Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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Return on Invested Capital (ROIC)
AbbVie Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| 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: 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 NOPAT. See details »
2 Invested capital. See details »
3 2025 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The period under review demonstrates significant fluctuations in Return on Invested Capital (ROIC). Net operating profit after taxes (NOPAT) and invested capital both experienced changes over the five-year span, directly influencing the ROIC performance.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT decreased from US$12,362 million in 2021 to US$11,543 million in 2022, representing a decline of approximately 6.67%. A substantial decrease was then observed in 2023, with NOPAT falling to US$3,292 million. A partial recovery occurred in 2024, reaching US$4,563 million, followed by further growth to US$5,919 million in 2025.
- Invested Capital
- Invested capital decreased consistently from US$95,922 million in 2021 to US$68,204 million in 2023, a reduction of approximately 28.8%. A slight increase was noted in 2024, with invested capital reaching US$69,263 million, before decreasing again to US$61,356 million in 2025.
- Return on Invested Capital (ROIC)
- ROIC initially increased from 12.89% in 2021 to 14.05% in 2022, despite the slight decrease in NOPAT, likely due to a more significant reduction in invested capital. However, ROIC experienced a dramatic decline in 2023, falling to 4.83% as NOPAT decreased substantially. A recovery began in 2024, with ROIC rising to 6.59%, and continued into 2025, reaching 9.65%. The 2025 ROIC, while improved, remains below the levels observed in 2021 and 2022. The fluctuations in ROIC closely mirror the changes in NOPAT, indicating a strong correlation between profitability and the return generated on invested capital.
The observed trends suggest a period of operational challenges in 2023, impacting profitability. The subsequent recovery in NOPAT from 2024 onwards is a positive indicator, although the invested capital base continues to evolve. The relationship between NOPAT, invested capital, and ROIC warrants continued monitoring to assess the long-term sustainability of capital allocation efficiency.
Decomposition of ROIC
AbbVie Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | = | × | × | ||||
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The period under review demonstrates significant fluctuations in the components of return on invested capital. A notable divergence emerges when examining operating profit margin, capital turnover, and the impact of the effective cash tax rate.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited a decline from 27.06% in 2021 to 10.48% in 2024 before recovering to 15.26% in 2025. The most substantial decrease occurred between 2022 and 2023, falling from 26.77% to 14.58%. This suggests a weakening in core operational profitability during that timeframe, followed by a partial recovery in the most recent year.
- Turnover of Capital (TO)
- Turnover of capital consistently increased from 0.59 in 2021 to 1.00 in 2025. This indicates improving efficiency in asset utilization, meaning the company is generating more revenue per dollar of capital employed. The rate of increase was most pronounced between 2022 and 2023, and again between 2024 and 2025.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The value of 1 minus the effective cash tax rate, representing the portion of operating profit retained after taxes, decreased from 81.30% in 2021 to 41.58% in 2023, before increasing to 77.32% in 2024 and then decreasing to 63.42% in 2025. This volatility significantly impacts the final ROIC calculation, and the substantial drop in 2023 appears to be a primary driver of the overall ROIC decline during that year.
- Return on Invested Capital (ROIC)
- Return on invested capital mirrored the combined effects of the aforementioned factors. It rose from 12.89% in 2021 to 14.05% in 2022, then experienced a sharp decline to 4.83% in 2023. A subsequent increase to 6.59% in 2024 and further to 9.65% in 2025 suggests a recovery, though the 2025 level remains below the initial values observed in 2021 and 2022. The interplay between declining operating margins and fluctuating tax rates heavily influenced the ROIC trajectory.
The observed trends suggest that while the company has improved its capital efficiency, its profitability has been subject to considerable variation, particularly concerning its effective tax rate. These factors have collectively shaped the return on invested capital performance over the analyzed period.
Operating Profit Margin (OPM)
AbbVie Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| 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: 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Net revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited considerable fluctuation over the five-year period. Initial stability gave way to a significant decline, followed by a partial recovery.
- Operating Profit Margin (OPM) - Overall Trend
- The OPM began at 27.06% in 2021 and 26.77% in 2022, demonstrating relative consistency. A marked decrease was then observed in 2023, falling to 14.58%. This downward trend continued into 2024, with the OPM reaching a low of 10.48%. A subsequent increase occurred in 2025, bringing the OPM to 15.26%, though still below the levels seen in 2021 and 2022.
- Relationship to Net Operating Profit Before Taxes (NOPBT)
- The decline in OPM from 2021 to 2024 correlates with a decrease in NOPBT. While net revenues initially increased from 2021 to 2022, NOPBT remained relatively stable. The substantial drop in NOPBT from 2022 to 2023, and continuing into 2024, directly contributed to the falling OPM. The partial recovery in NOPBT in 2025 is mirrored by an increase in OPM.
- Relationship to Net Revenues
- Net revenues experienced an increase between 2021 and 2022, but then decreased in 2023. Revenues then increased again in 2024 and 2025. However, the revenue fluctuations do not fully explain the OPM changes. The most significant OPM decline occurred in 2023, despite a relatively small decrease in net revenues. This suggests that factors beyond revenue, such as cost of goods sold or operating expenses, played a substantial role in the margin compression.
The observed volatility in the OPM warrants further investigation to determine the underlying drivers. A detailed analysis of cost structures and revenue mix would be beneficial in understanding the reasons for the margin fluctuations and projecting future performance.
Turnover of Capital (TO)
AbbVie Inc., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| 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: 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 Invested capital. See details »
2 2025 Calculation
TO = Net revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The analysis reveals a notable trend in the turnover of capital over the five-year period. Net revenues experienced fluctuations, while invested capital generally decreased. These movements significantly impacted the turnover ratio.
- Net Revenues
- Net revenues increased from US$56,197 million in 2021 to US$58,054 million in 2022, representing a growth of approximately 3.3%. A subsequent decrease was observed in 2023, with revenues falling to US$54,318 million. Revenues partially recovered in 2024, reaching US$56,334 million, and continued to rise substantially in 2025 to US$61,160 million.
- Invested Capital
- Invested capital demonstrated a consistent downward trend throughout the period. It decreased from US$95,922 million in 2021 to US$82,134 million in 2022, then further declined to US$68,204 million in 2023. The rate of decrease slowed in 2024, with invested capital at US$69,263 million, before continuing to fall to US$61,356 million in 2025.
- Turnover of Capital (TO)
- The turnover of capital ratio exhibited a clear upward trajectory. Starting at 0.59 in 2021, it increased to 0.71 in 2022. This upward trend continued, reaching 0.80 in 2023 and 0.81 in 2024. A significant increase was observed in 2025, with the ratio reaching 1.00. This indicates that for every dollar of invested capital, the company generated one dollar of revenue in 2025, a substantial improvement compared to earlier years.
- The increase in the turnover ratio, despite decreasing invested capital, suggests improved efficiency in utilizing capital to generate revenue. The substantial increase in 2025, coinciding with higher net revenues and continued reduction in invested capital, reinforces this observation.
The combined effect of fluctuating revenues and decreasing invested capital resulted in a significant improvement in the turnover of capital ratio over the observed period. The company appears to be becoming more efficient in generating revenue from its invested capital base.
Effective Cash Tax Rate (CTR)
AbbVie Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| 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: 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The effective cash tax rate exhibited considerable fluctuation over the five-year period. Cash operating taxes generally increased, though with significant variation year-to-year, while net operating profit before taxes also demonstrated volatility. These movements resulted in a dynamic effective cash tax rate.
- Effective Cash Tax Rate (CTR)
- In 2021, the effective cash tax rate was 18.70%. This increased to 25.72% in 2022, representing a rise of approximately 7 percentage points. A substantial increase was then observed in 2023, with the rate reaching 58.42%. This peak was followed by a significant decrease to 22.68% in 2024. The rate then increased again in 2025, settling at 36.58%.
The substantial increase in the effective cash tax rate in 2023 warrants further investigation. This jump, from 25.72% to 58.42%, occurred alongside a notable decrease in net operating profit before taxes, suggesting a potentially disproportionate impact of cash taxes on a smaller profit base. The subsequent decline in 2024, despite continued lower net operating profit before taxes, indicates a change in factors influencing the cash tax burden. The increase in 2025 suggests a return towards a higher, though not peak, tax rate.
- Relationship between NOPBT and Cash Taxes
- Net operating profit before taxes decreased significantly from US$15,540 million in 2022 to US$7,917 million in 2023. While cash operating taxes also decreased from US$3,997 million to US$4,625 million, the decrease in NOPBT was proportionally larger, driving the CTR higher. In 2024, NOPBT continued to decline to US$5,902 million, but cash taxes fell dramatically to US$1,339 million, resulting in a lower CTR. The increase in both NOPBT and cash taxes in 2025 contributed to the higher CTR observed in that year.
The volatility in the effective cash tax rate suggests the presence of non-recurring tax items, changes in tax legislation, or significant shifts in the geographic distribution of profits. Further analysis of the underlying tax provisions is recommended to understand the drivers of these fluctuations and their potential impact on future financial performance.