Understanding Biogen's Position In Biotechnology Industry Compared To Competitors

In the dynamic and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Biogen BIIB and its primary competitors in the Biotechnology industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within the industry.

Biogen Background

Biogen and Idec merged in 2003, combining forces to market Biogen's multiple sclerosis drug Avonex and Idec's cancer drug Rituxan. Today, Rituxan and next-generation antibody Gazyva are marketed via a collaboration with Roche. Biogen also markets novel multiple sclerosis drugs Plegridy, Tysabri, Tecfidera, and Vumerity. In Japan, Biogen's MS portfolio is copromoted by Eisai. Hemophilia therapies Eloctate and Alprolix (partnered with Sobi) were spun off as part of Bioverativ in 2017. Biogen's newer products include Spinraza (SMA, with partner Ionis), Leqembi (Alzheimers, with partner Eisai), Skyclarys (Friedreich's Ataxia, Reata), Zurzuvae (post-partum depression, Sage), and Qalsody (ALS, Ionis). Biogen has several drug candidates in phase 3 trials in neurology-related fields.

After examining Biogen, the following trends can be inferred:

• A Price to Earnings ratio of 25.91 significantly below the industry average by 0.62x suggests undervaluation. This can make the stock appealing for those seeking growth.

• Considering a Price to Book ratio of 2.61, which is well below the industry average by 0.39x, the stock may be undervalued based on its book value compared to its peers.

• The Price to Sales ratio is 3.8, which is 0.62x the industry average. This suggests a possible undervaluation based on sales performance.

• The Return on Equity (ROE) of -0.47% is 7.16% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.

• With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $50 Million, which is 0.03x below the industry average, the company may face lower profitability or financial challenges.

• The company has lower gross profit of $1.87 Billion, which indicates 0.73x below the industry average. This potentially indicates lower revenue after accounting for production costs.

• With a revenue growth of 0.87%, which is much lower than the industry average of 4.06%, the company is experiencing a notable slowdown in sales expansion.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

When examining Biogen in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:

• Biogen falls in the middle of the list when considering the debt-to-equity ratio.

• This indicates that the company has a moderate level of debt relative to its equity with a debt-to-equity ratio of 0.53, suggesting a balanced financial structure with a reasonable debt-equitymix.

Key Takeaways

For the valuation analysis of Biogen in the Biotechnology industry, the PE, PB, and PS ratios indicate that the company's valuation is relatively low compared to its peers. This suggests that Biogen may be undervalued in terms of its earnings, book value, and sales. However, the low ROE, EBITDA, gross profit, and revenue growth ratios indicate that Biogen's financial performance is also relatively low compared to its industry peers. This suggests that the company may be facing challenges in generating profits, managing expenses, and achieving revenue growth.

This article was generated by Benzinga's automated content engine and reviewed by an editor.