today, obviously over time we have built quite a bit of experience in that field. In terms of what we do, and if we read this from the top, the chevrons really represent the services that the DOCS business offers in the marketplace. One of the points I really want to get across today is FSP means a lot of things, a lot of different things to a lot of people. Every customer I've spoken to has a slightly different flavor of what they believe that to be. For us, we consider contingent resourcing is that classic body shop contract staffing business. It's the origins of DOCS, it's not necessarily what we do most of today, but it's still something that customers look for, maternity cover, temporary placements, that type of work.
Program insourcing you can think of really as a team. Sometimes customers need a SWAT team or a group of 10 or 15 individuals to drop in and help out in a study. That's what we refer to as program insourcing. Strategic capacity management moves into a bigger scale. Strategic capacity management really refers to the overflow resourcing that customers use on top of their own internal headcount. We can provide those resources to react to the peaks and troughs of demand. Then of course, there's classic FSP, all of a function being outsourced or part thereof, more intensive operational oversight from us. Over the years, our, say the percentage of our revenue has moved more towards the right.
These big programs are where we do most of our work, and that's what's driven all of the growth and probably reflects the trend in the marketplace. In terms of the bottom section of the slide, the important points here are we leverage as much as humanly possible the ICON infrastructure. DOCS has retained its own independent brand and service line business unit, but we very much leverage the GBS structures. We work very closely with Nuala's organization to make sure we have the latest and greatest in all the different functional areas. We're quite deeply embedded and integrated into the overall PLC. In terms of our, I refer to our global coverage and how we have grown the business and positioned our staff around the global network really through a combination of organic growth, and also acquisition. I've graphically represented it here.
One of the interesting points to note is that actually for us, and this has only happened in the last maybe six or 12 months, Asia Pacific is actually our biggest, really, we have most people in Asia Pacific now, which has been probably a reaction to or a result of the fact that Asia is growing as fast as it is. I would say most of that growth has been in China and in India. China is probably our fastest-growing market at the moment. In terms of what these people do when they're deployed, our FSP programs vary in size. It could be from five or 10 people on a program to many, many hundreds. We have accounts, customers that we work with, where we have multiple FSPs, each of which are many hundreds in size. They can be global.
We have, for example, a global clinical monitoring FSP that operates in every one of these regions. They can be regional, and occasionally they can even be aligned by therapeutic area. Really the range of programs that we deliver is significant across the network. That was the sort of the whistle-stop tour of DOCS and where we came from and how we've got to where we are today. Moving on to the market, I'm not sure this slide tells you a great deal more than probably you already knew. We've already talked, Steve talked earlier on about the market growth being around 6%. We've looked at a number of different sources. We struggle at times to size the market, just because the data's not always available to us. Our guesstimate, our estimate of what the market growth is in and around the same.
Possibly a point higher, maybe two, but really in and around the same as the CRO market growth. We do see a lot of movement in customers in different directions as they shift, and as they adjust their sourcing strategy. In essence, the market is growing at fundamentally the same rate. Maybe as I move now into some of the trends that we see, and this is actually a slide that we talk to customers a lot with, and generally gets good discussion going. I think the way to read this slide is, the time is on the x-axis, and really what I am saying is 10 years ago, even eight years ago when I joined DOCS, I think what we saw was customers had a very binary view of how they would do their outsourcing. They would either outsource on a project-by-project basis, or they would do it themselves.
I think what's happened over, particularly the last couple of years is with the pressure that they feel from a cost perspective, not wanting to carry a lot of permanent fixed cost and headcount, they started to use functional resourcing and FSP as really their overflow on their internal headcount. That's created a lot of opportunity for us. They've also chosen at times to outsource a full function, in its entirety, and again, that has created some demand. It has emerged for us at least as an add-on as opposed to an instead of, and that's really one of my themes as I talk a little bit more about around where we see the opportunity going forward. The summary comments that I was thinking about in preparing for the presentation, I was thinking about what are the things we hear most from our customers.
One of the things that's happening an awful lot is the consolidation of the agency type staffing providers. I was giving the example yesterday, we received an RFP from, let's say, a top 10 pharma, about three years ago. They wanted to consolidate their staffing providers, and they admitted on the kickoff call that they had 115 staffing providers that they knew about. Because so much of the budget is locally held by HR departments in countries all around the world, and based on the data they could get, they knew they had 115 different providers ranging from big CROs down to small mom-and-pop shop agencies in Malaysia.
I think what they're realizing, certainly in the procurement departments, is that if they can get their arms around that spend, pull it together, create that volume, and then think about it in terms of FSP and how they can get more control and management and CRO infrastructure around that, there's an opportunity really to try to make their lives easier in terms of overflowing on their own internal headcounts. That, I think, that's probably pushing some of the agencies out of the mix and is really an opportunity for the CROs. I tend to use the term FSP 2.0 or next generation FSPs. I think what we see in the marketplace is customers who are either traditional FSP users who are looking to establish what is the next thing for them, what is version 2.0 of their FSP they've been running for 10 years.
How do they introduce technology or something different to continue the efficiency gains that they may have found from FSP in the past? Also, there is a little bit of, I call it good noise around the marketplace about FSP. You have non-FSP buyers of the past who are now looking to get to understand what can they get from FSP. Is that just a staffing option or can I have that with some value add and maybe some of the elements of the full service model? I think what we're also finding within the vendor management and procurement departments is a very in-depth understanding around how these models work and the quality of the RFPs we're getting. Maybe five years ago were, "Tell me how this might work." Now they're very definitive. They've thought about it. It's part of their overall sourcing strategy.
It speaks directly to the way they're triaging their pipeline, managing their product pipeline, and we see that flow all the way through to the RFP, which makes it a lot easier to respond to, I have to say, when you have a well-written RFP. The last point, FSP models are varied. For me, they cover everything from the staffing type of opportunity, where you're just putting bodies on seats, to more complex FSPs that have a lot of operational oversight. There may be a lot of offshoring. They could look like a BPO type of model delivered by an Accenture of the world. They really can be very different, and our goal is to sit with customers, understand what their definition of FSP is, and then find the right solution for them and partner with them on that basis.
Those are the things when we're sitting with customers, these are the things that we hear from them, and really the drivers as to how they want to move forward. That then informs our strategy, in terms of what it is that we're trying to achieve over the next two to three years. What I'm calling integrated enterprise solutions is something I'm going to talk a little bit more about on the next couple of slides. Essentially what we mean is rather than selling FSP or full services as different things, antagonistic things, you must choose one or the other. We believe it makes a lot more sense to sell them as integrated options, where a customer can dip into either/or take elements of either. You hear the word in the industry, hybrid, to describe those. I don't like that word, and everyone laughs at me.
They're all smiling at me now as I say that. I don't like the word hybrid because I don't feel it means very much. Integrated makes sense to me because when we sit on our common infrastructure and platform, we can then offer a sourcing solution to our customers that can be either full service or functional, and that's the way we like to think about it. One of our strategies is really to start talking to customers more. We have had some really good discussions, and we've had some opportunity evolve over the last particularly two years in that space. FSP 2.0, I referred to. We see different opportunities to evolve the FSP models to layer in some technology.
Some customers are starting to ask about introduction of ICON SOPs and systems into that model, which wouldn't have been the way of the past, but that could be an opportunity going forward. As I said, our mission really is to custom-build solutions. FSP is very much a custom design for our customers, how they want to see it. I referenced earlier on that Asia has been a very fast-growing part of our business and is now, albeit marginally, our biggest region. We still see huge opportunity there. We feel we have great scale in certain countries. There are other countries that are interesting markets that we don't yet have that scale. One of the things we want to do in terms of enhancing our capability is continue to grow our Asian footprint and position ourselves well to do that.
There are other functional areas that, again, as sponsors work through their thought process of, well, how can I continue to push fixed head count off my books and get someone else to manage it? We think medical writing is one of those areas that's emerging. Others are DM/stat programming, but medical writing is one we see as particularly interesting at the moment. That's our focus in terms of strategy for the next 12 or 24 months. Just a little more on this concept of integrated enterprise solutions. One of the things that always amazes me is customers buy multiple different sourcing models from multiple CROs. They buy all sorts of different software and technology, and they use multiple providers, and they try and stitch all this thing together under multiple governance structures, and then they wonder why occasionally it doesn't work well.
I think they like to keep their options open, which I can understand, but the discussions are evolving around how can we pull some of those things together. How can we continue to consolidate under less providers? As I said, we see FSP and full service as not antagonistic things that are binary. You should choose one or you should choose the other. Our view would be probably every one of the top 20 pharma are already using elements of FSP/staffing or full service. They all operate in those models. They're therefore not antagonistic. If we can position ourselves as a company who can do both of those things very well, then it's in all of our interests to work together with them on that basis. My next slide will talk about some of the benefits to the customers in that sense.
There's obvious efficiencies of working with one provider. From our perspective, what makes it good for us, it allows us to leverage our GBS infrastructure and our functional infrastructure. It allows me to work really closely with Nuala in terms of the ICR organization and how we can find the best of our resources. To serve the customers' needs. I've called it here solidifying our position with the customer. It makes us even more sticky. FSPs are sticky models in that it's hard to dislodge an incumbent. Our feeling would be that if we can work with the customer in both of those ways, then as they, over time, FSP is fashionable or less fashionable, and sourcing cycles change. If we're working with the customer in all of those models, then we're a little more resistant, and that helps that sustainable growth.
As the customer changes their approach, we move with them, and we move with those times. What are the benefits of these types of solutions for our customers? I think I always imagine the starting point of all of this for a customer is looking at the product pipeline, understanding what they need to do in the next 12, 18, 24 months, then making decisions around what they're going to do themselves, what they're going to outsource, how they're going to outsource, where they do. There's a lot of decision-making goes on there.
If they're looking at their, as they do currently for those top 20, if they look at their execution arms and think about, well, how is the best way to approach this particular project, then it helps them if you're working with a partner who can do all that and work with them. The concept of enterprise solutions really facilitates better decision-making. We can sit with the customer, work through that discussion, and really help them understand what are the best approaches for their particular scenario. The next one, which really we have some really good live and recent case studies, is around staff mobility. We've had a lot of situations where with the same customer, staff are rolling off full service projects that are naturally coming to an end.
That same customer recognizes that those staff now have built up a lot of institutional knowledge on their systems with internal stakeholders. They know that. They know them, the customer. We know the customer knows us. If those projects end, they lose those staff from working on those projects. Where we have been in FSP arrangements with that same customer, we've been able to take some of those staff and transition them into FSP, and the customer is delighted by that because now those folks are coming into an FSP structure. Possibly working in that FSP structure on the sponsor's SOPs, on the sponsor's systems, gaining even more internal knowledge. We also have case studies where we've moved those people back then after a period of time.
There's a large cohort of our internal staff in both Nuala's organization and my own, who are very cross-trained and familiar with the nuances of operating in these different models. That's a real advantage. If you think about one of the customer's biggest concerns and CROs as a result, is staff retention. How do we keep our staff engaged? How do we keep them on their studies? That helps quality and continuity. This really is a way of being able to move staff around between the models. Customer loves it's good for us, and it works very well. All of that also drives simplified governance structures. I was at a customer a couple of weeks ago, and we were having a governance meeting for this account, and they referenced the fact that they had four more of them to do over the next two weeks.
Those are all day-and-a-half meetings. It's a huge amount of time they invest. They have vendor management teams that are growing and developing to try and manage all these relationships. It stands to reason that working with one provider to do all of that simplifies all of that quite considerably. All of this, the whole purpose of this, is to drive towards transparency, simplicity, and the retention of good people in the model. We believe that drives towards a better level of partnership. Just saying, "We want to be your partner," is not enough. We sort of need to explain to the customer why that is a good thing in our view and how that will work.
In terms of the differentiators as we see them, it's a notoriously difficult industry to differentiate in, and I've given some thought, and this is actually, again, how we talk to the customer about where we feel we differentiate in this space. We do have a lot of I mean, over 18 years, as you saw on that timeline, over 18 years, we've built a very strong, solid FSP business that has its roots in recruitment, but really has its base now in CRO. We have a huge amount of case study, a huge amount of experience of moving staff, a huge amount of experience in finding staff, and operationally delivering FSP models. We also have an enormous capacity, as you saw in the global network slide. As I talked about in terms of our mobility of staff, we can move staff seamlessly between these models.
They're already experienced in doing so. It's not an issue. From a commitment perspective, it's a common thing for customers to try and contractually tie you down around certain delivery metrics. We welcome that. That's something that we really look forward to. We're very comfortable with SLAs, always willing to commit. It's part of the relentless drive to efficiency and operational excellence. We actually welcome that as a challenge, particularly if we can get a bonus clause in addition to a malus clause, it's our favorite thing. We're very, very comfortable in committing to that, which I don't believe a lot of our competitors are comfortable with. From a commercial perspective, particularly around these big enterprise-level deals now, we're happy to incentivize customers From a commercial perspective to buy into that concept. We can find the efficiencies and share those with the customer where that's appropriate.
My last point on core focus is my shameless DOCS plug. DOCS, having led it for eight years, it's a personal one at this point. I think it's quite unique in its structure. Other CROs over the last 10 years have acquired businesses like DOCS, integrated them, and assimilated them, let the brand equity go away, and they've gone through huge changes and movements. We haven't. We've acquired a business, we've built around it, we've grown it, we've found all the benefits of the CRO, but we've kept it as its own separate entity. The other thing we've tried to do is keep what made it great in the first place and the reason we bought it. Its roots are in recruitment. Our recruiters are commercial recruiters. They live off their bonus. They eat what they kill, and they're very good at finding talent out in the marketplace.
Again, other companies don't have that. They have transitioned to letting their HR departments take care of that. We feel very differentiated in that we have kept the best of what is a company founded in recruitment that now sits on a big, broad, and excellent CRO infrastructure. In summary, we've enjoyed a lot of solid growth over the recent years. We really anticipate that that will continue. We think in the FSP space, just think of it in isolation, there will continue to be a lot of opportunity there for all the reasons that I mentioned, the customer trends that we have seen. When we add into that we can and will sell FSP as part of a broader solution to a customer, we think that actually increases the opportunity quite significantly.
Our strategy will continue to evolve around what does FSP look like. We're not just selling the same old thing. We're trying to think, what is the customer going to be looking for in the next couple of years? Fundamentally, our differentiation is around our tenure in this space and the competency that we bring, and our brand, and how we're known out in the marketplace. With that, I will finish, and I will pass over to Brendan.
Thank you, Colin. Hope we're all enjoying our day here. I know you had an interesting session. A couple of the go-rounds on the different pieces that we had in the demos at the back. I hope everybody got a lot out of those. You all got to meet Pepper or as some of us remarked, the future of sell-side analysis. Moving swiftly on. There's a couple of things we want to focus on today. I'm not going to take too much of your time. All the interesting people have already spoken. I'm not sure what I could add to it really, to be honest. What I will do is run through where we've been historically, financially, and obviously where we'd like to see ourselves moving to in the future.
Then we'll be going into our Q&A session when I'll be inviting the rest of the ILT back onto the stage, and we can answer some of your questions, which I'm sure you're keen on us to do. Okay. I'm going to start off by talking through the financial fundamentals of the ICON story, and what we think about when we think about a well-run financial organization. We said the phrase a couple of times today, sustainable growth, and it's an absolute principle on which we base ourselves. We talked about the partnership relationships. We talked about relentless focus on operational excellence, and those are the pieces that will lead to that sustainable growth, and it is a long-term ambition of our organization as we look forward. We talk about margin optimization as well.
We are constantly challenging the organization to come up with better and more efficient ways to do the job for less for our customers, but also to create the best margin we can for our shareholders. Maximizing EPS growth. You know we've been talking about the fact that we're a very strong Irish organization. That leads obviously to having a very good tax rate and to making sure that we are using our P&L account as efficiently as we can to make sure that when we say a margin in our P&L account, we actually get that margin to the EPS, and to the bottom line, and to the earnings of the organization. Maintaining high levels of cash generation. Again, a very strong element of the organization over the last number of years has been our cash conversion cycle.
Again, something you guys were very familiar with, and as a variance to some of our peers certainly, we have very high cash conversion cycles. We've seen it, in fact, in excess of 90%, but our long-term goal is to be in the range of 80%-90% on cash conversion. Discipline capital deployment. What do we mean by that? We still mean that M&A is our primary use of capital in the organization, but that will be added to buyback over time. We were going to look at both of those elements in a disciplined fashion. We're going to continue to look at assets that create service expansion to the group, but also maximize our accretion, as well as look at the timing on when we do our capital deployment for share buyback.
Obviously all of those pieces leading to the very solid return for shareholders that we've seen in some of the earlier slides that Steve presented. Again, as I said, I won't labor a lot of these slides. We've seen this profile of our business wins increasing substantially over the last number of periods. If I can get this doohickey to work. There we go. You can see, obviously, as George mentioned, the very significant pickup in business wins over the last number of quarters leading to really industry-leading book-to-bill certainly for the last year and a half which we can see persisting as we saw in the back end of 2017, really persisting into 2018. That's led to very solid backlog growth as well. We see a 13% CAGR on our backlog growth.
Obviously, we've got the inclusion of our acquisitions in that number over time, but still a very solid organic growth story as we see it going from Q2 2016 to Q2 2018. I suppose on the other side of it, we've been quite honest about it as well, we put it on the side. The conversion has been going the opposite direction. As of course, what we all know is a lot of what we're seeing in the marketplace now are large, long oncology and other types of trials that are stretching out that duration of that backlog. That is a feature that we have seen over the last number of years. The good news is we're at the similar levels for the last two quarters, and that's something we're focused on, at the very least, keeping that at that level as we move forward.
Those strong level of business wins and that strong level of backlog growth has led to very solid revenue growth over that same period. You can see we've got a 7% CAGR. As we move forward, we'll obviously, for the remainder of this year, continue to talk about ASC 605 revenue, and we're going to do that for this presentation. We've got the ASC 606 numbers there for comparative reasons as well as we move forward. You can see a very solid in line with our industry, certainly, and inclusive of acquisitions, that 7% CAGR. Of course, you all know really what the story behind that is that during that period, of course, as well, what we managed to do is significantly diversify our business.
This same first half of 2017, we saw 22% concentration from our largest customer, that dropping to 13% or close to just under 13% in the first half of 2018. The resultant impact on all the other elements of concentration across our top five, top 10, and top 25, but really significantly driven by the decrease in our top clients. I suppose the growth in our top five customers outside of our top one customer has been very substantial and has led really to a lot of the acceleration that we see in the diversification of our overall business portfolio. We see that moving, probably staying as we get bigger as an organization, contributing to our largest customers or customer being in the region of about 10%.
One of the features over the last number of years has been a little bit of pressure on our gross margin, and we have seen it drop down from about 42% to about 41% over the last number of years. You can see that really has been impacted really between Q2 and Q3 of 2017. Obviously, that was the timing of some of our acquisitions that we brought in, our Mapi acquisition at that stage, that we brought in to really build out our late phase service offerings. We've been looking at the growth profile of the organization and ensuring that we have enough resource and headcount in the organization to service the revenue while we diversify that customer base and while we grow our revenue. That's been an element of that contraction in our gross margin.
Again, our focus on this will be to go forward with keep it at these levels or similar levels as we move forward. Again, you can see the ASC 606 margin ranges for reference purposes. Offsetting that has been a very substantial improvement in our leverage of our SG&A. What you've seen predominantly over the last 2 years is quarter-on-quarter dollar numbers that are pretty much flat from an SG&A perspective. While obviously you saw a decrease of 110 basis points in our gross margin over the same period, you saw a benefit of 240 basis points. More than double the offset in terms of the actual margin expansion that we got from leverage of our SG&A. This is a path we've been on for a number of years, as you know.
Many of you will remark on the fact that we've had SG&A being at similar dollar levels on an annual basis for the last three to four years. This is something where we think we can still leverage the organization as we grow, and make sure that we are actually delivering on that to our shareholders as we go forward. I'll speak to some of that paradigm as we move forward in a moment. Where has that left us from an overall operating income perspective over the last couple of years? Well, we've seen our margins marching up to close on 20% by the end of Q2 2017, taking a bit of that pullback, as we talked about in our gross margin profile in Q3 2017.
With that significant leverage that we continue to see on our SG&A pushing well past previous highs and into the low 20s as we come into Q1 and Q2 of the current year. As we can see what is, I suppose, emblematic of steady and sustainable growth, and that's really what we're going to continue to focus on as we move forward as an organization. That plays true, obviously, to our earnings. One of the things I think we're quite proud of actually as an organization is the fact that what we say we do. I think we're pretty straight shooters as an organization. One of the things you'll see, again, in how we report financially is that same kind of principle. That when you look at our P&L account, it's not massively adjusted.
When you come to our EPS line, it's pretty much what goes through into the cash flow. There aren't that many puts and pulls from where we report to what we do in terms of the $ that go into the bank account. You're really seeing very significant progress in earnings. You can see that 16% CAGR over the same period, which is obviously a combination of that leverage of the bottom line plus the top-line growth of 7% that we've seen previously. That's something that we're, again, focused on maintaining as we go forward. Some dips and highs, as you can see along the way, with some of the additional, I suppose, benefits we get from our tax rate, given that we are an Irish-domiciled company. Okay. Nothing new in what I've spoken to you about.
You guys know a lot of that from your analysis, and probably some of you know better than I do. Let's start turning to what we want to try to achieve as an organization as we move forward, and how do we look at that, really over the next number of years and not just number of quarters. From an organic perspective, we want to continue our innovation and operational excellence. As we've talked about here, it's been a big focus of today. I hope some of the pieces that you've heard from Nuala and the other guys in the teams, Colin and Tom particularly, will give you some confidence around that. The strategic partnerships is something that George focused on, obviously, in our conversation. I'm sure we'll come back to it in the Q&A. It's extraordinarily important to us.
Those big relationships and relationships of all sizes, we see as strategic right across the group, and the development of those and increasing in the numbers of those on an annual basis is something we will stay very focused on as we move forward. Again, as I say, I think the phrase partnership covers more than just large-scale relationships, and we make that point there by further expansion of mid-tier biotech and specialty. We want to continue to expand our services, and we want to continue to do that. We've called out a couple of areas here that have been areas that we have expanded quite aggressively in the last number of years. I referenced the point on the late-phase services, where we expanded through the acquisition of Mapi last year.
We've expanded through in our device businesses for a number of years now, and it's been a hot market for us, and one we see continuing to grow as they evolve and mature as a marketplace themselves. Obviously the lab services, which Jim is here with us today, and we can chat to him about it during Q&A. It's an area where we'd love to see further expansion of probably one of our smaller business units at the moment as we move forward. One of the things that I think came through very clearly, both in Colin and Nuala's presentation, was our ambitions in APAC, and that's something where we can really see that market shifting and changing and allowing us to capitalize on that growth trend. Okay, that's our organic platform from an M&A potential areas. Extending our site network. You heard about it today.
You've heard about the great success that PMG has been in terms of our site network. We want to see that continue, and to reach out into new geographical areas as well. We'll continue to look at opportunistically at therapeutic and market segments to find groups that either have that small therapeutic area of expertise that we can push to. Orphan drugs would be an area that we'd certainly like to see more expansion in, or indeed, in market segments as the opportunity arises. Certainly, Asia-Pac would continue to be a focus there. Sorry, I should say that was around geographic expansion. Medical devices then is obviously, as I mentioned, it's a hot area. We see that market developing. We want to continue there. Similarly, in specialty labs, we see a lot of good growth in our specialty labs, and we want to continue to do that through M&A.
Again, around as we've said throughout the course of this presentation, we believe the benefit of data is around analytics and not data ownership. That's an area where we'll continue to look for targets. Okay. We've had the context of where we've been. We've had the context of what we want to focus on in the future. What are the big asks that we want to do on our P&L account over the next number of years, and what will that produce? Let's run through these on a line-by-line basis. What we're expecting from our organization is that the market can support and that we will be able to focus on a continued book to bill of at least 1.25 as we move forward over the next number of years.
The conversion levels that we're seeing now at the 9.4-9.5 range can be something that will be consistent as we move through time. We may not see those pick back up, but we think we can manage them at that level. The gross margin levels that we've spoken to will be broadly consistent with where we've seen them this year over the next number of years, and that we can continue our good work done already, improved, I suppose, to date in terms of our leveraging of our SG&A base, and moving that forward. What will all that drive? That should continue to drive operating margin in the low 20% ranges. Not quite the pace we've seen in the past, but certainly really pushing the industry and pushing ourselves to challenge in terms of being in the low 20%.
The tax rates for the benefit of your models, if you're thinking about that, we see remaining at about 12%. We're also thinking in terms of, well, if we do all of this, can we maintain our share count at about 55 million? And I think that's something that we probably can do through selective buyback over time. Again, what does this deliver? And this is, I should say, when we're looking at the 7% to date, obviously that's a real number, an actual number of what we've realized up until this point. So if we think about this as a midway point, if you like, we're looking at the five years up to the current year, 2018, and we're looking out the five years beyond that to 2023, and what our expectations are as a group.
The 7% represents the absolute growth on an annual basis over that period. As we've said, that was during a time of significant diversification of the organization. What we see going forward is certainly that we should be able to, on a CRO basis, hit circa high single-digit annual growth rates. That's what we're looking for as an organization. If we can stick to what we've just talked about, that's what we feel we can deliver on the top line. Between the two pieces that we talked about on gross margin and SG&A leverage, we think we can continue the story around our margin expansion. We've seen obviously very significant margin climb from 2013 up to about 2018, when I mentioned we're in the low 20s.
As we go forward, our expectation is that kind of really 30 to 50 basis points on an annual basis of margin expansion as we move into the low 20s and move out to 2023. Finally, what does that mean from the absolute perspective of our EPS expansion? Again, as I said, we stick to the knitting. A lot of what we deliver from an operating margin will fall to that bottom line. So while we have seen 28% CAGR, again, moving very steeply up from a margin profile, particularly in the years 2013 through 2015, moving up to 2018, our ASC 605 being the midpoint of our updated guidance. What we're looking for then really from 2019 to 2023 is that low double-digit earnings growth on an annual basis. Again, this comes back to what we talked about earlier. It comes back to our historical patterns.
It's really around sustainable growth. We are a long-term contracts organization. There shouldn't be the need to bounce up and down every five minutes. What we're thinking about is how do we, as an organization, really create sustainable growth that is replicable and we can really move and create a picture for ourselves as an organization, our shareholders, and our partners as a really confident organization with which to work and to really drive the future of the organization. Okay. Again, as I said, I wouldn't take too much of your time. We'll get onto the Q&A, which I'm sure you're eager to do. We got some summary points here, which I do want to kind of continue to emphasize.
We have had a strong historical financial performance in the organization, both in terms of margins and cash flow, really leading the industry there, and obviously a significant share price appreciation as a result of those pieces. Our clear financial goals, we've just spoken about them now. I'm sure we'll have plenty more questions when we get to the Q&A session around what they mean substantially. Again, it is that sustainable revenue growth and EPS growth that we are about as an organization. We've talked about the continued leverage of our SG&A, and that's certainly an area where we are going to continue to focus. You've seen some of the pieces that we're going to look at in regards to that around robotics, but also other automation and other elements where we continue to look at SG&A as an area of opportunity for us as a company.
We have a clear M&A policy. Again, it is around the bolt-on concepts. We are very disciplined in our approach and how we look at those assets, size them, and identify them. We're a clean financial reporter. As I said before, we're pretty straight folks. What you see is what you get. That's true of our P&L as well. That's recognized by the fact that we're investment grade with both Moody's and S&P. I'll leave that. Not a shocking new piece of news to finish on. This is our guidance from last time. Not changing it, just in case anybody's getting overly excited. It is what we put out on the last earnings call. You have that there. With that said, I'll thank you for your attention during the course of today and to all of my fellow presenters on the ILT.
We're now going to do a bit of jiggery-pokery on stage to organize some chairs and get some microphones in. We will move to our Q&A session. Thank you.
Oh, yeah. Red and green and I think
Right.
I don't hold down the button. We got one more chair.
That'd be stranger.
Yeah.
We should be able to go.
Got two. You're going to space them on there that way.
Well, we got every second row.
Yeah.
Take a mic.
Thanks. Good afternoon.
Speak. Just speak up.
Hi. Yeah. Bob Jones, Goldman Sachs. Thanks for all the information. I guess just a couple on some of the statistics you shared around penetration early on. I know you shared growth being the biggest driver of the way the industry's growing going forward, coming from increased penetration. Just curious if you could maybe share where do you see penetration today, where do you think that can ultimately go? Then I guess within that, one on strategic partnerships, in general. Obviously not a new phenomenon in the industry, but does seem like recently there's been some increased dialogue or maybe opportunities in the marketplace around strategic partnerships. I guess two-parter. What's driving that? Then two, as far as penetration, where are we with strategic partnerships today, and where could that go?
Okay, let me take that to start with. Certainly on the penetration, we'd see the penetration in somewhere in the 40%-50% sort of area. I think we could all argue about what that number actually is, but it's around about that.
I would think, I think we believe that can go significantly higher than that. It's not 80%, it's not 90%, but it's probably certainly into the 60s. I think there's long-term continued development of penetration to the market. I think that'll probably take the next 10, 15 years. I don't think it's something that's going to happen tomorrow, but I think there's definitely upside there in terms of penetration. In terms of strategic partnerships, I think, where are we? I think we're at the, if I could sort of coin a term from Churchill, we're sort of at the beginning of the end or the end of the beginning. We've started those partnerships. They've been going now for probably five to 10 years, realistically, within the industry. I think we've learned a lot as an industry. I think our customers have learned a lot.
I think we're seeing some development of those partnerships into the more mid-size companies, and we're certainly engaging with a number of customers more in the mid-size area. They're seeing the benefits of that. I think the larger pharma companies, they've been in that approach for a while, and I think they're seeing some different ways of doing things, and I think they're seeing some opportunities, and I think we are as well. I think we're, as I say, end of the beginning. I think there's more to do. I think there's more innovation we can bring. I think as an industry, we have an obligation and an opportunity to be perhaps a little bit more forthright in how we bring opportunities and how we bring new solutions to our customers.
I think perhaps in the past, we've been a little bit more, we'll take the orders and we'll deliver. I think we as an industry and certainly as an organization here at ICON, are much more confident in ourselves in what we can bring to those partnerships. Certainly, the experience we've had over the last certainly five to 10 years, I think has given us the confidence, I think, to bring forward. In fact, George alluded to the case study, to a partnership. We were able to bring experience of that partnership to the new opportunity and actually talk to them about the things that they should do and the things that they shouldn't do. I think one of the reasons we were actually selected in that partnership is because we worked very well with the other provider, the other CRO.
The relationship between providers in the partnership is also very important and a differentiator, and certainly we found it in that area. George, did you want to talk?
Yeah. The only other thing I was thinking, Bob, is that I think in the middle tier, which could be $10 billion-$20 billion, you're not talking about small companies, I think you're seeing more of them who worried about partnership because it meant infrastructure and cost, finding a kind of middle ground and then consolidating the vendor base where they could. We worked very hard on that as well, been very successful there, because I think when you sort of take that model and then you adapt it for not a $50 billion company, but for a five, $10, or $20 billion, then I think you see more of them moving in that direction because they can sort of get it.
Because they don't have the people and the infrastructure to support that, finding a sort of a lighter touch to the way you manage those, then they sort of pull together their vendor base. That's a place we've done reasonably well, and I think they can get very comfortable with a partnership, small P, that isn't feel so bureaucratic and costly, working really quite well for them.
Hi, David Windley at Jefferies. I have a couple. I'll ask them one at a time. In terms of penetration and thinking about FSP in kind of the more mature companies versus the rapid growth we're seeing in biotech. Figure you're probably not doing much FSP work with emerging biotech. Are you, Steve, your answer to Bob's question, are you counting FSP in your penetration thoughts? Is that part of your penetration view, or are you thinking about more just full service penetration?
No, we put FSP in that penetration bucket. We see it in the same sort of light, David. As Colin outlined, we see increasingly opportunities for, particularly the larger companies, to integrate their approach to outsourcing. They do have a component of FSP with some of their more, dare I say it, their sort of routine, mundane, functional sort of areas, data management, stats, medical writing, safety, I think is very much an area for FSP. In the clinical project management monitoring space, they remain in a full service sort of approach. We look at it both together, and we think the penetration is probably moving with similar sort of velocity in both segments.
Okay. Completely separately on the PMG and site ownership, and interlaced with M&A, some of the presentations kind of talked about virtual trials and technology and how that alleviates burden and perhaps even removes the need for sites to some degree. Maybe that's blue sky kind of thinking, but at the same time, you're talking about wanting to commit capital in that area. Can you talk about kind of reconcile the thinking there in terms of why it's worthwhile to commit capital in a place that you think could be de-emphasized in the future?
I think we have to be a little careful and recognize we do work within a fairly conservative industry, and these changes we talk about in terms of virtual trials will take some time. It's not going to happen in the next two, three, four, even five years. We'll be talking about virtual trials like we've been talking about EDC. That took 20 years. We still do paper trials. There is a glide path or a ramp-up that's going to happen. However, we need to embrace that. We certainly do believe that the virtual trial will embed particularly in the late phase area. I'll ask Ramita to comment a little bit more about that in a moment and what we're doing there.
We do recognize that the late phase area is going to be a big proponent, if you like, and a big area for the virtual trials. But I would think that certainly in the next 5-10 years, sites-
Efficiency around sites and making sure that our strategy is that top-down, bottom-up, recruiting patients through sites, certainly through oncology. It'll be a long time before we have third-line non-small cell lung cancer patients being treated in a virtual trial from home. That's not going to happen. Let's face it, oncology is 40% of our business. There's a move, but it's very much in the late. We embrace it, but we also are realistic in that we need to continue to solve or solve that problem in the two, three space. Ramita, would you like to comment on what we're doing?
Certainly, from a late-phase perspective, since we're not regulated in the way that phase II, III clinical research is, it allows for more of that flexibility to tinker with using that virtual model to engage patients and bring it into more non-interventional research. We're actually seeing a little bit of uptick of inquiries from our sponsors asking us to look at ways to use more virtual approach or techniques or modalities to engage patients and start to solve some of the questions that might be generated from traditional hypotheses from clinical research.
Great. Donald Hooker, KeyBanc. Just for Brendan, the sort of commentary looking out around the book-to-bill of 1.25, it's a great book-to-bill, and certainly would support high single-digit growth. How much of that is contingent on things as they are now, as revenue growth starts to catch up? It looks like you have the burn rates of backlog. Do you think that's going to stabilize as revenue catches up? What's your confidence in maintaining that? Is there a mix issue there? Can you elaborate a little bit on that target?
Just to make sure I understand your question, it's around the ramp of revenue and the revenue mix?
Yeah, just the book-to-bill to 1.25. It seems, or at least 1.25. What's your thinking behind that in getting there?
I think, well, we've seen a very robust marketplace. There's no question about that over the last year and a half. For us, it's been a very solid time. George has talked to some of the transformation, really, in our own commercial organization during that period. We are seeing very hot levels of biotech funding in the marketplace right now. I think in terms of, is it a sustainable go-forward number? If that's the question, I think it's certainly something that we will be targeting, is the way I'd describe it. It's something that we feel is probably doable if we can be ahead of the marketplace, and we want to be ahead of the marketplace. Nuala talked a lot about 120% efficiency on how we deliver our trials today.
We really do see from the innovation and the delivery to our customer that we should be able to hit that kind of level relative to the market as we go forward. Maybe I should let George comment as well.
There was something I was going to add, which touches a bit on our lunch conversation. We are and will for the foreseeable future be a medium large pharma company. That is, as I was talking about in my presentation, it starts with those very large pharma companies and a big, stable revenue base to build on every quarter, and a lot of attention being paid to the midsize. They're big, but they're midsize by all of our standards because they can generate, individually and collectively, a significant amount of revenue to sit on top of that. On top of that, sort of the icing on the cake is right now you have a lot of money in the biotech dev cost space. We want to take maximum advantage of that. As you all know, it sort of comes and goes.
You have a nice long run, we want to strike a balance between staying focused on our core business and getting the biotech while it has. If that first category is growing rapidly, then we'll be able to sustain the organic revenue growth rate that Brendan and Steve were talking about.
Maybe in just the terms of the backlog burn, as you're bringing this new business in, I think you seem to be communicating that burn rate to revenue is going to stabilize. Is that mix, or are you assuming sort of improvements there from some of the investments in technology?
In terms of keeping that conversion rate stable?
Yeah.
I think there's a number of elements that we're looking there at. We are seeing, obviously, as we've said, quite a lot of oncology work coming through. We think that's a team, it's thematic in the industry. There's a huge amount of funding in that space. We are looking at ways to be better at terms of startup for our trials, the speed to get our trials up and running, and actually get that revenue running through our organization. Making sure that we have all of our studies are primed and ready to go in as quick a fashion as we can. That's something we'll continue to focus on to ensure we stay in that kind of mid-nines range.
Hi. Thank you. This is Juan from Bank of America Merrill Lynch. My first question is on the overall CRO market growth rate that you estimate that approximately 6% growth over the next few years. It was noted on the slide that the average price for every trial is contributing about 1%-2% to that overall growth. I'm not sure if that metric is synonymous to pricing. If it is or not, can you share how the study mix trends or shifts are contributing to the value per trial going up?
You want to take that?
I think if you look at the value per trial, I don't think we're seeing a huge diminution or slowdown in the dollars per trial. I think theoretically, as we move towards more patient, these genotypes and these smaller trials.
There's a potential for the average overall contract value to fall. We haven't seen that up till now. Certainly, on a pricing point of view, I would say the pricing environment at the moment is pretty benign. Now, that won't always be the case. We recognize we have a lot of tailwinds within the industry at the moment, but we'll enjoy that while we can. I think we can continue to be successful. We're making, I think, a lot of progress in the biotech space. The biotechs tend to be a little less price sensitive in their projects. They don't have the infrastructure, so they do tend to be full-service projects, which are higher margin. In the long term, we'll continue to ride that wave. It will not continue as it is now. We recognize that.
In the meantime, we do continue, of course, to focus in on the large pharma customers. We believe as we build these partnerships, we become much more efficient. Partnership is good for us in that the pricing environment, if we can maintain where we are, we can generate those efficiencies, and we can improve our margins in those partnerships, particularly around long-term, large volume partnerships. There's a number of ways we believe we can continue to manage and improve our margins in the long time. The pricing environment, as I said, at the moment is, as I say, benign. Anything you want to add?
Yeah, no. I think that's right. I think we have a pretty decent, stable pricing environment at the moment. We see that right across the board. You see, with the level of business that's out there, that also allows for that, to be absolutely honest. It's a stable environment where we see reasonable pricing, not diminished from what we've seen in the past.
Okay, good. My follow-up is on the P&L for Brendan. You did 10% in tax in the second quarter, and 12% was your initial guidance for 2018, and in the out years now in the update that you provided today. What does it take for that 10% to be sustainable in the future?
I think, well, we put it on the screen because we meant it, that 12% is our long-term tax guidance. We do see from time to time roll-offs of certain provisioning that we've had from the past. That can bump us down to a 10% in our quarter. I think from a long term, when we look at the structure of our P&L account, the long-term sustainable number right now is still 12%.
Hey, over here. It's Tycho Peterson from JPMorgan. Maybe just to follow up on the pricing commentary, to what degree can you price out some of these IT investments to your customers? Is this just really a cost of doing business? In other words, can you push some of these IT investments onto your customers in terms of higher pricing?
Sorry, Tycho, I didn't quite get the.
Some of the big data and IT investments you're making, to what degree can you extract better pricing around that from your customers? Are they just anticipating that you're going to make those investments and they're not willing to pay for it?
I would say at a high level, it's probably more the latter than the former. What you do get when you do this is stickiness with that customer. As you're potentially in the middle of building a partnership, you're making IT investments around the data and the connectivity that you have with that customer. You get stickiness for subsequent programs and subsequent spend within the organization. Tom, do you want to make a comment on that in terms of the pricing environment around the collaborations?
Yeah. Little doubt we're having to make our own investment on our side, there are a number of sponsors that are prepared to collaborate and share the cost, and they're fair in their approach. They want to use that for the betterment of the overall relationship that we have. They see it as a long-term play where they collaborate on the development of some new capabilities. They want to have restriction around the use of that only between themselves and ourselves, of course. I think they take an even hand for the most part in those collaborations.
We've heard from your peers about maybe a little bit more aggressive approach on fixed price contracts. Can you maybe talk about interest from clients in those?
We keep getting this question about fixed price contracts and how our peers are rolling these out. We've done these for years. I think the top-tier CROs all do fixed price contracts to the extent that any of us fix the price. We are very happy to do fixed price. In fact, we think that's a way of differentiating ourselves, not so much from our peers, who we believe all do them, but certainly from the mid-tier and the smaller CROs who probably don't have the financial capability to be able to do those and can't really take that risk. We're very confident around our metrics and our execution, and particularly where we have recent experience in a therapeutic area. We will take that risk.
Like all of our competitors, we won't take the risk if the FDA comes back and says, "We need another 100 patients," or the sponsor can't provide the drug or the protocol's not ready. No matter what they tell you, none of our competitors who know what they're doing will be able to actually fix a price on a contract. Certainly around recruitment rates, and Nuala talked about it with our PMG. Recruitment rates and startup timelines, yes, we will nail our colors to the mast, and we will commit to those timelines, and that's absolutely what we do. Do you want to comment on that?
Sure, yeah. I mean, I kind of referenced it in my presentation. There are two things we do at data. One is to really help us plan and be more strategic.
I'm not having a lot of luck today either on turning slides or turning microphones on. Oh, there we go. I got the hot seat. Our focus is on being predictable. We've very elaborate methodology that allows us to simulate our projects. As I mentioned, we also involve our investigators and our patients to really ensure that the methodology is robust. When we are going down a route of committing with a customer, our focus is on being at a minimum 90% predictable. We believe that's a good place to be. We know that protocol amendments always come to fruition, but we factor that into our planning. Once you take a long, hard look at your strategy and you've got 90% probability of succeeding, I think it makes it easier to make sound business decisions.
Maybe just, sorry, a quick comment, and it's linked to the partnership discussion earlier. I think what was also successful about the partnership we were referring was that the customer has been very transparent on their portfolio. I think we are seeing that more and more in that they see the value of effective planning. If we can share our thinking with investigators, also with patients, they can actually see the value of actually sharing a bit more about their compounds, and hence you can actually design, redesign, and mitigate risk. I think that's also assisting us both in terms of building better partnerships, but also in terms of delivering in a predictable fashion.
Maybe just one last one on gross margin. I understand the guidances for stability versus 2018 levels. I think you've alluded to a number of things that could help gross margin over time, virtual trials, automation, these types of things. Will this really be offset by wage inflation, or do you think you actually could expand margin over time, gross margin?
I think our aim on gross margin will be to keep it at similar levels to where we are now. We recognize there'll be some pressure. Virtual trials and some of the new innovations around the technology that we're using will give us the opportunity to improve it. There'll be some tailwinds. Equally, there'll be some headwinds as well as we build our business and wage inflation particularly in certain worker categories in our business is quite substantial. Overall, I think we're optimistic in that we can maintain. There may be a little pressure down. Overall, certainly the expectation of the target is that we maintain that, and I think there'll be various puts and calls on that.
Just going back to a couple of your questions and wrapping them up. In our partnerships, we do more IT and more investment than in our other accounts. We do more bonus, penalty, fixed price than in our other accounts. We usually give them a little more than other accounts, but they're our most profitable accounts. There's sort of a concept that when you really enter into a partnership with somebody, you both give, and it works out better for business. Actually, that's been our performance the last five years, is that they tend to be our best margin customers when we look at it by that. We're okay doing the things that look like, "Are you giving them too much?" Because we find efficiency and we end up doing okay on price and margin.
Thanks. Jack Meehan at Barclays. We got a flavor of APAC a few times during the presentation, so I was curious to get your view on the maturity of the market there now, and what is it going to take to win. Do you need to plant some organic seeds, or do you think maybe M&A makes sense to get better to bigger scale there?
I think as we look at Asia Pac, and as I think we alluded to, our growth out there has been substantial. We do see that market expanding substantially. Japan, for instance, really Japan over the last five years has come into the global development landscape. They really are now a player. It used to be when I started in the industry, Japan was almost in the too hard basket. You did your development in Japan and then you did it elsewhere, or vice versa. You never really tried to mix the two. Japan and the Japanese companies now are really looking at global development plans, including Japan. We have a number of programs and a number of partnerships that include sites in Japan. That's a good example. China, of course, the changes in the regulatory framework in China are leading to significant growth out there.
I think the challenge that we have or the watch that we have is making sure that growth is sustainable and that we're able to deliver the quality. I'd rather grow at 10%, 20% and deliver a quality project on a sustainable basis than grow at 40% and have some trip-ups along the way. Our customers have long memories. The focus for us is making sure that we take on profitable business in China that's sustainable and that can be delivered. Perhaps on a clinical basis, Nuala, you might comment a little bit on the Asia Pac market.
I certainly concur with the shift in China, the catalyst is really the buy-in from the regulators. Not only are they committing to reducing their timelines to six months to get approvals in place, they've been very public in terms of actually significantly enhancing their workforce, either from an audit perspective, in terms of certifying sites. Yeah, they've really sent out a strong message to the industry, and we're beginning to see the expedited timelines coming through, albeit perhaps selective and prioritized depending on certain indications. I think the challenge for the industry is having a sufficient workforce in place to be able to deliver on that.
I think when Colin talks about the kind of FSP models in the industry, China, Colin mentioned it about the expedited growth there, and where we've got the ability to move our resources around to try and ramp up in China. It is a challenge. I would say also in Japan, where we've been successful is also in recognizing that you need to invest in manpower. We've been very successful in launching a graduate program. We're in our third year of the graduate program in Japan. As a result, launched the graduate program in China as well in response to the needs.
Great. As my follow-up for Brendan on the revenue forecast that you presented, I have two questions on that. The first is that all organic for high single-digit growth over time? As we sit here today, do you think that's achievable in 2019? Thanks.
When we looked at that math, they are our targets. I'll qualify it slightly by saying that. That is an organic growth rate pattern that we look at. It is dependent upon the pieces that we talked about, both in terms of the book to bill and the conversion of that book to bill. Is it obtainable in 2019? Watch this space. We'll have guidance out later in the year, maybe even next year. I think it is part of our long-term plan that we want to be growing in the high single digits organically on an annual basis. That's something that we will try to be as true to as we can.
John Kreger from William Blair. If you think about your business compared to, let's say, your top five peers, what are the one or two key differences that you guys perceive in being kind of strategy differences and capability differences versus the other four or five?
I think there are a couple of things. I'd point to our technology, and I think the combination of the technology that we can bring gives a difference. I look at our AdPlan, I look at our ICONIC technology. You saw OneSearch, and I think the MCMod, which is a pharmacokinetic program. I think the application of that and the effective application of that is giving us a differential advantage. I think that's one thing. I think we've talked about a lot about our partnership approach, and I know that can be a little bit esoteric, but we have probably as much, if not more experience of strong partnerships and delivering on partnerships in the industry than any of our competitors.
We believe we can really bring some very fresh and very clear knowledge around partnerships, how to embed partnerships, or how to do partnerships really well. You need to be able to apply that effectively. You need to be able to communicate that effectively. We believe we have the ability to be able to do that, and we've proven that, I think, recently over the last, well, 18 months, couple of years, as we've secured new partnerships. It's about partnerships, technology. It sounds a little boring, John, but I talk about unrelenting focus on execution. No one talks about that in the industry. At the end of the day, getting stuff done, moving trials forward, taking the steps, making the activities, streamlining our processes is fundamentally very important to customers. We emphasize that. We talk about it every day.
It goes right through our organization. I would say that's an area that we're not distracted by. Technology's great and innovation's great, but it needs to be applied to practical tasks that move trials forward, and we are very committed to doing that, and we're unrelenting in the way we push that across our organization.
Thank you. A follow-up, unrelated. A big difference that I perceive of ICON is site management. Can you just flesh out that business model a little bit more? Are we talking about an owned facility where you're the only one doing the sites? Are you managing a site that already exists? It would just be helpful to see what your vision is of that business over the next five years.
Our ideal world is when we have a fully integrated site solution where the investigators have an exclusive relationship with us. That is the case of our PMG model that I referenced at the beginning of the presentation. We work in partnership with healthcare alliances. It may or may not be exclusive. What we strive to do is to build relationship with the healthcare institutes with a view to actually shifting them towards a more integrated model. That was the example I gave in terms of the DuPage Medical Group, which has actually provided us the ability to really respond to specific needs in oncology.
Just to add to that, I think Nuala talked about the models, but we don't own the sites. We don't own the bricks and mortar. We don't employ the investigators. What we do is we have our people, ICON people, PMG people, at the sites ready to make sure that every patient that walks through the door is a candidate for our clinical trial. We're adding clinical trials, clinical research as a care option at the site. That's the sort of mantra we play with the sites. Being involved in a clinical trial is a positive thing. Whether you're in the control group, the placebo group or the active group, you get care that you wouldn't otherwise get. It's a good thing for patients, and we bring that to the site, and we make sure that ICON clinical trials are the first ones that are considered.
That's our ideal site, and most of our sites, about 90% of our sites, are in that sort of way. We have our people at the sites sitting there ready to receive the patients and make the whole process as easy as possible for the investigators.
Justin Bowers from Bloomberg Intelligence. Two questions. One, just going back to the conversion rate and kind of the steady state going forward. What are the levers there in terms of internal execution versus external factors? You look in the rearview, you can see you had phenomenal backlog growth. Your top customer was kind of declining. Then the second would be just where's the industry in terms of oncology? Are we at kind of a steady state in terms of where the portfolio is or the mix of studies? Have we gotten better at identifying patients, or is there would continue to be chop there, now versus kind of five years ago and where we're going?
Sure. I might speak to the backlog conversion point and I'll let the guys come back in on the oncology piece. I think, obviously, I suppose one is predictable of the other. If you see continued elongation of your backlog because your trial mix is moving yet further towards oncology, that is a challenge for us as an organization. That's what we have seen over the last number of years. I suppose what we're saying as we move forward is that we feel we're in a better place on moving some of the internal levers that you kind of referenced, which is around study startup, around getting our studies up and running, patients recruited faster, and moving those trials into the clinic effectively over the next year and a half. Without getting into the very specific details, it is around trying to really ramp up that startup period.
We've had a lot of success in the last 8 to 12 months on the startup of our trials and on the pace at which we're ramping those into revenue. That's helped from the information platforms we have that allow us to actually get those patients, and you've seen some of that work today. We certainly are making progress on that, and that's certainly one of the gating factors in terms of making sure that conversion stays around the levels that we have at the moment. That said, if we see significant growth, and maybe this leads on to the next part of the question in the oncology piece, it will be a challenge, but it's one we're looking to be able to keep in a manageable range.
Yeah. I think it's fair to say that the oncology part of the portfolio is going to continue to be very important. We're good at oncology, we're a kind of victim of our own success to some extent in terms of the impact of the oncology portfolio or programs that we have on the conversion. There's no question that they burn slower. There are various things we can do, and Nuala talked about the DuPage network and what that can potentially bring us in terms of community-based oncology centers. We have a number of initiatives going in startup to move. While the oncology portfolio will continue to be important, it's around 40% or so of our backlog, and I don't think that's going down anytime soon, quite frankly.
I do think that going forward, we'll get better at running those studies, at starting those studies, at recruiting those studies, and that will help to, I think, move or at least provide a tailwind for the conversion and for the backlog burn.
Thanks, Dave. I got a follow-up, a couple of follow-ups. Follow-up to the last question, is there a meaningful difference in, say, study execution from the customer's influence between larger companies and smaller companies? Do the biotechs want to get started and about business faster?
I don't think there is much of a difference really in that in terms of startup, David. It can vary depending on the particular program. Oncology programs, whether they're large pharma or biotechs, tend to take longer to get going and tend to take longer to burn. I don't think it's a customer segment issue. I think it's more of a therapeutic issue and complex program issue. Do you want to add?
I'd agree. I think where we see diversity, it's really in the protocol construct. It goes back to my point about early intervention, early understanding as to what you're striving to achieve. If you think through the protocol inclusion/exclusion criteria more carefully tends to lead to a more efficient process. I think there are some customers that perhaps the protocol amendments come in later on in the day, but they're also in perhaps more complex areas as well. Not a very, I guess, data-driven answer, but one size doesn't fit, I would say.
Yeah. I would say the biggest difference actually is the time when we get involved in a molecule. In a partnership, Nuala was just talking about one where we've been awarded studies for the next year, and they won't start for a year, right? I would say more small biotech small companies, they contract with us at the time they're ready to start. I think it's not necessarily the size of the customer, it's the relationship we have with them. That is one reason we've slowed down is we've gotten more insight further ahead in our partnerships. We know we're going to get it. You can put it in the backlog, but it takes longer to start, not through execution, but through funding or whatever at the company.
A follow-up on a different question around the metrics that you've given. It seems like, tell me, Brennan, if I'm wrong here, it seems like you've kind of built some cushion into these numbers for yourself in the following context, you kind of need two of the three of book-to-bill, backlog burn rate, and revenue growth. If you have a book-to-bill of 1.25 and backlog burn rate stays at 9.5%, your revenue growth is going to be faster than high single digits, right? The only thing that makes revenue high single digit when you've got a 1.25 book-to-bill is that your burn rate is declining and weaning off that book-to-bill.
In other words, my point here is that in this context, you have some slippage factor or some fudge factor that burn rate can continue to decline against a 1.25 book-to-bill, and you still hit high single-digit revenue growth. True or untrue?
What I say to that is, listen, the most fundamental thing I want you to take from all of the numbers that we put on the screen today is that we're targeting high single digits.
Yes
We are targeting growth rates as we move forward. If you do the math on the 1.25 and you use exactly 9.5, will you come up with some slightly different number? Possibly. What I want you to take from today is that the organic growth rate on a go-forward basis, we're targeting to be in the high single digits.
Okay, my last complex question. I promise I'll hand over the mic. Coming back to this, I'll call it bonus penalty. I think a certain competitor has gotten this phrase in the market of fixed price, but when probed on it really is about what are we willing to take risk on. I heard in the presentations in the back of the room that because of your visibility and your greater predictability, to Nuala's point, around patient recruitment, around site ID, whatever those things that perhaps arguably data can influence, that you believe you have greater predictability. Steve, you said earlier that you're willing to put the colors on the mast and take some risk around that. The punchline of the question is that something you're trying to lead?
Is that something that clients have gotten to a point where they're demanding that kind of commitment or that visibility for their own budgetary stability? Or is it something that because of competitors' actions, you're having to follow? I think that's the core question.
Yeah. It's a little bit of both, Dave. Where we see an opportunity and we see particular confidence in a program, we will certainly propose a bonus penalty. It is always a bonus and a penalty, not just a penalty. We often find customers would ask us just to take the penalty, and we tend to resist that, quite frankly. We think it's fair that there should be upside as well as downside if we don't deliver. The answer is we will certainly respond to the market. I'll be very honest with you and say, I think that's a very modest differentiator because I think most of our competitors would do the same thing. We might put a little bit more at risk, but I don't think that's going to be differentiating as much.
I think we're certainly very confident with what we have, the systems we have, the data we have in knowing when we think we can deliver a project. There are projects where we don't have the data and perhaps don't have the recent experience where we would say, "No, I don't think we'd do that." Or we're being asked to hit timelines that we think aren't feasible, in which case we would resist on it. We do it in a very data-orientated way. We'd go back to the customer. We model our recruitment rates. We do Monte Carlo simulations. It really is quite a sophisticated event now. We look at the probabilities we would have in actually hitting a particular timeline and say, "Okay, on the scheme of things, that's worth going for.
We think we can do it." I would say 80%, 90% of the time, we would do it, and we would go to a customer, and there are many of those times when we would go when we haven't actually been asked. I think most of our competitors probably do the same thing.
I also think, don't you, Steve Cutler, that there's much more, Dave, conversations in the RFPs and in the defenses about bonus penalty. In the end, it goes by the board a number of occasions because what they really want you to do is commit to bringing it in on time. They really don't particularly want to bonus you, as Steve Cutler said, but they don't particularly want to nail you with the penalty either. I think they're more inclined to say, "Look, if you constrain the circumstances for changes in budget to true exogenous factors, bring it in on schedule, on time, on budget." Then sort of the conversation about bonus penalty tends to drop out. Procurement will raise it, at the end, it sort of tends to drop out.
Okay. Thank you.
Yeah.
Great. Donald Hooker from KeyBanc again. In terms of acquisitions, you obviously have a big balance sheet, free cash flow. What are sort of the targets and metrics? I assume you have a series of targets you're looking at. Do you update these targets regularly, and maybe any updates on hopes for M&A?
Yeah, Don. We constantly survey the market. I think Brendan pretty clearly outlined the areas we're interested in geographically, therapeutically, functionally. The data analytics space intrigues us. We don't want to own the data, but we do see the analytics of the data as being very important, and we do believe that the way we're going at the moment, where we're partnering with a number of organizations, finding out what works and quite frankly, what doesn't work because they don't all work, and we have found that out. We're very much focused on M&A for capital deployment. That is our priority. We've had a share buyback program. We have approval for a continued share buyback program, and we'll do that opportunistically. Our focus is M&A, and we certainly see some areas within our business.
We've already talked publicly about Japan being one of them, perhaps some opportunities in the safety and the functional space, devices. There are a number of areas there. I'd have to say, though, that a number of the assets out there at the moment are at very high valuations, very frothy. I'm not going to go out there and indiscriminately throw money at acquisitions that ultimately aren't going to deliver for us in terms of being accretive to our share price and being positive to our operation. That's not to say that we're conscious of the fact that we have a very strong balance sheet, and we'll deploy that. I'd also say that interest rates are where they are, that the economy's doing well, but I think interest rates will probably tick up a little bit.
It's not the worst place to be in as we look at some of our competitors who are highly levered up, really, quite frankly, and may regret that, I think, perhaps in the longer term. That's not to say that we won't use our capital appropriately and deploy where we see appropriate opportunities at appropriate prices.
Do you guys worry if the industry's becoming more cyclical, given the importance of biotech funding? We certainly hear it a lot. If you think it is there a way to mitigate that?
I've never seen the environment so positive as it is at the moment with biotech funding, with large pharma budgets, with FDA. I don't for a second imagine that it will continue like this ad infinitum. As we've alluded to, I think, and Brendan's talked to, George has talked about, our focus is on the large pharma segment. Two-thirds of our backlog is large pharma. We believe that will continue. We continue our strategy executing on large pharma because we believe fundamentally that in a year or 2 or 3 years when the biotech funding environment is not as strong, we'll have that segment, that large pharma segment, which will continue to outsource, which will continue to penetrate, and which we'll continue to see upside in terms of R&D spend.
No, I don't worry about it being too cyclical. We do recognize, we're not naive, that we're probably in as good as a position as we'll ever be from a market growth point of view and opportunity, and we aim to take absolute advantage of that for as long as that continues. When it doesn't, and it will be a when, our fundamentals of our business will be strong. The strategies that we have, I think, are the right ones. I think we're executing them well, and we'll be, I think, in a good place.
I think it's also probably important to remember that in that space, mixed in the biotech world is third-party money, venture capital money that's moved into the space again, particularly in phase II, phase III, that is cyclical, comes and goes, or there's a train wreck, and then they pull back a bit. As distinct from more co-venture, co-development deals where what looks like a biotech is, in fact, heavily funded by moneys being downloaded by one or more sponsors. That's a trend, quiet trend, that is continuing, and that I don't think will be as cyclical as not because they're trying to find vehicles to accelerate development by taking it outside. That, I think, characteristic will grow the way the rest of it is growing, whereas the venture capital money comes and goes.
It looks more cyclical than it is when you look at where the money's coming from.
Great. I think that's the end of the questions. Thank you all for participation. We'll hand over to Steve now for wrap-up comments.
Well, if you don't mind, I'll wrap up from here. I want to thank everyone for coming. It's been a good day for us. We've, I think, had the opportunity to share our strategies and what we're doing as an organization. I hope you enjoyed the demonstrations. It gave you an opportunity to see in a little more detail what we're doing to improve and to continue to drive our organization. We are founded on our strategy around partnership. George spoke eloquently, I think, around how we're doing that on a commercial front. You can see we're partnering not just with our customers, but with our providers and our data analytics groups in a way that I think gives us some real competitive advantage going forward. We also spoke a lot about execution and delivery and our metrics. Nuala talked about that, our site model.
That's an absolutely critical part of our differential advantage. The site model, the ability for us to recruit patients at a faster rate to get sites started up so we can improve our conversion rate is absolutely fundamental. That execution focus, as I said, that unrelenting focus on execution, I think really puts us in very good stead to overall deliver a sustainable growth pattern and a sustainable growth rate over the next five years and beyond. Brendan talked about what the assumptions we've made to target that sort of growth. We believe they're very doable because we believe we are executing on our strategy well, and we'll continue to do that. Thanks again. We look forward to seeing you at our drinks presentation. I want to appreciate the time you've spent here with us today, and thank you all very much. Good. Thank you.
Just a quick in terms of logistics and timing. The drinks reception is being moved forward a little bit just because we're just conscious of time. It's actually 5:30 now. 6:00 is where you need to be. That's absolutely fine. We're just going to go there for 5:30, excuse me. It's around the corner. It's 6 Times Square at the hotel. It's called the Knickerbocker, and we're upstairs in the Cloud Bar. Anytime from 5:30 onwards. Thank you.