Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Statement of Comprehensive Income
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
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Profitability Ratios (Summary)
Vertex Pharmaceuticals Inc., profitability ratios
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 profitability metrics demonstrate a period of initial expansion followed by a significant contraction and subsequent recovery. Generally, the company exhibited strong profitability through 2023, experiencing a notable dip in 2024 before showing signs of improvement in 2025.
- Gross Profit Margin
- The gross profit margin remained consistently high throughout the observed period, fluctuating between 86.11% and 88.06%. A slight downward trend is apparent from 2021 to 2024, followed by a modest increase in 2025, suggesting continued strong cost control in production but potential pricing or input cost pressures.
- Operating Profit Margin
- The operating profit margin experienced substantial volatility. It increased significantly from 36.73% in 2021 to 48.23% in 2022, then decreased to 38.83% in 2023. A substantial decline occurred in 2024, resulting in a negative margin of -2.11%, indicating increased operating expenses relative to revenue. The metric recovered to 34.77% in 2025, though it did not reach previous highs.
- Net Profit Margin
- The net profit margin mirrored the trend of the operating profit margin. It rose from 30.92% in 2021 to 37.20% in 2022, decreased to 36.68% in 2023, and then experienced a sharp decline to -4.86% in 2024. A recovery to 32.94% was observed in 2025, but remained below the 2022 level.
- Return on Equity (ROE)
- Return on equity followed a similar pattern to the profit margins. It increased from 23.19% in 2021 to 23.88% in 2022, decreased to 20.59% in 2023, and then sharply declined to -3.26% in 2024. A recovery to 21.18% occurred in 2025, indicating improved profitability relative to shareholder equity, but still below earlier levels.
- Return on Assets (ROA)
- Return on assets exhibited a comparable trend. It rose from 17.44% in 2021 to 18.30% in 2022, decreased to 15.92% in 2023, and then fell to -2.38% in 2024. The metric recovered to 15.42% in 2025, suggesting improved efficiency in utilizing assets to generate profit, but not a return to the prior peak.
The year 2024 appears to be an outlier, with significant negative impacts across all profitability ratios. The recovery in 2025 suggests corrective actions were taken, but the company has not yet fully regained its previous levels of profitability. Further investigation into the factors driving the 2024 decline is warranted.
Return on Sales
Return on Investment
Gross Profit Margin
Vertex Pharmaceuticals Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| 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. | ||||||
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).
1 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin exhibited a generally decreasing trend over the five-year period, although fluctuations were present. While gross profit and revenues both increased in absolute terms each year, the rate of increase in revenues outpaced that of gross profit, resulting in margin compression.
- Gross Profit Margin Trend
- The gross profit margin began at 88.06% in 2021. A slight decrease to 87.90% was observed in 2022. This downward trend continued with a more pronounced decline to 87.21% in 2023, and further to 86.11% in 2024. A modest recovery to 86.24% occurred in 2025, but the margin remained below the level recorded in 2021.
The consistent growth in both gross profit and revenues suggests strong sales performance. However, the decreasing gross profit margin indicates increasing costs associated with generating those revenues. These costs could include raw materials, direct labor, or manufacturing overhead. Further investigation would be required to pinpoint the specific drivers of this cost increase.
- Gross Profit and Revenue Relationship
- From 2021 to 2025, revenues increased by 58.28%, while gross profit increased by 54.88%. This disparity suggests that the cost of goods sold is growing at a faster rate than revenue, thereby compressing the gross profit margin.
The stabilization of the gross profit margin in 2025, although slight, may indicate that cost control measures are beginning to take effect or that the rate of cost increase is slowing. Continued monitoring of this metric is recommended to assess whether this stabilization is sustainable.
Operating Profit Margin
Vertex Pharmaceuticals Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Income (loss) from operations | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| 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. | ||||||
| Operating Profit Margin, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Operating Profit Margin, Industry | ||||||
| Health Care | ||||||
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).
1 2025 Calculation
Operating profit margin = 100 × Income (loss) from operations ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin exhibited considerable fluctuation over the five-year period. Initial growth was followed by a significant decline and subsequent recovery.
- Overall Trend
- The operating profit margin demonstrated an increasing trend from 2021 to 2022, peaking at 48.23%. This was followed by a decrease in 2023, and a substantial decline into negative territory in 2024. A recovery was then observed in 2025, though the margin did not return to its prior high.
- 2021-2022 Performance
- From 2021 to 2022, the operating profit margin increased from 36.73% to 48.23%, representing a growth of 11.5 percentage points. This improvement coincided with a rise in revenues, and a more substantial increase in income from operations.
- 2023 Performance
- In 2023, the operating profit margin decreased to 38.83%, a decline of 9.4 percentage points from the previous year. While revenues continued to increase, the growth in income from operations slowed, contributing to the margin contraction.
- 2024 Performance
- 2024 saw a dramatic shift, with the operating profit margin falling to -2.11%. This represents a significant decrease of 40.94 percentage points from 2023. This negative margin was driven by a substantial decrease in income from operations, despite continued revenue growth.
- 2025 Performance
- The operating profit margin showed signs of recovery in 2025, increasing to 34.77%. This improvement was attributable to a substantial increase in income from operations, alongside continued revenue growth. However, the margin remained below the levels observed in 2021 and 2022.
The volatility in the operating profit margin suggests potential fluctuations in underlying cost structures or significant changes in operational efficiency. The negative margin in 2024 warrants further investigation to understand the factors contributing to the loss in operational profitability.
Net Profit Margin
Vertex Pharmaceuticals Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| 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. | ||||||
| Net Profit Margin, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Net Profit Margin, Industry | ||||||
| Health Care | ||||||
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).
1 2025 Calculation
Net profit margin = 100 × Net income (loss) ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin exhibited considerable fluctuation over the five-year period. Initial years demonstrated strong profitability, followed by a significant decline, and a subsequent recovery.
- Overall Trend
- The net profit margin increased from 30.92% in 2021 to 37.20% in 2022, indicating improved profitability. This positive trend continued modestly into 2023, reaching 36.68%. However, 2024 witnessed a substantial decrease, resulting in a negative net profit margin of -4.86%. The final year, 2025, showed a recovery, with the net profit margin returning to 32.94%.
- Year-over-Year Changes
- The largest year-over-year increase occurred between 2021 and 2022, with a 6.28 percentage point improvement. The decline from 2023 to 2024 was particularly pronounced, representing a 31.82 percentage point decrease. The subsequent increase from 2024 to 2025 was substantial, a 37.80 percentage point improvement, though not fully restoring the margin to prior levels.
- Relationship to Revenues
- Revenues consistently increased throughout the period. However, the negative net profit margin in 2024 suggests that revenue growth alone was insufficient to maintain profitability, indicating potentially significant increases in costs or other expenses during that year. The return to positive profitability in 2025, despite continued revenue growth, suggests corrective actions or favorable changes in cost structure.
- Volatility
- The net profit margin demonstrates a high degree of volatility. The swing from a positive margin exceeding 30% to a negative margin, and then back to a positive value, highlights potential sensitivity to underlying business conditions or specific events impacting profitability.
Return on Equity (ROE)
Vertex Pharmaceuticals Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | ||||||
| Shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| 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. | ||||||
| ROE, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| ROE, Industry | ||||||
| Health Care | ||||||
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).
1 2025 Calculation
ROE = 100 × Net income (loss) ÷ Shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Equity (ROE) exhibited a fluctuating pattern over the five-year period. Initial increases were followed by a significant decline and subsequent recovery.
- Overall Trend
- ROE began at 23.19% in 2021, increased to 23.88% in 2022, then decreased to 20.59% in 2023. A substantial decline occurred in 2024, resulting in a negative ROE of -3.26%. The metric recovered in 2025, reaching 21.18%.
- Net Income Influence
- Net income generally increased from 2021 to 2023, contributing to the initial ROE gains. The sharp decrease in net income in 2024, evidenced by a loss of US$535.6 million, directly caused the negative ROE for that year. The return to profitability in 2025, with net income of US$3,953.2 million, drove the subsequent ROE recovery.
- Shareholders’ Equity Influence
- Shareholders’ equity consistently increased from 2021 to 2025, with the exception of a slight decrease between 2023 and 2024. While increasing equity generally supports higher overall returns, the impact of net income fluctuations proved more dominant in determining ROE. The increase in equity in 2024, despite the net loss, likely moderated the severity of the ROE decline.
- Year-over-Year Changes
- The largest year-over-year change in ROE occurred between 2023 and 2024, a decrease of 23.85 percentage points. The most significant increase occurred between 2024 and 2025, an improvement of 24.44 percentage points. These substantial swings highlight the sensitivity of ROE to net income performance.
The volatility in ROE suggests a sensitivity to earnings fluctuations. While shareholders’ equity demonstrates a generally positive trend, net income appears to be the primary driver of ROE performance during this period.
Return on Assets (ROA)
Vertex Pharmaceuticals Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| 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. | ||||||
| ROA, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| ROA, Industry | ||||||
| Health Care | ||||||
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).
1 2025 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited a generally positive trend from 2021 to 2023, followed by a significant decline in 2024, and a subsequent recovery in 2025. This analysis details the observed patterns and potential implications.
- Overall Trend
- The ROA increased from 17.44% in 2021 to 18.30% in 2022, indicating improved profitability relative to the company’s asset base. While still positive, the ROA decreased to 15.92% in 2023, suggesting a moderation in the rate of asset utilization efficiency. A substantial decrease occurred in 2024, with the ROA falling to -2.38%, representing a net loss relative to assets. The ROA rebounded to 15.42% in 2025, approaching levels seen in prior years.
- Key Observations
- The period between 2021 and 2023 demonstrates consistent, albeit moderating, profitability concerning asset deployment. The negative ROA in 2024 is a significant outlier, directly correlated with a net loss reported for that year. The recovery in 2025 suggests a return to profitability and improved asset utilization, though not fully restoring the levels achieved in 2021 and 2022.
- Supporting Financial Performance
- Total assets increased consistently from 2021 to 2025, growing from US$13,432,500 thousand to US$25,643,000 thousand. This asset growth did not consistently translate into proportional net income growth. The substantial asset increase between 2022 and 2023 (US$4,579,900 thousand) was accompanied by a smaller increase in net income (US$297,600 thousand), contributing to the ROA decline in 2023. The negative net income in 2024, despite relatively stable total assets, drove the ROA to a negative value. The return to positive net income in 2025, coupled with further asset growth, resulted in a positive ROA.
Further investigation into the factors contributing to the 2024 net loss is warranted to understand the drivers behind the ROA decline and assess the sustainability of the 2025 recovery.