Biogen Inc. (NASDAQ:BIIB)

The analysis of the annual financial data reveals several notable trends in the company's profitability, capital investment, and economic performance over the five-year period.

Net Operating Profit After Taxes (NOPAT)

NOPAT showed a strong upward trend from 2017 through 2019, increasing from approximately 2.89 billion USD to about 6.02 billion USD. This represents more than a twofold increase over two years, indicating significant improvements in operational efficiency or profitability. However, in 2020, NOPAT declined sharply to around 4.37 billion USD and further dropped in 2021 to approximately 1.50 billion USD, marking a substantial reduction in profit generation capacity in the latter years.

Cost of Capital

The cost of capital percentage remained relatively stable across the period, fluctuating slightly between 8.35% in 2017 and gradually decreasing to 7.64% by 2021. This mild decline suggests a slightly lower expected return requirement by investors or an improved risk profile as the years progressed.

Invested Capital

Invested capital followed a generally increasing pattern, starting at roughly 12.48 billion USD in 2017 and growing to about 14.12 billion USD in 2019. There was a reduction in 2020 to approximately 12.63 billion USD, but the amount rebounded in 2021 to around 13.82 billion USD. This trend indicates fluctuations in the resources committed to the business, possibly reflecting changes in investment strategy or asset management.

Economic Profit

Economic profit saw robust growth initially, rising from approximately 1.85 billion USD in 2017 to a peak near 4.85 billion USD in 2019, reflecting strong value creation above the cost of capital. Similar to NOPAT, it decreased significantly in 2020 to 3.39 billion USD and plummeted further in 2021 to around 445 million USD. The sharp contraction in economic profit in the final year signals a major deterioration in generating value beyond capital costs.

Overall, the data indicate a period of strong financial performance culminating in 2019, followed by a notable downturn in profitability and economic profit in 2020 and 2021. Despite a stable and slightly declining cost of capital, invested capital levels fluctuated but did not offset the decline in returns. This pattern suggests challenges in maintaining previous profit margins or operational effectiveness in recent years.

Net Income Attributable to Biogen Inc.

The net income exhibited a rising trend from 2017 to 2019, increasing from approximately 2.54 billion to nearly 5.89 billion US dollars. However, a decline was observed starting in 2020, with net income falling to about 4.00 billion and further decreasing sharply to approximately 1.56 billion US dollars in 2021. This indicates a significant reduction in profitability during the latter years of the period.

Net Operating Profit After Taxes (NOPAT)

The NOPAT followed a similar trajectory to net income, showing an increase from about 2.89 billion US dollars in 2017 to a peak of approximately 6.02 billion US dollars in 2019. Subsequently, a decline occurred with NOPAT decreasing to roughly 4.37 billion in 2020 and then sharply dropping to around 1.50 billion US dollars in 2021. This pattern signifies a reduction in operating efficiency and effectiveness in generating profit after taxes over the last two years.

Overall Observations

Both net income and NOPAT demonstrated growth during the initial three years, suggesting improved financial performance and operational results. The peak in 2019 represents the highest point in profitability within the analyzed period. The subsequent decline in 2020 and more pronounced drop in 2021 highlight challenges or adverse developments affecting profitability and operational outcomes. The data suggests the company experienced a notable downturn in earning capacity and operating profit in the final years.

Income Tax Expense

The income tax expense demonstrates a consistent downward trend from 2017 to 2021. Starting at 2,458,700 thousand US dollars in 2017, the expense decreased significantly each year to reach 52,500 thousand US dollars in 2021. The reduction is particularly notable in 2021, where the expense dropped sharply compared to previous years.

Cash Operating Taxes

Cash operating taxes also show a general decline over the analyzed period. Beginning at 2,441,355 thousand US dollars in 2017, these taxes declined steadily year over year, falling to 533,599 thousand US dollars in 2021. The reduction is gradual until 2020, followed by a less steep but still notable decrease in 2021.

Comparative Analysis

Both income tax expense and cash operating taxes have followed a downward trajectory, reflecting a possible strategic or operational improvement affecting taxable income or tax planning. The income tax expense decreased more sharply between 2020 and 2021 compared to prior years, whereas cash operating taxes reduced more steadily across the entire timeframe.

Total Reported Debt & Leases

The total reported debt and leases remained relatively stable from 2017 to 2019, with a slight decrease each year from approximately 6.45 billion US dollars to around 6.44 billion US dollars. However, there was a significant increase in 2020, rising to approximately 7.91 billion US dollars. In 2021, the debt slightly decreased to about 7.69 billion US dollars, indicating a reduction after the peak the previous year.

Total Biogen Inc. Shareholders’ Equity

Shareholders' equity showed a consistent upward trend from 2017 to 2019, growing from approximately 12.61 billion US dollars to 13.34 billion US dollars. In 2020, there was a notable decline to about 10.70 billion US dollars. This followed by a modest recovery in 2021, with equity increasing to approximately 10.90 billion US dollars, yet still below the peak levels observed in 2019.

Invested Capital

Invested capital experienced steady growth from 2017 through 2019, rising from approximately 12.48 billion US dollars to 14.14 billion US dollars. In 2020, invested capital dropped to about 12.63 billion US dollars but rebounded in 2021 to 13.82 billion US dollars. This pattern suggests some disruptions or adjustments during 2020, followed by partial recovery the following year.

The analysis of the economic profit, invested capital, and economic spread ratio over the five-year period reveals notable fluctuations and trends.

Economic Profit

The economic profit exhibited a rising trajectory from 2017 to 2019, increasing from approximately $1.85 billion to $4.85 billion. This growth reflects a substantial improvement in value generated over the invested capital during that time. However, 2020 saw a decline to around $3.39 billion, indicating a decrease in profitability. The downward trend continued markedly in 2021, with economic profit dropping sharply to approximately $445 million, signaling a significant reduction in economic value creation by the end of the period.

Invested Capital

Invested capital showed a generally increasing pattern, starting at about $12.48 billion in 2017 and growing to roughly $14.14 billion in 2019. There was a decline in 2020 to approximately $12.63 billion, followed by a rebound to $13.82 billion in 2021. Despite these fluctuations, the invested capital value at the end of the period remains higher than the initial year, indicating ongoing investments or asset accumulation.

Economic Spread Ratio

The economic spread ratio, which measures the return spread on invested capital, mirrored the trend in economic profit. It rose significantly from 14.82% in 2017 to 34.31% in 2019, reflecting improving efficiency or profitability relative to invested capital. The ratio then declined to 26.81% in 2020 and plummeted dramatically to 3.22% in 2021. This steep decrease suggests a deteriorating margin of return on capital invested by the final year.

In summary, the data demonstrates a peak in economic profitability and efficiency in 2019, followed by a downturn in subsequent years. While invested capital remained relatively elevated, the capacity to generate value from that capital weakened substantially by 2021. This pattern may indicate challenges in maintaining profitability or changes in operational effectiveness during the latter part of the period analyzed.

Economic Profit

The economic profit exhibited a notable increase from 2017 through 2019, rising from approximately 1.85 billion to 4.85 billion US dollars. This positive momentum then reversed in the subsequent years, with a decline to about 3.39 billion in 2020 and a significant drop to approximately 445 million in 2021.

Revenue

Revenue followed an upward trend between 2017 and 2019, increasing from roughly 12.27 billion to 14.38 billion US dollars. However, a decrease occurred thereafter, with revenue declining to around 13.44 billion in 2020 and further contracting to nearly 10.98 billion in 2021.

Economic Profit Margin

The economic profit margin trend mirrored that of economic profit, showing strong growth initially. It increased from 15.06% in 2017 to a peak of 33.75% in 2019. Afterwards, the margin declined substantially, falling to 25.18% in 2020 and sharply dropping to 4.05% in 2021.

Overall Analysis

The data indicates a period of growth and improved profitability through 2019, as reflected by rising economic profit, revenue, and profit margin. From 2020 onward, the company experienced a downturn in both revenue and economic profitability, with the most pronounced decreases in 2021. This shift suggests challenges in maintaining previous growth levels and profitability during the latter part of the period analyzed.