Pharm Exec Industry Audit Slideshow

Annual sales

Of the top 10 in sales, only Johnson & Johnson, Abbott, and Roche were able to grow revenues; the others fell back into negative territory. Next: Enterprise value.

Enterprise value growth

Despite the negative sales growth, overall enterprise value in the 24 rose by 13 percent. Gilead exhibited enterprise value growth of nearly 120 percent, followed by Actavis, at 101 percent, and Novo Nordisk, at slightly more than 38 percent. Next: Enterprise value to sales

Enterprise value to sales

The higher the ratio here, the assumption is there is additional forward momentum—the company is just getting started; the sky's the limit. A low ratio suggests the opposite: a company's best growth prospects are behind it. Gilead again cut a big swath through this ratio, nearly doubling its performance compared to 2011. Next: Gross margin

Gross margin

Gross margin reflects pricing power, as expressed by the ability of a company to secure a generous mark up for its goods. The higher the margin, the more pricing power a company has in hand. Celgene earned the highest markup, at slightly over 90 percent, increasing it by five basis points over 2011. You don't want to see gross margin decrease, but this is what happened to Johnson & Johnson, Novartis, GSK, AstraZeneca, Lilly, Amgen, Hospira, and Endo. Next: Net income to sales.

Net income to sales

The Net Income to Sales table measures how well a company manages its pricing and controls expenses. While gross margin was constant for the year, overall profitability decreased, from 26.2 percent to 24.9 percent, suggesting a trend toward pricing power erosion and SG&A expenses that surged out of control. Next: Sales to assets.

Sales to assets

Sales to assets is another way of reflecting how a company manages those margins by capitalizing on its inventory of assets. For every dollar invested in assets, how much sales revenue is generated? Novo Nordisk is at the top with a very efficient, productive ratio of 1.19; that is, for every dollar Novo Nordisk invests in assets, that dollar generates $1.19 in revenues. Next: Net income to assets

Net income to assets

The Net Income to Assets table shows an overall average decrease in this metric against the previous year. It is also evidences some pronounced contrasts: the most impressive number is Novo Nordisk's — at 32.88, it is higher than some firms' gross margins. Roche, again, is second, at 15.10. Next: And the Winner is...

And the Winner is...

Novo Nordisk!

The Danish market leader in the diabetes franchise is followed by Gilead, Biogen-Idec, Celgene, and Roche.
All lean and mean specialty biotech/pharmas.

To read the Pharm Exec 12th Annual Industry Audit article in full, click here.