Simulations Plus (SLP) KeyBanc Capital Markets Technology Leadership Forum summary

Industry overview and market positioning

• Biosimulation applies predictive analytics and in silico modeling to drug development, reducing time and cost by simulating outcomes before clinical trials.

• The market is valued at $4 billion, expected to grow 12–14% annually, with a fragmented vendor landscape and diverse toolsets.

• The business has grown organically and through seven acquisitions, with the latest expanding total addressable market (TAM) to $8 billion.

• Main competitors include Certara and ICON plc, with competition focused on software platforms and consulting services.

• Large pharma companies are primary clients, but growth also targets biotech and mid-market firms.

Recent acquisition and strategic impact

• The $100 million acquisition of Pro-ficiency doubled TAM by adding clinical operations simulation capabilities.

• Pro-ficiency enhances protocol adherence in clinical trials, improving training and monitoring for trial sites and personnel.

• The acquisition also brings medical communications capabilities, supporting both pre- and post-approval commercialization.

• Pro-ficiency's business mix is more consulting-heavy but is shifting toward higher-margin software as digital training modules replace traditional methods.

• Integration is expected to align Pro-ficiency's business model with legacy operations within 12–18 months.

Financial performance and growth strategy

• Legacy business operates at 60–65% software revenue with 90%+ software margins and 40% consulting margins, yielding about 70% gross margin and 30–32% adjusted EBITDA.

• Pro-ficiency's initial margin profile is lower but improving as it transitions to digital solutions.

• Organic growth guidance is 10–15%, with acquisitions targeted to push total growth above 20%.

• Software revenue is highly recurring, with 95% renewal rates and regular price increases.

• Consulting revenue is project-based, with half of consulting for large pharma and half for other clients.