Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
Celgene Corp., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial performance of Celgene Corp. from 2014 to 2018 is characterized by a significant contraction in Market Value Added (MVA), reflecting a widening gap between the capital invested in the business and the market's valuation of that investment. Although MVA remained positive throughout the five-year period, indicating that the company continued to create value above its invested capital, the magnitude of this value creation declined substantially.
- Market Value Trends
- The market value of the company exhibited volatility throughout the period. After a decline in 2015, the value peaked in 2016 at 102,904 million US$. However, a sustained downward trend followed, with the market value falling to 80,859 million US$ by December 31, 2018. This represents an overall decrease in fair market valuation from the 2016 peak.
- Invested Capital Growth
- A consistent and aggressive increase in invested capital is observed. The capital base grew from 9,844 million US$ in 2014 to 27,773 million US$ in 2018. Notable surges occurred between 2014 and 2015, where capital nearly doubled, and again in 2018, suggesting significant internal investments or acquisitions during these windows.
- Market Value Added (MVA) Erosion
- The MVA experienced a net decline of approximately 42.7% over the analyzed period, falling from 92,832 million US$ in 2014 to 53,085 million US$ in 2018. This erosion is the result of a dual pressure: the simultaneous decrease in total market value and the substantial increase in the capital base. The data suggests that the market did not attribute proportional value to the additional capital deployed into the company.
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MVA Spread Ratio
Celgene Corp., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 53,085) | 64,500) | 84,232) | 72,544) | 92,832) | |
| Invested capital2 | 27,773) | 18,857) | 18,672) | 18,136) | 9,844) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 191.14% | 342.04% | 451.11% | 400.01% | 943.04% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2018 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 53,085 ÷ 27,773 = 191.14%
4 Click competitor name to see calculations.
The financial trajectory from 2014 to 2018 reflects a significant contraction in market value creation relative to the growth of the capital base. While the company expanded its invested capital substantially, this growth was accompanied by a steady decline in both the absolute Market Value Added and the efficiency of value creation as measured by the spread ratio.
- Market Value Added (MVA)
- A consistent downward trend is observed in the MVA, which fell from 92,832 million US$ in 2014 to 53,085 million US$ by 2018. This represents a total decrease of approximately 42.8% over the five-year period, indicating that the market's valuation premium over the company's invested capital diminished significantly.
- Invested Capital
- Invested capital exhibited strong growth, increasing from 9,844 million US$ in 2014 to 27,773 million US$ in 2018. The most pronounced increase occurred between 2014 and 2015, where capital nearly doubled. This upward trajectory suggests an aggressive expansion of the company's asset base or increased funding requirements to support operations.
- MVA Spread Ratio
- The MVA spread ratio experienced a sharp decline, dropping from a peak of 943.04% in 2014 to 191.14% in 2018. This compression was driven by the simultaneous occurrence of decreasing market value added and increasing invested capital. The rapid deterioration of this ratio suggests that the returns generated on new capital investments failed to keep pace with the market's expectations, leading to a reduction in the value-creation efficiency per unit of capital invested.
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MVA Margin
Celgene Corp., MVA margin calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 53,085) | 64,500) | 84,232) | 72,544) | 92,832) | |
| Net product sales | 15,265) | 12,973) | 11,185) | 9,161) | 7,564) | |
| Add: Increase (decrease) in deferred revenue | 37) | 26) | (8) | 34) | 5) | |
| Adjusted net product sales | 15,302) | 12,999) | 11,177) | 9,195) | 7,569) | |
| Performance Ratio | ||||||
| MVA margin2 | 346.92% | 496.19% | 753.62% | 788.91% | 1,226.53% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 MVA. See details »
2 2018 Calculation
MVA margin = 100 × MVA ÷ Adjusted net product sales
= 100 × 53,085 ÷ 15,302 = 346.92%
3 Click competitor name to see calculations.
A significant divergence is observed between the growth in operational scale and the market's valuation of the organization's value creation between 2014 and 2018. While adjusted net product sales demonstrated consistent year-over-year growth, both the Market Value Added (MVA) and the MVA margin experienced a general decline, indicating a contraction in the market premium attributed to the company's performance.
- Market Value Added (MVA)
- The MVA exhibited a volatile but overall downward trajectory, starting at US$ 92,832 million in 2014 and ending at US$ 53,085 million in 2018. Although a temporary recovery occurred in 2016, where the value rose to US$ 84,232 million, the subsequent two years saw a sharp decline, resulting in a total decrease of approximately 42.8% over the five-year period.
- Adjusted Net Product Sales
- Revenue growth remained strong and uninterrupted throughout the period. Adjusted net product sales rose from US$ 7,569 million in 2014 to US$ 15,302 million in 2018. This represents more than a twofold increase in sales, highlighting a steady expansion of the company's market reach and product commercialization.
- MVA Margin
- The MVA margin showed a continuous and precipitous decline, falling from a high of 1,226.53% in 2014 to 346.92% in 2018. The fact that the margin decreased consistently even as sales increased suggests that the market's valuation of the company's future growth potential or efficiency in value creation diminished relative to its actual revenue growth.
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