Gilead Sciences Inc. (NASDAQ:GILD)

Over the five-year period, property, plant and equipment demonstrated a general upward trend, although fluctuations were observed in specific components. Gross property, plant and equipment increased from US$7,014 million in 2021 to US$8,302 million in 2025. Accumulated depreciation also increased consistently throughout the period, from negative US$1,893 million in 2021 to negative US$2,696 million in 2025, resulting in a net increase in property, plant and equipment from US$5,121 million to US$5,606 million.

Land and Land Improvements

The value of land and land improvements increased significantly from 2021 to 2022, rising from US$404 million to US$562 million. This was followed by relative stability, remaining at US$561 million from 2023 through 2025. This suggests a substantial land acquisition in 2022 with no further significant changes in subsequent years.

Buildings and Improvements

Buildings and improvements exhibited a consistent upward trend, increasing from US$3,794 million in 2021 to US$4,622 million in 2025. The largest single-year increase occurred between 2023 and 2024, with an addition of US$191 million. This indicates ongoing investment in building infrastructure.

Laboratory and Manufacturing Equipment

Laboratory and manufacturing equipment also showed a steady increase, moving from US$952 million in 2021 to US$1,241 million in 2025. The rate of increase was relatively consistent year-over-year, suggesting a planned and consistent investment in production capabilities.

Internal-Use Software

Internal-use software was not reported for 2021, 2022, or 2023. It appeared in 2024 at US$692 million and decreased slightly to US$666 million in 2025. This suggests a significant investment in software during 2024, potentially related to a major system implementation, followed by a minor adjustment in the subsequent year.

Other and Construction in Progress

The ‘Other’ category experienced considerable fluctuation. It increased from US$807 million in 2021 to US$1,069 million in 2023, then decreased substantially to US$399 million in 2024 before partially recovering to US$467 million in 2025. Construction in progress decreased from US$1,057 million in 2021 to US$501 million in 2024, then increased to US$745 million in 2025. These movements suggest projects were completed and put into use, or reclassified, during the period, with renewed construction activity in 2025.

The consistent increase in accumulated depreciation reflects the ongoing utilization of these assets. The net property, plant and equipment balance increased steadily, indicating a net addition of assets exceeding the depreciation expense over the period. The fluctuations within specific asset categories suggest dynamic capital expenditure and project completion cycles.

The average age ratio of property, plant, and equipment exhibits an increasing trend over the observed period. Beginning at 28.64% in 2021, the ratio rose to 34.83% by 2025, indicating a gradual aging of the asset base. This increase is not linear, with a slight deceleration in the rate of increase between 2023 and 2024.

Average Age Ratio

The average age ratio consistently increased from 28.64% to 34.83% over the five-year period. This suggests that, on average, the company’s property, plant, and equipment are becoming older relative to their estimated useful lives. The incremental increases were 2.15%, 3.2%, 0.74%, and 1.1% year-over-year, respectively.

Estimated Useful Life & Age

The estimated total useful life of the assets fluctuated between 19 and 22 years. While the estimated age, representing the time elapsed since purchase, increased from 6 years in 2021 to 7 years in 2022 and remained at 7 years through 2025, the changes in estimated total useful life appear to offset the impact of the increasing age. This suggests potential adjustments in depreciation schedules or asset valuation methods.

Remaining Useful Life

The estimated remaining useful life remained relatively stable, ranging from 13 to 15 years. Despite the increasing average age ratio, the remaining useful life has not significantly decreased, indicating that the company is either actively replacing older assets or revising the estimated useful lives of existing assets. The remaining useful life was 14 years in 2021, 15 years in 2022, and 13/14 years for the remaining years.

In summary, while the asset base is aging as indicated by the increasing average age ratio, the consistent remaining useful life suggests proactive asset management practices are in place. Further investigation into the factors influencing the estimated useful life adjustments would provide a more comprehensive understanding of the company’s capital expenditure and depreciation policies.

An examination of the financial information reveals a consistent pattern in property, plant, and equipment related metrics over the five-year period. Gross property, plant, and equipment exhibited an overall upward trend, increasing from US$7,014 million in 2021 to US$8,302 million in 2025. Accumulated depreciation also increased steadily, rising from US$1,893 million in 2021 to US$2,696 million in 2025. Land and land improvements experienced an initial increase between 2021 and 2022, then remained relatively stable for the subsequent years.

Average Age Ratio

The average age ratio demonstrates a clear increasing trend, moving from 28.64% in 2021 to 34.83% in 2025. This indicates that, on average, the company’s property, plant, and equipment are becoming older over time. The rate of increase slowed between 2023 and 2024, with a slight decrease observed, before resuming an upward trajectory in 2025. This suggests potential shifts in capital expenditure or depreciation policies.

The consistent growth in both gross property, plant, and equipment and accumulated depreciation suggests ongoing investment in assets coupled with their natural depreciation over time. The stable value of land and land improvements indicates no significant additions or disposals in that asset category during the latter part of the period. The increasing average age ratio warrants further investigation to determine if planned asset replacements or upgrades are sufficient to maintain operational efficiency and avoid potential disruptions due to aging infrastructure.

The slight deceleration in the average age ratio increase between 2023 and 2024 could be attributed to increased capital expenditures during that period, offsetting the impact of continued depreciation. However, the renewed increase in 2025 suggests that depreciation is again outpacing asset additions, leading to a further increase in the average age.

Over the five-year period, property, plant and equipment, gross consistently increased, rising from US$7,014 million in 2021 to US$8,302 million in 2025. Land and land improvements also exhibited growth, increasing from US$404 million to US$562 million, then remaining stable at US$561 million from 2022 through 2025. Depreciation expense demonstrated an overall upward trend, moving from US$329 million in 2021 to US$381 million in 2024, before decreasing slightly to US$370 million in 2025. The estimated total useful life of the assets fluctuated throughout the period.

Gross Property, Plant & Equipment

The consistent increase in gross property, plant and equipment suggests ongoing investment in fixed assets. The rate of increase varied, with a larger jump between 2021 and 2022 (US$647 million) compared to the increase between 2024 and 2025 (US$418 million). This could indicate varying levels of capital expenditure in different years.

Land and Land Improvements

The initial increase in land and land improvements between 2021 and 2022 indicates acquisition of additional land or improvements to existing land. The subsequent stabilization suggests no further significant land-related investments were made during the latter part of the period.

Depreciation Expense

The upward trend in depreciation expense is consistent with the increasing value of property, plant and equipment. The slight decrease in 2025 may be attributable to changes in the asset base or the application of different depreciation methods. It is also possible that assets reaching the end of their useful life were retired, reducing the depreciable base.

Estimated Total Useful Life

The estimated total useful life exhibited volatility, starting at 20 years in 2021, increasing to 22 years in 2022, decreasing to 19 years in 2024, and then rising to 21 years in 2025. This fluctuation could be due to changes in the composition of the asset base, revisions in depreciation policies, or adjustments based on actual asset performance. The changes in estimated useful life would directly impact the annual depreciation expense.

Analysis of the presented financial information reveals trends in accumulated depreciation, depreciation expense, and the estimated age of property, plant, and equipment. Accumulated depreciation consistently increased over the five-year period, rising from US$1,893 million in 2021 to US$2,696 million in 2025. Depreciation expense also generally increased, though with some fluctuation, moving from US$329 million in 2021 to US$370 million in 2025.

Accumulated Depreciation

The increase in accumulated depreciation indicates a continued consumption of the value of the company’s property, plant, and equipment. The rate of increase accelerated between 2021 and 2023, increasing by US$556 million, before slowing down between 2023 and 2024 with an increase of only US$21 million. The increase from 2024 to 2025 was US$226 million, suggesting a return to a more typical rate of depreciation accumulation.

Depreciation Expense

Depreciation expense experienced a slight decrease from US$329 million in 2021 to US$323 million in 2022. However, it then increased to US$354 million in 2023 and further to US$381 million in 2024, before decreasing slightly to US$370 million in 2025. This fluctuation may be attributable to changes in the asset base, including new acquisitions or disposals, or adjustments to estimated useful lives.

Time Elapsed Since Purchase

The reported time elapsed since purchase remained relatively stable, fluctuating between six and seven years. The value was six years in 2021, increased to seven years in 2022 and 2023, decreased to six years in 2024, and then increased to seven years in 2025. This suggests a consistent pattern of asset renewal or acquisition, maintaining the average age of the asset base within a narrow range. The consistency in this metric, coupled with the increasing depreciation expense, suggests that the company is actively utilizing its assets and recognizing their diminishing value over time.

The combined trends suggest a consistent depreciation pattern across the asset base. The increasing accumulated depreciation and generally increasing depreciation expense, alongside a stable average asset age, indicate a predictable and ongoing process of asset utilization and value consumption.

The net value of property, plant, and equipment exhibited an overall increasing trend from 2021 to 2025, despite a slight decrease between 2022 and 2023. Land and land improvements experienced a significant increase from 2021 to 2022, and then remained stable for the subsequent three years. Depreciation expense generally increased over the period, with a peak in 2024, before decreasing slightly in 2025. The estimated remaining life of the property, plant, and equipment fluctuated, showing a slight increase in 2022, a decrease in 2023, and then a return to a value similar to that of 2022 in 2025.

Property, Plant, and Equipment (Net)

The net book value of property, plant, and equipment increased from US$5,121 million in 2021 to US$5,606 million in 2025. The increase from 2021 to 2022 was US$354 million, representing a 6.9% growth. A decrease of US$158 million, or 2.9%, was observed between 2022 and 2023. Growth resumed from 2023 to 2025, with an overall increase of US$289 million, or 5.3%.

Land and Land Improvements

Land and land improvements increased substantially from US$404 million in 2021 to US$562 million in 2022, representing a 39.1% increase. Following this increase, the value remained constant at US$561 million from 2023 through 2025, indicating no further investment in these assets during that period.

Depreciation Expense

Depreciation expense remained relatively stable between 2021 and 2023, fluctuating between US$323 million and US$354 million. A notable increase to US$381 million occurred in 2024, followed by a slight decrease to US$370 million in 2025. This suggests a potential increase in the depreciable asset base in 2024, or a change in depreciation methods, followed by a minor adjustment in 2025.

Estimated Remaining Life

The estimated remaining life of property, plant, and equipment showed some variability. It was 14 years in 2021, increased to 15 years in 2022, decreased to 13 years in 2023, remained at 13 years in 2024, and then increased back to 14 years in 2025. These fluctuations could be due to reassessments of asset useful lives, asset replacements, or changes in accounting policies. The relatively stable values in recent years suggest a more consistent approach to estimating asset lives.

The interplay between increasing net property, plant, and equipment and rising depreciation expense suggests continued investment in assets, offset by the recognition of their usage over time. The stabilization of land and land improvements, coupled with the fluctuating estimated remaining life, warrants further investigation to understand the long-term asset strategy.