Vertex Pharmaceuticals Inc., balance sheet: property, plant and equipment

US$ in thousands

	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Buildings and improvements	876,091	713,412	657,438	634,061	548,232
Furniture and equipment	346,698	317,567	280,908	256,509	236,634
Leasehold improvements	234,585	175,769	103,428	117,806	108,702
Computers and software	258,612	230,872	221,674	213,184	192,592
Land	33,128	—	—	—	—
Property and equipment, gross	1,749,114	1,437,620	1,263,448	1,221,560	1,086,160
Accumulated depreciation	(790,580)	(692,540)	(451,443)	(432,123)	(387,798)
Property and equipment, net	958,534	745,080	812,005	789,437	698,362

Item	Description	The company
Property and equipment, gross	Amount before accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.	Vertex Pharmaceuticals Inc.’s property and equipment, gross increased from 2018 to 2019 and from 2019 to 2020.
Property and equipment, net	Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.	Vertex Pharmaceuticals Inc.’s property and equipment, net decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.

Vertex Pharmaceuticals Inc., asset age ratios

	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Average age ratio	46.07%	48.17%	35.73%	35.37%	35.70%
Estimated total useful life (years)	16	13	17	20	18
Estimated age, time elapsed since purchase (years)	7	6	6	7	6
Estimated remaining life (years)	8	7	11	13	11

Asset age ratio	Description	The company
Average age ratio	As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company’s fixed asset base is old or new. Newer assets are likely to be more efficient.	Vertex Pharmaceuticals Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.
Estimated total useful life	Over longer time periods, this ratio is a useful measure of company’s depreciation policy and can be used for comparisons with competitors.	Vertex Pharmaceuticals Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2018 to 2019 but then increased from 2019 to 2020 not reaching 2018 level.
Estimated time elapsed since purchase	The approximate age in years of a company’s fixed assets. Useful for comparison purposes.	Vertex Pharmaceuticals Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2018 to 2019 and from 2019 to 2020.
Estimated remaining life		Vertex Pharmaceuticals Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Selected Financial Data (US$ in thousands)
Accumulated depreciation	790,580	692,540	451,443	432,123	387,798
Property and equipment, gross	1,749,114	1,437,620	1,263,448	1,221,560	1,086,160
Land	33,128	—	—	—	—
Asset Age Ratio
Average age¹	46.07%	48.17%	35.73%	35.37%	35.70%

2020 Calculations

¹ Average age = 100 × Accumulated depreciation ÷ (Property and equipment, gross – Land)
= 100 × 790,580 ÷ (1,749,114 – 33,128) = 46.07%

Asset age ratio	Description	The company
Average age	As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company’s fixed asset base is old or new. Newer assets are likely to be more efficient.	Vertex Pharmaceuticals Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.

	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Selected Financial Data (US$ in thousands)
Property and equipment, gross	1,749,114	1,437,620	1,263,448	1,221,560	1,086,160
Land	33,128	—	—	—	—
Depreciation expense	109,500	106,900	72,400	61,400	60,800
Asset Age Ratio (Years)
Estimated total useful life¹	16	13	17	20	18

2020 Calculations

¹ Estimated total useful life = (Property and equipment, gross – Land) ÷ Depreciation expense
= (1,749,114 – 33,128) ÷ 109,500 = 16

Asset age ratio	Description	The company
Estimated total useful life	Over longer time periods, this ratio is a useful measure of company’s depreciation policy and can be used for comparisons with competitors.	Vertex Pharmaceuticals Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2018 to 2019 but then increased from 2019 to 2020 not reaching 2018 level.

	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Selected Financial Data (US$ in thousands)
Accumulated depreciation	790,580	692,540	451,443	432,123	387,798
Depreciation expense	109,500	106,900	72,400	61,400	60,800
Asset Age Ratio (Years)
Time elapsed since purchase¹	7	6	6	7	6

2020 Calculations

¹ Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= 790,580 ÷ 109,500 = 7

Asset age ratio	Description	The company
Estimated time elapsed since purchase	The approximate age in years of a company’s fixed assets. Useful for comparison purposes.	Vertex Pharmaceuticals Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2018 to 2019 and from 2019 to 2020.

	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Selected Financial Data (US$ in thousands)
Property and equipment, net	958,534	745,080	812,005	789,437	698,362
Land	33,128	—	—	—	—
Depreciation expense	109,500	106,900	72,400	61,400	60,800
Asset Age Ratio (Years)
Estimated remaining life¹	8	7	11	13	11

2020 Calculations

¹ Estimated remaining life = (Property and equipment, net – Land) ÷ Depreciation expense
= (958,534 – 33,128) ÷ 109,500 = 8

Asset age ratio	Description	The company
Estimated remaining life		Vertex Pharmaceuticals Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

Vertex Pharmaceuticals Inc. (NASDAQ:VRTX)

Analysis of Property, Plant and Equipment