Skip to Content
Stock Strategist

Intangible Assets Give Quintiles IMS a Wide Moat

The merger between the medical clinical trial companies has created some upside for the stock.


We are relaunching coverage of  Quintiles IMS (Q) and updating our position on the company to account for the merger between Quintiles, the largest contract research organization, and IMS Health, the dominant player in the healthcare data and analytics space. We believe the combined entity's leading positions in the late-stage contract research, development, and drug commercialization markets make it the go-to partner for biotech and pharma clients and support the firm's upgrade to wide moat and stable ratings. Our post-merger valuation for the firm is $90 per share, up from our $71 per share fair value estimate for Quintiles alone. We believe there is modest upside to the stock, as some investors remain concerned that the large size of the two companies will impede successful integration efforts, or are unconvinced synergies will materialize from the merger.

The company's intangible assets--its proprietary data sets, technology, expertise, and reputation--place Quintiles IMS well ahead of its closest competitors. IMS Health's legacy business compiles healthcare data from over 100,000 sources and consequently, has high fixed acquisition costs, limiting the attractiveness of this market to new entrants. The breadth and scale of this data, along with the firm's reputation for providing accurate and complete data, creates a barrier to entry and allows Quintiles IMS to exhibit substantial pricing power. The firm uses proprietary data adjustments, and clients are likely to stay with IMS to preserve the continuity of the data, which results in high customer retention rates.

Kelsey Tsai does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.