Analysis of Inventory
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Inventory Disclosure
Vertex Pharmaceuticals Inc., balance sheet: inventory
US$ in thousands
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Raw materials | |||||||||||
| Work-in-process | |||||||||||
| Finished goods | |||||||||||
| Inventories |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The composition of inventories exhibits a significant upward trend over the five-year period. While all components contribute to this overall increase, the magnitude of change varies considerably between raw materials, work-in-process, and finished goods.
- Raw Materials
- Raw materials initially decreased from 42.4 million USD thousand in 2021 to 38.1 million USD thousand in 2022. However, a substantial increase is then observed, rising to 78.7 million USD thousand in 2023, and continuing to climb to 252.0 million USD thousand in 2024 and 259.8 million USD thousand in 2025. This suggests a potential build-up of materials in anticipation of increased production or concerns regarding supply chain disruptions.
- Work-in-Process
- Work-in-process inventory demonstrates the most dramatic increase throughout the period. Starting at 224.0 million USD thousand in 2021, it steadily rose to 260.7 million USD thousand in 2022, 525.1 million USD thousand in 2023, 768.8 million USD thousand in 2024, and reached 1,196.9 million USD thousand in 2025. This substantial growth could indicate extended production cycles, bottlenecks in the manufacturing process, or a significant expansion in output.
- Finished Goods
- Finished goods inventory also increased, but at a more moderate pace compared to work-in-process. It rose from 86.7 million USD thousand in 2021 to 161.8 million USD thousand in 2022, then decreased to 135.0 million USD thousand in 2023 before increasing again to 184.6 million USD thousand in 2024 and 230.1 million USD thousand in 2025. The dip in 2023 may reflect increased sales or a deliberate reduction in finished goods holdings.
- Total Inventories
- Total inventories increased consistently throughout the period, from 353.1 million USD thousand in 2021 to 460.6 million USD thousand in 2022, 738.8 million USD thousand in 2023, 1,205.4 million USD thousand in 2024, and finally reaching 1,686.8 million USD thousand in 2025. The accelerating growth in total inventories, particularly driven by work-in-process, warrants further investigation to understand the underlying operational and strategic factors.
The significant increases in both raw materials and work-in-process inventories, coupled with the growth in finished goods, suggest a substantial investment in inventory holdings. Management should assess whether these levels are aligned with anticipated demand and operational efficiency.