巴克莱美股医疗保健行业美国生命科学与诊断巴克莱医疗会议上关于工具与诊断的十大争论20193545页

EquityResearch5March2019COREBarclaysCapitalInc.and/oroneofitsaffiliatesdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.PLEASESEEANALYSTCERTIFICATION(S)ANDIMPORTANTDISCLOSURESBEGINNINGONPAGE37.Restricted-InternalU.S.LifeScienceTools&DiagnosticsTop10Tools&DxDebatesfortheBarclaysHealthcareConferenceNextweek,wearehostingtheBarclaysGlobalHealthcareConferenceinMiamiBeach,FL.We’reexpectinghealthyinvestordebatesamongstourparticipatingcompanies,includingLifeScienceTools:BRKR,ILMN,MTD,PKI,RGEN,TECH,&TMO;Diagnostics:EXAS,HOLX,LMNX,OXFD,QDEL,&QGEN;andLabs/CROs/CDMOs:CTLT,CRL,DGX,ICLR,IQV,&LH.TheTop10Tools&Dxdebatesweseeinclude:1)HowdurableisthebiopharmaceuticalendmarketforLifeScienceToolsandtheCROs?WebelievebiopharmaisasustainablegrowthenginefortheLifeScienceTools&CROs,drivenbyhigherlevelsofnewdrugapprovalsandampleaccesstofunding.Additionally,webelieveThermoFisher’suniquebiopharmaassetsarewellpositionedtobenefitfromtheshifttowarddevelopmentofpersonalizedtherapies.Jack’sJobBoard:Aftertwoyearsofhealthynewawards,wecontinuetoseeanaccelerationinthenumberofCROemployeesbeinghired-withIQVIAstandingoutvspeers.2)AredatastrategiesdrivingshareshiftsamongCROs?AsseveralCROsdevelop“NextGeneration”platformsforclinicaldevelopment,thedebateisaroundifandwhendataofferingswilltransitionfrombeinga“nicetohave”toa“needtohave”.IQVIA’sstrongnewbusinesswinsraisequestionsaroundwhetherthetransitionisapproaching.3)HowdurableisgrowthintheChinaendmarket?Strongregionalgrowthsupportstheargumentthatsupportforlifescienceresearchisdurable,thoughconcernspersist.4)Whatisdrivingcontrastingdiagnosticstrengthrelativetotheclinicallabpressure?We’vebeenperplexedatcontrastingresultsbetweenthelabsanddiagnosticmanufacturers.ForDx,theriskisreimbursementreductionsbleedthroughovertime.5)Canthenationallabscutenoughcoststooffsetpricingpressurein2019?Significantrateheadwindsincreasefocusonoperationalimprovementstohitguidance.6)Whenwillclinicallabconsolidationaccelerate?Webelievetheconfluenceoflabindustrypressuresshouldhaveanoutsizedimpactonregionalandhospital-basedlabs.Thekeyquestionistiming,followingasloweryearofdeal-makingin2018.7)IstheindustryprimedforincreasedM&A?2018wasaslowyearforacquisitionsbyanymeasure.Lookingto2019,webelievethereisacasetobemadeforincreasedactivity,giventhefragmentedlandscapeandclearopportunitiesforconsolidation.8)Whatisthenexthotlifesciencetoolordiagnostic?Weviewanacceleratedpaceofinnovationasaninvestmentpositivefortheentiregroup.9)Whichcompanyisbestpositionedforadownturn?Webelieveourcoverageismorerecession-proofthanthebroadermarket.Thenationallabsscreenasthemostdefensivearea,followedbytheCROs,thenDiagnosticsandLifeScienceTools.10)AreLifeScienceToolsapproachingpeakpositivesentiment?Thegroupisnowtradingatclosetoall-timehighs.WebelievethebiggestfundamentalriskisaroundtheIndustrialendmarket–wheremacrodatapointshavemoderated.Actions:WeraiseourTMOPT($295,upfrom$280)andIQV($160,upfrom$155).INDUSTRYUPDATEU.S.LifeScienceTools&DiagnosticsNEUTRALUnchangedForafulllistofourratings,pricetargetandearningschangesinthisreport,pleaseseetableonpage2.U.S.LifeScienceTools&DiagnosticsJackMeehan,[e-mail],[e-mail],[e-mail],USBarclays|U.S.LifeScienceTools&Diagnostics5March20192SummaryofourRatings,PriceTargetsandEarningsChangesinthisReport(allchangesareshowninbold)CompanyRatingPricePriceTargetEPSFY1(E)EPSFY2(E)OldNew01-Mar-19OldNew%ChgOldNew%ChgOldNew%ChgU.S.LifeScienceTools&DiagnosticsNeuNeuIQVIA(IQV)OWOW143.35155.00160.0036.306.30-7.257.25-ThermoFisherScientific,Inc.(TMO)OWOW264.06280.00295.00512.1512.15-13.7513.75-Source:BarclaysResearch.SharepricesandtargetpricesareshownintheprimarylistingcurrencyandEPSestimatesareshowninthereportingcurrency.FY1(E):CurrentfiscalyearestimatesbyBarclaysResearch.FY2(E):NextfiscalyearestimatesbyBarclaysResearch.StockRating:OW:Overweight;EW:EqualWeight;UW:Underweight;RS:RatingSuspendedIndustryView:Pos:Positive;Neu:Neutral;Neg:NegativeBarclays|U.S.LifeScienceTools&Diagnostics5March20193CONTENTS1)HOWDURABLEISTHEBIOPHARMACEUTICALENDMARKETFORLIFESCIENCETOOLSANDTHECROS?.......................................................4Jack’sJobBoard-CROs:HiringContinuestoAccelerate....................................................................72)AREDATASTRATEGIESDRIVINGSHARESHIFTSAMONGCROS?113)HOWDURABLEISGROWTHINTHECHINAENDMARKET?..........134)WHATISDRIVINGCONTRASTINGDIAGNOSTICSSTRENGTHRELATIVETOCLINICALLABWEAKNESS?................................................165)CANTHENATIONALLABSCUTENOUGHCOSTSTOOFFSETPRICINGPRESSUREIN2019?.......................................................................176)WHENWILLCLINICALLABCONSOLIDATIONACCELERATE?.......187)ISTHEINDUSTRYPRIMEDFORINCREASEDM&A?.......................