Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA First Quarter 2024 Earnings Conference Call. As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Kerri Joseph, Senior Vice President, Investor Relations and Treasury. Mr. Joseph, please begin your conference.

Thank you, operator. Good morning, everyone. Thank you for joining our first quarter 2024 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Ron Bruehlman, Executive Vice President and Chief Financial Officer; Eric Sherbet, Executive Vice President and General Counsel; Mike Fedock, Senior Vice President, Financial Planning and Analysis; and Gustavo Perrone, Senior Director, Investor Relations. Today, we will be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following this call in the Events and Presentations section of our IQVIA Investor Relations website at ir.iqvia.com. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and subsequent SEC filings. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release and conference call presentation. I would now like to turn the call over to our Chairman and CEO, Ari Bousbib.

Thank you, Kerri, and good morning, everyone. Thank you for joining us today to discuss our first quarter results. We had a strong start to the year. We delivered top and bottom line numbers on or slightly above our expectations. Excluding the impact of foreign exchange and COVID-related work, our revenue grew 6%. We continue to see a favorable demand environment for our industry. On the clinical side, demand from our R&DS clients remains solid. Our backlog reached a new record and grew almost 8% versus prior year. Net new bookings for the quarter were approximately $2.6 billion, representing a quarterly book-to-bill of 1.23. This included a substantial cancellation in the CNS area that is in the public domain, and I'm sure many of you are aware of. Excluding this large cancellation, which is well outside the typical cancellation size we see in a quarter, our first quarter book-to-bill ratio would have been over 1.3, actually closer to 1.35. Our quarterly RFP flow was up 6% year-over-year, and that's in value, meaning in dollar terms, and it was driven by mid- to high single-digit growth in all customer segments, again, in dollar terms. Our qualified pipeline grew double digits versus prior year, again, in value in dollar terms. Emerging biotech funding was very strong according to BioWorld, which we use consistently as a source. First quarter EBP funding was $47.1 billion, which is more than triple the funding of Q1 last year. Shifting to TAS, our commercial side of our business, revenue in the quarter grew as expected. With the modest uptick in activity anticipated for later this year, we continue to forecast an improvement in the back half of the year. We continue to see some favorable signs. For example, our pipeline remains strong. In our conversations with clients, there is more clarity on budgets, and we are starting to see faster decision timing with some clients compared to the second half of 2023. That said, the tone overall with our clients remains cautious. And the fact is that the uncertain macro environment persists as everyone can tell from the Fed's remarks yesterday. Turning now to the results for this quarter. Revenue for the first quarter grew 2.3% on a reported basis and 2.9% at constant currency. Compared to last year, and excluding COVID-related work from both periods, we grew the top line approximately 6% on a constant currency basis, including just over a point of contribution from acquisitions. First quarter adjusted EBITDA came in at $862 million, and first quarter adjusted diluted EPS was $2.54. I'd like to share a few highlights of business activity. Let's start with the TAS segment. You will have seen that we are expanding our global strategic partnership with Salesforce. The partnership will integrate innovation from IQVIA OCE with Salesforce's Life Sciences Cloud to provide customers with a new single end-to-end engagement platform, which is expected to be available late 2025. This is very exciting news for the industry as we expect to transform the engagement with HCPs and with patients with the next-generation CRM platform that's built on OCE and powered by IQVIA data, domain expertise, and advanced analytics. Separately, and as we discussed in the past, that continues to be an evolution in the way in how the industry manages HCP and patient engagement. For example, there is an ongoing shift in HCP engagement from in-person to digital interactions. On the patient side, there is increased emphasis on direct-to-patient solutions through patient support and market access programs, including financial support, hub services, and medical education. As you know, we've been investing in building out these digital capabilities, and we are getting good market traction. For example, in the quarter, a top 3 pharma client awarded IQVIA a contract for our smart engagement solution to understand the healthcare provider online journey across therapeutic areas and factor that in earlier into the drug development process. A top 5 pharma bought IQVIA's Omnichannel Navigator solution to assess return on marketing investment, measure customer interactions and campaign performance, and make data-driven decisions to optimize marketing strategies. A global midsized pharma awarded IQVIA a multiyear contract to implement our commercial compliance solutions. These solutions will allow our clients' interactions with healthcare professionals to be in compliance with transparency and regulatory obligations in over 30 countries. An EBP client bought IQVIA's patient relationship manager offering, which provides a comprehensive real-time view of the patient's journey and helps maximize the impact of their patient support program. In general, the TAS segment is seeing more demand for our sophisticated technology-enabled analytics solutions. For example, in the quarter, a top 10 pharma client awarded IQVIA a contract to streamline clinical operation data management processes. IQVIA's technology provides real-time data sharing, eliminating unnecessary file processing and improving the speed of data updates. Also in the quarter, a large med tech firm bought the IQVIA offering that enables better stakeholder targeting and go-to-market execution, ultimately enhancing the clients' ROI. Moving to real-world. A top 10 pharma company chose IQVIA to conduct a comparative study of the effectiveness of treatments against the standard of care in patients with a specific marker across 10 different cancers. The goal is to help the client gain market access and reimbursement for their treatment, which can be used for multiple types of cancer based on a single biomarker. IQVIA was awarded a contract by a top 10 pharma to demonstrate the effectiveness of a novel eye movement technology, addressing a common symptom in patients with multiple sclerosis. A top 10 pharma client awarded IQVIA a large real-world respiratory infection vaccine effectiveness study. We were selected based on our strong epidemiologic, scientific, and therapeutic expertise, as well as our global footprint to augment site identification and operational execution. And finally, to conclude my commentary on the TAS segment, I'd like to highlight the work we're doing in public health. It's been an increased area of focus for governments looking to extend life expectancy, reduce health inequalities, and improve overall quality of care and access to care. Some examples of IQVIA's work in this area include one of the largest UN health agencies contracting IQVIA to help with a major initiative to eradicate all types of poliovirus in Africa that focuses on children. IQVIA is deploying personnel to improve outbreak response with vaccines and to strengthen polio surveillance and response in hard-to-reach areas. So far, IQVIA's team has conducted visits to more than 12,000 sites and trained over 122,000 health workers across 26 African countries. Another example of our work in this area is IQVIA was selected to conduct a large EU-funded project to create a national oncology network and database for one of the European's Ministry of Health to improve the country's low cancer survival rates. A single IT platform will connect national hospitals and the reimbursement fund in that country. The platform will leverage curated oncology data and analytics to manage patient risk and improve treatments in a cost-efficient manner. Lastly, on public health, the Global Fund selected IQVIA to support 13 African countries to improve the visibility of their supply chain performance, ensure the availability of commodities and services, mitigate service disruptions, and provide stronger assurance through more frequent on-site spot checks. The project focuses on pharmaceutical and diagnostics analytics from over 2,800 facilities for tracer health products in HIV, tuberculosis, and malaria. This work is very important to us in public health. It's also extremely important to our global pharma clients, who are actively engaged in this area as well. Moving to R&DS, let's start by highlighting two more distinguished vaccine development awards. A top 10 pharma selected IQVIA to support the development of a novel respiratory vaccine, which could represent a significant breakthrough as the only vaccine targeting multiple respiratory viruses simultaneously. IQVIA laboratory secured a preferred strategic partnership with a top 10 pharma based on IQVIA's unique expertise, innovation, and delivery model. As we discussed in the past, there is stronger demand for FSP services, and we continue to win our fair share in this segment as well. For example, in the quarter, we secured an extension of FSP data management services with a leading midsized pharma known for their innovative rare blood disease therapies. In the EBP segment, we secured two large awards, where we displaced incumbent CROs based on our global scale and AI-enabled capabilities. We were selected by a U.S. West Coast EBP client to conduct two large Phase III oncology studies simultaneously. This is significant as the client is new to IQVIA and selected us based on our differentiated AI-enabled capabilities, as the trial protocol includes complex inclusion and exclusion criteria and usually large patient cohorts with aggressive enrollment timelines. We also won another large EBP full-service Phase III trial, displacing the incumbent, again, by leveraging our AI-enabled startup, site identification, activation, and enrollment capabilities. With that, I will turn it over to Ron for more details on our financial performance.

Thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. First quarter revenue of $3.737 billion grew 2.3% on a reported basis and 2.9% at constant currency. COVID-related revenues were approximately $45 million, down about $105 million versus the first quarter of 2023. Excluding all COVID-related work from both this year and last, constant currency growth was approximately 6%. As already mentioned, acquisitions contributed just over 100 basis points to this growth. Technology & Analytics Solutions revenue for the first quarter was $1.453 billion, up 0.6% reported and 1% at constant currency. Excluding all COVID-related work, constant currency growth in TAS was 3%. R&D Solutions first quarter revenue was $2.095 billion that was up 3.4% reported and 3.8% in constant currency. And excluding all COVID-related work, constant currency growth in R&DS was 8%. Finally, Contract Sales and Medical Solutions, or CSMS, first quarter revenue of $189 million was up 3.8% reported and 7.1% at constant currency. Let's move down the P&L. Adjusted EBITDA was $862 million, growing 1.3%. Our first quarter GAAP net income was $288 million, down 0.3% year-over-year, while GAAP diluted earnings per share were $1.56, up 2% year-over-year. Adjusted net income was $468 million for the quarter, up 1.3% year-over-year, and adjusted diluted EPS grew 3.7% to $2.54. Now, as already reviewed, R&D Solutions delivered another strong quarter of bookings. Our backlog at March 31 stood at a record $30.1 billion, which was up 7.9% year-over-year. The next 12 months of revenue from backlog increased to $7.7 billion, growing 6.1% year-over-year. Let's turn to the balance sheet. As of March 31, cash and cash equivalents totaled $1.444 billion. Gross debt was $13.536 billion, and the result of those two is net debt of $12.092 million. Our net leverage ratio ended the quarter at 3.38 times trailing 12-month adjusted EBITDA. First quarter cash flow from operations was $522 million, and capital expenditures were $145 million, resulting in free cash flow of $377 million. Turning now to guidance. We are reaffirming our full-year revenue guidance on a constant currency basis. We are adjusting revenue at actual currency downward by $75 million to reflect the strengthening of the U.S. dollar since we last guided. We now expect revenue to be between $15.325 billion and $15.575 billion, representing year-over-year growth of 2.3% to 3.9% on a reported basis. Now this guidance now includes a year-over-year FX headwind of approximately 100 basis points. And I'll remind you that when we last guided, we were looking for about 50 basis points of FX headwind. We continue to assume approximately $300 million of step-down in COVID-related work and about 100 basis points of contribution to revenue from M&A activity. We're reaffirming our adjusted EBITDA guidance of $3.7 billion to $3.8 billion, which represents year-over-year growth of 3.7% to 6.5%. The impact of FX changes to revenue had a negligible impact on EBITDA. We're also reaffirming our adjusted diluted EPS guidance, which continues to be $10.95 to $11.25, up 7.4% to 10.3% versus the prior year. Okay. Let me conclude by providing second quarter guidance. For the second quarter, we expect revenue to be between $3.740 billion and $3.815 billion. This includes a year-over-year FX headwind of approximately 150 basis points, and we anticipate the second quarter will be the toughest quarterly FX compare of the year. As a reminder, the step-down in COVID-related work is weighted towards the first half of the year. Also, we continue to expect gradual improvement in TAS revenue growth in the back half of the year. For the second quarter, adjusted EBITDA is expected to be between $870 million and $890 million, and adjusted diluted EPS is expected to be between $2.54 and $2.64. All of the guidance I provided assumes that foreign currency rates as of April 30 continue for the balance of the year. So to summarize, Q1 was a strong start to the year. TAS revenue came in as expected, and we continue to look for improvement in the back end of the year. R&DS delivered $2.6 billion of net bookings, bringing backlog to over $30 billion for the first time in our history. We continue to see favorable forward-looking indicators in the clinical trial business, such as strong RFP flow, strong qualified pipeline growth, and strong biotech funding. And finally, we're reaffirming our earnings guidance for the year, including adjusted diluted EPS growth of 7.4% to 10.3%. With that, let me hand it back to the operator for Q&A.

We'll take our first question from Elizabeth Anderson at Evercore ISI. Ms. Anderson, your line is open. You may have yourself muted.

Let's move on to the next one in the queue, operator.

We'll go to Shlomo Rosenbaum at Stifel.

I wanted to ask a little bit about the large cancellation that you called out. You absorbed it into the numbers. Could you give us a little bit more specificity in terms of highlighting what kind of impact would be to revenue or/and also to bookings? Because you're rolling the revenue due to FX, but you're also absorbing an incremental cancellation that's unusual. And maybe that could help us a little bit with the context over there and then also on the booking side.

Thank you, Shlomo. We typically don’t discuss cancellations and focus on net new bookings. However, I want to mention that before cancellations, our gross bookings were the second highest in our history. We are highlighting this particular cancellation because it is significantly larger than typical ones, which usually range from $15 million to $20 million. This cancellation is about $250 million. We have addressed unusual cancellations in the past, and this one has received media attention. We want to reassure everyone that our underlying business remains robust. In terms of absorbing the impact, we are a large company managing around 2,500 clinical trials at any given time. These trials are staggered throughout the year, and revenue is recognized over several years for each one. We have the capacity and global presence to handle even a large cancellation like this. There is no change to our guidance, and as Ron noted, the adjustment is solely due to foreign exchange effects.

Shlomo, just one thing, I would jump in there. I think you're asking about revenue, too. And obviously, because with an ongoing trial, it does have some impact to our revenue in the current year. But we're absorbing that in our normal numbers. And this is a series of trials, actually a program that would play out over many years. So there isn't an outsized impact in this year.

We'll take our next question from Max Smock at William Blair.

Maybe just following up on the RFP flows that you saw in the quarter. You mentioned up mid- to high single digits across all customer groups. I think last quarter, you had called out up double digits across all customer groups. So I just wanted to get a sense for whether what you saw in terms of RFP flows going into this quarter was in line with your expectations? And then, any thoughts on how we should think about book-to-bill, moving forward?

Again, I wouldn't read a lot into the variation quarter-to-quarter. Just as an example, the RFP flow last year was flat versus the previous year's number. So we think this is very good. It's consistent with our expectations. The large segment, the large pharma was up more in the high single digits in terms of RFP flow. EBP was a little bit higher than that at kind of mid-single growth, depending on the therapies. We had a lot of bookings in infectious diseases and internal medicine, which drove a lot of the growth there. The awards grew well into the teens. So we often look at awards. We report contracted bookings. As you know, some of our peers report awards, which are at an earlier stage in the process. And maybe just to reassure you that we haven't come down from what we said at the last quarter as a leading indicator, if you will, awards were up in the double digits and that was driven by large full-service trials and strong EBP as well. We look at the qualified pipeline, and the qualified pipeline is up double digits, actually very strong double digits. And it's up again at a record high. So nothing here that has changed versus our expectations.

We'll go next to Anne Samuel at JPMorgan.

In the TAS business, you talked about strength in the pipeline and some positive signs and maybe some more positive conversations there. As you're moving through the year, are you seeing your pipeline convert kind of at the same rate that you had initially expected? And with the macro maybe slightly more stable, can you just maybe speak to any potential areas of upside as things are starting to loosen up?

Yes. I wouldn't discuss potential upside at this point. The macroeconomic conditions are not really stabilizing unless you consider the fact that we now know there won't be a rate cut in the near future as stabilization. The TAS business is performing as we anticipated, reflecting the same performance we communicated in previous guidance, with a growth rate that we expected when excluding COVID and currency effects. Based on our pipeline, budget improvements, and client conversations, we continue to anticipate some upside later in the year, particularly in the later months. Large pharmaceutical companies have implemented significant cost reduction programs, leading to increased caution and scrutiny in their budgets compared to previous years. This cautious approach is influenced by the overall macro environment and concerns about long-term implications related to the IRA and margin preservation. Our client base is generally doing well and reporting strong numbers, which is encouraging. Typically, when our clients perform well, they tend to spend more, and we can see they are doing well. All these indicators are positive. Regarding the TAS business, our data business is performing as expected, showing flat to low single-digit growth. The real-world business, which we previously noted was slowing down, has fluctuated from strong double-digit growth to mid-single-digit growth, negative growth in the fourth quarter, and has now stabilized at a flat level, indicating we may have reached the bottom. The tech business is also meeting our expectations, performing well. The analytics and consulting segment, which has a shorter cycle, varies each quarter. It improved last quarter, but this quarter saw a decline, which is why our overall performance in TAS wasn't better than expected. Overall, the real-world segment is doing better than we anticipated, while analytics and consulting fell slightly short, which we expected due to its inherent variability. We expect to see continued improvement in that area, bolstering our confidence for strong performance in TAS towards the end of the year. However, I can't guarantee any upside.

We'll move to our next question from David Windley at Jefferies.

I wanted to transition you to R&DS. You highlighted in your prepared remarks about some of the business wins; you highlighted some FSP deals. I also heard you say, though, that your RFP flow was strong on the full-service side. So given that you've talked in the past about how that FSP does present some margin headwinds, I thought maybe you could update us on the state of play between those two models and maybe we've reached some kind of equilibrium there. So just your thoughts on FSP versus FSO.

Yes. As a portion of our total R&DS revenue, FSP represented about 15%. When focusing solely on the services part of the business, excluding pass-throughs—which typically aren't present in FSP—that percentage increases to somewhere between 20% and 25%, and it continues to rise by a point or two each year. This does have an impact on margins, as FSP contracts tend to come with lower margins. However, being a large global company, we are under more pressure to operate efficiently, find new productivity areas, control costs, and mitigate the negative impacts of this unfavorable margin mix through cost reductions. We are actively applying our usual strategy, which involves growing our EBITDA faster than our revenue and thus increasing margins.

We'll go next to Jailendra Singh at Truist Securities.

I wanted to follow up on the Salesforce partnership comments. Just curious if you can share any initial reaction from your OCE customers post that announcement? Or is it still early? Also just curious, like what were the conversations leading up to the partnership? Trying to understand what drove the decision to partner with Salesforce, given what IQVIA has seen in terms of how HCPs prefer engagement in terms of digital marketing, etc.

Thank you. Well, look, as you know, we've carved out a nice position in the global CRM market for Life Sciences; we came from behind much later in the game. I guess we entered the market more than 10 years after the large dominant incumbent in this market. And today, we have a footprint of over 400 clients and about 100,000 seats in the business, which is quite impressive in a few short years. Now what happened here is that a dominant competitor has announced a re-platforming of their product from Salesforce to their own in-house platform. Now OCE is based on a Salesforce platform. It's the result of a strategic partnership that has been in the market for over 5 years. We and Salesforce want to ensure that we continue to have the best product in the market. And we've agreed that it is time to develop the next-generation product. We also agreed that it should be based on Salesforce's new Life Science Cloud, which is much more advanced, and it will be based on the current OCE application to be re-platformed. Now it takes time to do that. It makes sense for Salesforce to take the lead in developing this next-generation application, and it will be based on IQVIA IP. Our existing customers understand all of that. They will continue to be supported for at least the next 5 years, and they are very happy. I can even say yesterday, we won a very significant award on OCE with a large, well-known client, pharma client, and we actually displaced the large dominant player in the space, which has been the incumbent for a long time. So our clients are reacting very favorably. They understand the need for the next-generation transition, and we are going to shepherd that process together with Salesforce. When the product is ready in the next 2 years or so, we will go to market jointly with Salesforce with this new product platform, and we will help transition customers who wish to do so when they are ready to do so. Strong and positive reaction from the customer base.

We'll go next to Ann Hynes at Mizuho Securities.

Ari, wondering what surprised you on the upside most in the quarter and maybe on the downside? And just following up on the last FSP question, thank you for that clarity you gave us about its 20% to 25% ex pass-throughs. What do you think the max would be over time?

What was the first part?

What surprised you on the upside most in the quarter and maybe on the downside?

I don't want to be uninteresting, but I had no surprises this quarter. To put it simply, it was a fairly uneventful quarter. Everything came in just as we expected. The nature of business tends to be quite predictable. The large cancellation was based on the results and the clients' assessment of the environment, which has always been well documented. It usually takes time to clear up the study, and we anticipated this outcome. We knew the exact timing for when everything would come together, and it happened during the quarter. Aside from that, to be honest, there were no surprises. Everything aligned closely with our expectations. There are always some variables, but this was one of the most uneventful quarters I've experienced. We had no significant declines, which we actually prefer. Regarding your FSP question, it varies over time. I recall when I first engaged with this business nearly eight years ago, I was informed that FSP would replace full service as clients transitioned to that model. At that time, many large pharmaceutical companies were attempting to bring project management in-house and shift towards these types of systems. It's a cyclical trend; it moves back and forth. In highly specialized studies, it's challenging for a client not to opt for full service, as they often lack all necessary competencies internally. We're seeing trends similar to what we observed eight years ago. Additionally, we're noticing a shift towards hybrid models where the client starts with an FSP program, and as we refine the study parameters, we take on more responsibilities. This approach falls between full service and not being entirely outsourced. There are still aspects of the program we continue to oversee. This leads to greater integration with the client and a closer partnership. I don't see this as a long-lasting trend leading to a situation where it would become entirely FSP. I doubt that's going to happen. Also, keep in mind, FSP is virtually nonexistent for EBP or mid-sized pharma.

We'll take our next question from Michael Ryskin at Bank of America.

This is John Kim on for Mike. I appreciate the FSP comment there. I'll just ask a quick one. On that swing pendulum comment, do you expect that percentage to go down at some point? And in terms of the RFP flows, that sounds great, solid, solid flows. But is there anything that may hinder or delay that turning into sales in the second half?

Thank you. Regarding the FSP comment, I cannot predict when these things will materialize, as this is a long-cycle business. It typically takes about 4 to 5 years to fulfill a contract. We have a substantial amount of business lined up. What percentage of that FSP backlog do we have? Is it roughly 15%?

Yes.

Our backlog exceeds $30 billion, with approximately $4 billion to $4.5 billion attributed to FSP. This means that the majority of the revenue we anticipate generating over the next 4 to 5 years will come from full-service programs, and this will not significantly influence our business one way or the other. It's a slow-moving industry, and significant changes take time to materialize. We have been consistently experiencing positive momentum, and we prefer it that way. Therefore, I don't foresee any major shifts occurring. Additionally, regarding the possibility of impacts in the second half of the year, the timeframe is simply too brief to expect any effect. Any variations will affect results four years down the line.

We'll go next to Charles Rhyee at TD Cowen.

Ari, you mentioned earlier about acquiring an EBP client that will conduct two simultaneous studies in oncology. I'm interested in whether the choice to run two trials at the same time might relate to terms in the IRA that encourage local trials, allowing companies to maximize revenue before negotiating pricing with Medicare. Could that be a contributing factor? Additionally, do you anticipate that the structure of the IRA will lead more companies to engage in multiple trials at the outset? How might this benefit IQVIA in the future?

Yes, that's an interesting idea regarding the two material studies, but it's not the case here. I understand your line of thinking, though these studies are focused on different diseases and likely involve different molecules. We can provide more details in a follow-up after the call, but I don't believe this is related to the IRA. Clients are indeed trying to speed up their timelines due to the IRA's potential effect of shortening the duration of intellectual property protection. Consequently, they want to maximize their revenues, which may prompt them to launch several programs at the same time. In this instance, we are replacing an existing study, and I believe one of these is a rescue study. That's the context for this situation.

We'll go next to Tejas Savant at Morgan Stanley.

Ari, I have a few questions here on R&D Solutions. First, just broadly on the pricing environment, are you starting to see more pricing discipline from your peers versus what you saw in the back half of '23? Second, on the cancellation in CNS, given the faster burn nature of that work, is there any implication from that for the phasing of R&D revenue through the remainder of '24? And then last on AI enablement. You highlighted that as a driver of some of your EBP wins in the quarter, which I thought was quite interesting. Could you just share some color on why it's translating into share gain for you? And what is it you can do with AI that your peers aren't offering yet?

The three questions are independent. First, regarding pricing, there are no changes here. We continue to face pressure from clients, and price negotiations remain challenging. We previously mentioned that we're experiencing slightly more pressure from large pharmaceutical clients as they pursue savings initiatives, though it's not drastically different from what's occurred historically. I can't comment on our competitors, as I'm not aware of their strategies. However, it stands to reason that smaller competitors, which have struggled and faced acquisition, may find it difficult to secure business, potentially affecting pricing. However, there's nothing particularly unusual about this compared to what we've discussed previously. For your second question on cancellation, as we discussed before, it is a significant cancellation that will impact revenues over the next few years, including this year. We stated earlier that as a large company, we can absorb it in our guidance. It would have been preferable if the program hadn’t been canceled, but we are not adjusting our guidance as a result. The only adjustments we’ve made relate to foreign currency. On your third question regarding AI, there's a huge opportunity with AI, although it may be more limited in health care than many think, mainly due to the availability of data. While finding medical literature or legal precedents is possible, identifying patients best suited for trials and the sites for effective and quick enrollment presents challenges. Chatbots won't provide you with those answers. However, once you work within our environment, those tasks become feasible. The core intent of merging Quintiles and IMS eight years ago was to utilize extensive data, analytics, and technology to speed up clinical development, particularly for oncology, rare diseases, and challenging enrollment cases. With advancements in AI, our initiatives become even more achievable. We've been engaged in this for some time; this is not new to us, but we've been able to effectively apply new tools within our framework, leading to successful outcomes.

Our next question comes from Luke Sergott at Barclays.

I just kind of want to get a better sense of how to think about the TAS recovery and more on discretionary in the commercial side, and how it relates to drug approvals and things like that. We only had 10 approvals in this quarter versus 15 last quarter, but we're already starting to see a strong start to April. I'm just trying to get a sense of when pharma starts engaging you guys for work and when you start seeing those bookings and then ultimately when it starts flowing through; I know it's different for particular regions. But as the approvals start coming in and accelerating, how to think about the growth in the discretionary pieces that have been slower?

I wish I could predict the future, but I've been wrong before about a recovery in the TAS business, so I’ll be careful with my remarks. You rightly mentioned the approvals. Last year, we had 55 approvals, which set a record and was almost 50% higher than the previous year, marking the highest level since around 2017 or 2018. Typically, spending on new launches increases significantly for the five years following these approvals, so we anticipate a strong performance from the TAS business. The uncertainty lies in the timing of these launches and client decisions. About half of the spending related to new launches usually happens within the first two years. While we saw only 10 approvals this quarter, we believe that, given last year's approvals, we should expect a rebound. This is one reason we feel somewhat optimistic about the TAS business recovering more strongly, with a notable increase expected next year. Given that we believe the business has hit its lowest point, we anticipate improvements for the rest of the year. Our pipeline is the strongest it has ever been, and we continuously review it, noting an improvement in customer sentiment. In the first quarter, the mood is better, and more opportunities are emerging, leading to increased optimism for 2024. In the second half of last year, we saw clients reduce budgets due to internal negotiations, creating uncertainty. Now, there's greater clarity on budgets, which boosts confidence in securing awards for the remainder of the year. Furthermore, we've noticed that decision-making timelines are decreasing, which is encouraging.

All right. So I guess there's basically going to be a big difference there in timing, but safe to assume between like 6 and 12 months lag post an approval of when you actually start working on the launch with the drug company and the commercialization efforts?

That's correct.

Yes. That does conclude our Q&A at this time. Mr. Joseph, I'll turn the call back over to you.

Thank you for taking the time to join us today, and we look forward to speaking with you again in our second quarter 2024 earnings call. The team will be available the rest of the day to take any follow-up questions that you'll have. Thank you.

This concludes today's conference call. Again, thank you for your participation. You may now disconnect.