Biotechnology

Biotechnology Industry Key Financial Data 2023

The following analysis considers the 165 major publicly listed biotechnology companies with a market capitalisation above $1 billion. The numbers in the tables are expressed in millions of dollars except for percentages and ratios.

In 2023 the biotechnology industry generated $250.5 billion in revenues, a decrease of -6.9% from the $269 billion of 2022.

Over the past 10 years, the median growth rate in revenues has been 7.9%.

Overall, the biotechnology industry registered an operating income of $36.1 billion in 2023. Regarding profitability, the 10-year median gross margin is 68.9%, while the 10-year median operating margin is equal to 30.9%.

The total free cash flows to the firm for the biotechnology industry instead, were equal to $4.1 billion in 2023.

Moving on to efficiency ratios, the biotechnology industry’s 10-year median return on invested capital (ROIC) is 24.5%, while the 10-year median sales to invested capital is equal to 0.66.

The 10-year median reinvestment margin for the biotechnology industry – expressed as total reinvestments in net capital expenditures, acquisitions, and R&D divided by total revenues – is 19.3%.

Multiplying the reinvestment margin, which shows how much biotechnology companies have invested over the past years, by the sales to invested capital ratio, showing how efficiently biotechnology companies have invested, is it possible to calculate the expected growth rate in revenues for the biotechnology industry, equal to 11.95%.

Check out this post for a detailed explanation of how to calculate future revenue growth rates.

As regards solvency ratios, the debt-to-enterprise value ratio for the biotechnology industry is 2.3%, while the debt-to-equity ratio is 8.5%.

Finally, the unlevered beta of the biotechnology industry – which is the beta depurated by the debt leverage – has been 0.86, for the past 2 years, and 0.7, for the past 5 years.

However, the beta is only one of the required inputs to calculate the appropriate discount rate for company valuation, check out this page where you can find the equity risk premium for different markets needed to calculate the required cost of equity.