Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Biogen Inc., profitability ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The profitability profile exhibits a clear cyclical pattern, characterized by an upward trajectory from 2017 to 2019, followed by a significant contraction through 2021. Performance peaked across all measured metrics in 2019, after which a consistent decline in operational efficiency and capital returns is observed.
- Margin Analysis
- Gross profit margins remained remarkably consistent between 2017 and 2020, maintaining a level above 86%. A contraction occurred in 2021, where the margin decreased to 80.79%. Operating profit margins showed greater volatility, rising from 43.54% in 2017 to a peak of 48.98% in 2019, before falling sharply to 25.87% by 2021. Net profit margins followed a similar trajectory, peaking at 40.96% in 2019 and declining to 14.17% in 2021, indicating a substantial compression of bottom-line profitability over the final two years of the period.
- Return on Investment Metrics
- Return on Equity (ROE) and Return on Assets (ROA) mirrored the trends observed in net profitability. ROE climbed from 20.13% in 2017 to a high of 44.13% in 2019, before dropping precipitously to 14.28% by 2021. Similarly, ROA grew from 10.73% in 2017 to 21.62% in 2019, subsequently falling to 6.52% in 2021. The simultaneous decline in both ROE and ROA suggests a diminished capacity to generate earnings from both the asset base and shareholder equity.
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Gross Profit Margin
Biogen Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | 8,872,000) | 11,639,400) | 12,422,500) | 11,636,600) | 10,643,900) | |
| Revenue | 10,981,700) | 13,444,600) | 14,377,900) | 13,452,900) | 12,273,900) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 80.79% | 86.57% | 86.40% | 86.50% | 86.72% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | 68.96% | — | — | — | — | |
| Amgen Inc. | 73.44% | — | — | — | — | |
| Bristol-Myers Squibb Co. | 78.57% | — | — | — | — | |
| Danaher Corp. | 60.95% | — | — | — | — | |
| Eli Lilly & Co. | 74.18% | — | — | — | — | |
| Gilead Sciences Inc. | 75.56% | — | — | — | — | |
| Johnson & Johnson | 68.16% | — | — | — | — | |
| Merck & Co. Inc. | 72.02% | — | — | — | — | |
| Pfizer Inc. | 62.48% | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 84.83% | — | — | — | — | |
| Thermo Fisher Scientific Inc. | 50.08% | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | 88.06% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × 8,872,000 ÷ 10,981,700 = 80.79%
2 Click competitor name to see calculations.
An analysis of the profitability metrics from 2017 to 2021 reveals a period of relative stability followed by a significant contraction in both revenue and margin efficiency. While the organization maintained high gross margins for the majority of the period, the most recent fiscal year indicates a notable shift in the cost structure or pricing power.
- Revenue and Gross Profit Trajectory
- Revenue exhibited a growth trend from 2017 to 2019, peaking at 14.38 billion US dollars. This growth was mirrored by gross profit, which rose from 10.64 billion US dollars in 2017 to a peak of 12.42 billion US dollars in 2019. However, a reversal occurred in 2020, and a more pronounced decline was observed in 2021, where revenue fell to 10.98 billion US dollars and gross profit dropped to 8.87 billion US dollars.
- Gross Profit Margin Stability (2017–2020)
- Between 2017 and 2020, the gross profit margin remained exceptionally stable, fluctuating within a narrow range between 86.40% and 86.72%. This consistency suggests that during this four-year interval, the costs of goods sold scaled linearly with revenue, maintaining a constant ratio of profitability per dollar of sales.
- Margin Contraction in 2021
- A significant downward shift occurred in 2021, with the gross profit margin declining to 80.79%. This represents a decrease of approximately 5.78 percentage points from the 2020 level. The simultaneous drop in both total revenue and the margin percentage indicates that the reduction in profitability was not merely a result of lower sales volume, but also an increase in the relative cost of producing or delivering the company's offerings.
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Operating Profit Margin
Biogen Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Income from operations | 2,840,700) | 4,550,100) | 7,042,600) | 5,888,600) | 5,344,200) | |
| Revenue | 10,981,700) | 13,444,600) | 14,377,900) | 13,452,900) | 12,273,900) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 25.87% | 33.84% | 48.98% | 43.77% | 43.54% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | 31.89% | — | — | — | — | |
| Amgen Inc. | 31.44% | — | — | — | — | |
| Bristol-Myers Squibb Co. | 15.91% | — | — | — | — | |
| Danaher Corp. | 25.35% | — | — | — | — | |
| Eli Lilly & Co. | 22.45% | — | — | — | — | |
| Gilead Sciences Inc. | 36.72% | — | — | — | — | |
| Johnson & Johnson | 24.95% | — | — | — | — | |
| Merck & Co. Inc. | 25.74% | — | — | — | — | |
| Pfizer Inc. | 24.70% | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 55.67% | — | — | — | — | |
| Thermo Fisher Scientific Inc. | 25.57% | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | 36.73% | — | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 26.98% | — | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Health Care | 18.04% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Operating profit margin = 100 × Income from operations ÷ Revenue
= 100 × 2,840,700 ÷ 10,981,700 = 25.87%
2 Click competitor name to see calculations.
The financial performance between 2017 and 2021 exhibits a period of growth and operational efficiency that peaked in 2019, followed by a significant decline in both top-line revenue and operational profitability.
- Operating Profit Margin Trends
- A steady increase in the operating profit margin is observed from 2017 to 2019, rising from 43.54% to a peak of 48.98%. This indicates a period of expanding operational efficiency and strong cost management relative to revenue growth. However, this trend reversed sharply after 2019, with the margin contracting to 33.84% in 2020 and further declining to 25.87% by the end of 2021.
- Revenue and Income Correlation
- Revenue followed a similar trajectory, increasing from 12.27 billion US$ in 2017 to a high of 14.38 billion US$ in 2019. Income from operations mirrored this growth, reaching its maximum value of 7.04 billion US$ in 2019. The subsequent decline in revenue to 10.98 billion US$ in 2021 coincided with a steep reduction in operating income, which fell to 2.84 billion US$, representing a significant decrease from the 2019 peak.
- Profitability Compression
- The most notable shift occurred between 2019 and 2021, characterized by severe margin compression. The drop from a 48.98% margin to 25.87% suggests that operating expenses decreased at a much slower rate than revenue, or increased while revenue declined, leading to a substantial erosion of operational profitability.
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Net Profit Margin
Biogen Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Biogen Inc. | 1,556,100) | 4,000,600) | 5,888,500) | 4,430,700) | 2,539,100) | |
| Revenue | 10,981,700) | 13,444,600) | 14,377,900) | 13,452,900) | 12,273,900) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 14.17% | 29.76% | 40.96% | 32.93% | 20.69% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | 20.54% | — | — | — | — | |
| Amgen Inc. | 24.25% | — | — | — | — | |
| Bristol-Myers Squibb Co. | 15.08% | — | — | — | — | |
| Danaher Corp. | 21.84% | — | — | — | — | |
| Eli Lilly & Co. | 19.71% | — | — | — | — | |
| Gilead Sciences Inc. | 23.05% | — | — | — | — | |
| Johnson & Johnson | 22.26% | — | — | — | — | |
| Merck & Co. Inc. | 26.79% | — | — | — | — | |
| Pfizer Inc. | 26.76% | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 50.25% | — | — | — | — | |
| Thermo Fisher Scientific Inc. | 19.70% | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | 30.92% | — | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 23.38% | — | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Health Care | 15.24% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net profit margin = 100 × Net income attributable to Biogen Inc. ÷ Revenue
= 100 × 1,556,100 ÷ 10,981,700 = 14.17%
2 Click competitor name to see calculations.
The profitability profile exhibits a bell-shaped trajectory over the five-year period, characterized by a phase of rapid expansion peaking in 2019, followed by a significant contraction through 2021.
- Net Profit Margin Evolution
- The net profit margin experienced substantial growth in the initial years, rising from 20.69% in 2017 to a peak of 40.96% in 2019. This upward trend indicates a period of enhanced operational efficiency or a shift toward higher-margin revenue streams. This progression reversed sharply after 2019, with the margin contracting to 29.76% in 2020 and further declining to 14.17% by the end of 2021, marking the lowest profitability level within the analyzed timeframe.
- Revenue and Net Income Correlation
- Revenue grew steadily from 12.27 billion US$ in 2017 to a high of 14.38 billion US$ in 2019, before declining to 10.98 billion US$ in 2021. Net income followed a more volatile path, surging from 2.54 billion US$ in 2017 to 5.89 billion US$ in 2019, but subsequently falling precipitously to 1.56 billion US$ in 2021. The disproportionate decline in net income relative to the decline in revenue during the 2020-2021 period suggests a significant increase in operating expenses or the impact of non-operating losses.
- Overall Profitability Trend
- A marked erosion of profitability is observed between 2019 and 2021. The capacity to convert revenue into net profit deteriorated significantly, as the net profit margin decreased by 26.79 percentage points from its peak in 2019 to its value in 2021.
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Return on Equity (ROE)
Biogen Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Biogen Inc. | 1,556,100) | 4,000,600) | 5,888,500) | 4,430,700) | 2,539,100) | |
| Total Biogen Inc. shareholders’ equity | 10,896,200) | 10,700,300) | 13,343,200) | 13,039,600) | 12,612,800) | |
| Profitability Ratio | ||||||
| ROE1 | 14.28% | 37.39% | 44.13% | 33.98% | 20.13% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| AbbVie Inc. | 74.91% | — | — | — | — | |
| Amgen Inc. | 87.96% | — | — | — | — | |
| Bristol-Myers Squibb Co. | 19.46% | — | — | — | — | |
| Danaher Corp. | 14.24% | — | — | — | — | |
| Eli Lilly & Co. | 62.16% | — | — | — | — | |
| Gilead Sciences Inc. | 29.55% | — | — | — | — | |
| Johnson & Johnson | 28.20% | — | — | — | — | |
| Merck & Co. Inc. | 34.17% | — | — | — | — | |
| Pfizer Inc. | 28.47% | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 43.03% | — | — | — | — | |
| Thermo Fisher Scientific Inc. | 18.94% | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | 23.19% | — | — | — | — | |
| ROE, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 29.75% | — | — | — | — | |
| ROE, Industry | ||||||
| Health Care | 25.44% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROE = 100 × Net income attributable to Biogen Inc. ÷ Total Biogen Inc. shareholders’ equity
= 100 × 1,556,100 ÷ 10,896,200 = 14.28%
2 Click competitor name to see calculations.
Between 2017 and 2021, the return on equity (ROE) experienced a period of significant expansion followed by a sharp contraction. The metric peaked in 2019 before declining to its lowest level in the observed five-year period by the end of 2021.
- Growth Phase (2017-2019)
- A strong upward trajectory in profitability is evident from 2017 to 2019, with ROE increasing from 20.13% to a peak of 44.13%. This expansion was primarily driven by a substantial rise in net income, which grew from 2,539,100 thousand US$ to 5,888,500 thousand US$, while shareholders' equity remained relatively stable, increasing only marginally from 12,612,800 thousand US$ to 13,343,200 thousand US$.
- Contraction Phase (2020-2021)
- A reversal in the profitability trend occurred after 2019. ROE decreased to 37.39% in 2020 and further plummeted to 14.28% by December 31, 2021. This decline is directly correlated with a precipitous drop in net income, which fell to 1,556,100 thousand US$ by the end of 2021, representing a significant reduction from the 2019 peak.
- Equity and Income Relationship
- The volatility in ROE was predominantly driven by fluctuations in net income rather than changes in the equity base. While shareholders' equity experienced a decrease in 2020 to 10,700,300 thousand US$, the magnitude of the decline in net income between 2019 and 2021 far exceeded the reduction in equity, leading to the observed erosion of the return on equity.
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Return on Assets (ROA)
Biogen Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Biogen Inc. | 1,556,100) | 4,000,600) | 5,888,500) | 4,430,700) | 2,539,100) | |
| Total assets | 23,877,300) | 24,618,900) | 27,234,300) | 25,288,900) | 23,652,600) | |
| Profitability Ratio | ||||||
| ROA1 | 6.52% | 16.25% | 21.62% | 17.52% | 10.73% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| AbbVie Inc. | 7.88% | — | — | — | — | |
| Amgen Inc. | 9.63% | — | — | — | — | |
| Bristol-Myers Squibb Co. | 6.40% | — | — | — | — | |
| Danaher Corp. | 7.73% | — | — | — | — | |
| Eli Lilly & Co. | 11.44% | — | — | — | — | |
| Gilead Sciences Inc. | 9.16% | — | — | — | — | |
| Johnson & Johnson | 11.47% | — | — | — | — | |
| Merck & Co. Inc. | 12.35% | — | — | — | — | |
| Pfizer Inc. | 12.11% | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 31.75% | — | — | — | — | |
| Thermo Fisher Scientific Inc. | 8.12% | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | 17.44% | — | — | — | — | |
| ROA, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 10.42% | — | — | — | — | |
| ROA, Industry | ||||||
| Health Care | 9.46% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROA = 100 × Net income attributable to Biogen Inc. ÷ Total assets
= 100 × 1,556,100 ÷ 23,877,300 = 6.52%
2 Click competitor name to see calculations.
The analysis of the Return on Assets (ROA) from 2017 to 2021 reveals a period of significant expansion in asset efficiency followed by a sharp contraction. The ROA followed an upward trajectory for the first three years, peaking in 2019, before entering a steep decline through 2021.
- Profitability Trajectory
- Net income attributable to Biogen Inc. showed strong growth between 2017 and 2019, rising from US$ 2.54 billion to a peak of US$ 5.89 billion. This growth trend reversed after 2019, with net income falling to US$ 4.00 billion in 2020 and further declining to US$ 1.56 billion by 2021, indicating a substantial reduction in bottom-line earnings.
- Asset Base Stability
- Total assets experienced moderate growth from 2017 (US$ 23.65 billion) to 2019 (US$ 27.23 billion). Following this peak, asset values contracted moderately, ending at US$ 23.88 billion in 2021. Because the asset base remained relatively stable compared to the high volatility of net income, the fluctuations in ROA are primarily attributable to earnings performance rather than shifts in the company's asset structure.
- ROA Performance Trends
- The ROA increased from 10.73% in 2017 to a high of 21.62% in 2019, reflecting a period of high operational efficiency. However, a sharp downward trend followed, with the ratio falling to 16.25% in 2020 and dropping to 6.52% in 2021. The final value in 2021 represents a significant erosion of profitability, falling well below the initial 2017 levels.
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