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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Biogen Inc., economic profit calculation

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net operating profit after taxes (NOPAT)¹	1,501,467)	4,370,868)	6,023,385)	4,663,032)	2,890,089)
Cost of capital²	7.33%	7.49%	7.93%	8.01%	7.99%
Invested capital³	13,824,500)	12,625,400)	14,142,400)	13,170,435)	12,476,129)

Economic profit⁴	488,257)	3,425,717)	4,902,297)	3,607,482)	1,893,669)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,501,467 – 7.33% × 13,824,500 = 488,257

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Biogen Inc. economic profit decreased from 2019 to 2020 and from 2020 to 2021.

Biogen Inc., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income attributable to Biogen Inc.	1,556,100)	4,000,600)	5,888,500)	4,430,700)	2,539,100)
Deferred income tax expense (benefit)¹	(426,800)	149,000)	67,100)	108,300)	91,700)
Increase (decrease) in reserves for allowances²	(3,600)	1,100)	5,800)	(11,300)	(5,200)
Increase (decrease) in restructuring reserve³	—)	—)	—)	(500)	(4,600)
Increase (decrease) in equity equivalents⁴	(430,400)	150,100)	72,900)	96,500)	81,900)
Interest expense	253,600)	222,500)	187,400)	200,600)	250,800)
Interest expense, operating lease liability⁵	12,166)	14,071)	15,562)	20,529)	20,744)
Adjusted interest expense	265,766)	236,571)	202,962)	221,129)	271,544)
Tax benefit of interest expense⁶	(55,811)	(49,680)	(42,622)	(46,437)	(95,040)
Adjusted interest expense, after taxes⁷	209,955)	186,891)	160,340)	174,692)	176,504)
(Gain) loss on marketable securities	3,800)	8,300)	(4,500)	8,500)	19,400)
Interest income	(11,000)	(42,000)	(120,000)	(112,500)	(78,500)
Investment income, before taxes	(7,200)	(33,700)	(124,500)	(104,000)	(59,100)
Tax expense (benefit) of investment income⁸	1,512)	7,077)	26,145)	21,840)	20,685)
Investment income, after taxes⁹	(5,688)	(26,623)	(98,355)	(82,160)	(38,415)
Net income (loss) attributable to noncontrolling interest	171,500)	59,900)	—)	43,300)	131,000)
Net operating profit after taxes (NOPAT)	1,501,467)	4,370,868)	6,023,385)	4,663,032)	2,890,089)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in reserves for allowances.

³ Addition of increase (decrease) in restructuring reserve.

⁴ Addition of increase (decrease) in equity equivalents to net income attributable to Biogen Inc..

⁵ 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 419,500 × 2.90% = 12,166

⁶ 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 265,766 × 21.00% = 55,811

⁷ Addition of after taxes interest expense to net income attributable to Biogen Inc..

⁸ 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 7,200 × 21.00% = 1,512

⁹ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Biogen Inc. NOPAT decreased from 2019 to 2020 and from 2020 to 2021.

Biogen Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Income tax expense	52,500)	992,300)	1,158,000)	1,425,600)	2,458,700)
Less: Deferred income tax expense (benefit)	(426,800)	149,000)	67,100)	108,300)	91,700)
Add: Tax savings from interest expense	55,811)	49,680)	42,622)	46,437)	95,040)
Less: Tax imposed on investment income	1,512)	7,077)	26,145)	21,840)	20,685)
Cash operating taxes	533,599)	885,903)	1,107,377)	1,341,897)	2,441,355)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Biogen Inc. cash operating taxes decreased from 2019 to 2020 and from 2020 to 2021.

Biogen Inc., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Current portion of notes payable	999,100)	—)	1,495,800)	—)	3,200)
Notes payable, excluding current portion	6,274,000)	7,426,200)	4,459,000)	5,936,500)	5,935,000)
Operating lease liability¹	419,500)	485,200)	486,300)	508,135)	508,429)
Total reported debt & leases	7,692,600)	7,911,400)	6,441,100)	6,444,635)	6,446,629)
Total Biogen Inc. shareholders’ equity	10,896,200)	10,700,300)	13,343,200)	13,039,600)	12,612,800)
Net deferred tax (assets) liabilities²	(720,600)	(336,600)	(421,300)	(517,700)	(473,200)
Reserves for allowances³	38,000)	41,600)	40,500)	34,700)	46,000)
Restructuring reserve⁴	—)	—)	—)	—)	500)
Equity equivalents⁵	(682,600)	(295,000)	(380,800)	(483,000)	(426,700)
Accumulated other comprehensive (income) loss, net of tax⁶	106,700)	299,000)	135,200)	240,400)	318,400)
Noncontrolling interests	63,500)	(14,200)	(4,100)	(8,000)	(14,700)
Adjusted total Biogen Inc. shareholders’ equity	10,383,800)	10,690,100)	13,093,500)	12,789,000)	12,489,800)
Construction in progress⁷	(770,300)	(1,950,800)	(2,084,400)	(1,758,500)	(1,276,000)
Marketable securities⁸	(3,481,600)	(4,025,300)	(3,307,800)	(4,304,700)	(5,184,300)
Invested capital	13,824,500)	12,625,400)	14,142,400)	13,170,435)	12,476,129)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of restructuring reserve.

⁵ Addition of equity equivalents to total Biogen Inc. shareholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

⁸ Subtraction of marketable securities.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Biogen Inc. invested capital decreased from 2019 to 2020 but then increased from 2020 to 2021 not reaching 2019 level.

Biogen Inc., cost of capital calculations

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	32,356,798)	32,356,798)	÷	40,780,998)	=	0.79	0.79	×	8.50%	=	6.74%
Notes payable, including current portion³	8,004,700)	8,004,700)	÷	40,780,998)	=	0.20	0.20	×	3.64% × (1 – 21.00%)	=	0.56%
Operating lease liability⁴	419,500)	419,500)	÷	40,780,998)	=	0.01	0.01	×	2.90% × (1 – 21.00%)	=	0.02%
Total:	40,780,998)					1.00					7.33%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in thousands

² Equity. See details »

³ Notes payable, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	40,102,381)	40,102,381)	÷	49,103,481)	=	0.82	0.82	×	8.50%	=	6.94%
Notes payable, including current portion³	8,515,900)	8,515,900)	÷	49,103,481)	=	0.17	0.17	×	3.83% × (1 – 21.00%)	=	0.52%
Operating lease liability⁴	485,200)	485,200)	÷	49,103,481)	=	0.01	0.01	×	2.90% × (1 – 21.00%)	=	0.02%
Total:	49,103,481)					1.00					7.49%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in thousands

² Equity. See details »

³ Notes payable, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	58,701,347)	58,701,347)	÷	65,741,247)	=	0.89	0.89	×	8.50%	=	7.59%
Notes payable, including current portion³	6,553,600)	6,553,600)	÷	65,741,247)	=	0.10	0.10	×	4.09% × (1 – 21.00%)	=	0.32%
Operating lease liability⁴	486,300)	486,300)	÷	65,741,247)	=	0.01	0.01	×	3.20% × (1 – 21.00%)	=	0.02%
Total:	65,741,247)					1.00					7.93%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in thousands

² Equity. See details »

³ Notes payable, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	65,551,235)	65,551,235)	÷	72,096,970)	=	0.91	0.91	×	8.50%	=	7.72%
Notes payable, including current portion³	6,037,600)	6,037,600)	÷	72,096,970)	=	0.08	0.08	×	4.04% × (1 – 21.00%)	=	0.27%
Operating lease liability⁴	508,135)	508,135)	÷	72,096,970)	=	0.01	0.01	×	4.04% × (1 – 21.00%)	=	0.02%
Total:	72,096,970)					1.00					8.01%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in thousands

² Equity. See details »

³ Notes payable, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	73,200,689)	73,200,689)	÷	80,192,419)	=	0.91	0.91	×	8.50%	=	7.76%
Notes payable, including current portion³	6,483,300)	6,483,300)	÷	80,192,419)	=	0.08	0.08	×	4.08% × (1 – 35.00%)	=	0.21%
Operating lease liability⁴	508,429)	508,429)	÷	80,192,419)	=	0.01	0.01	×	4.08% × (1 – 35.00%)	=	0.02%
Total:	80,192,419)					1.00					7.99%

Based on: 10-K (reporting date: 2017-12-31).

¹ US$ in thousands

² Equity. See details »

³ Notes payable, including current portion. See details »

⁴ Operating lease liability. See details »

Biogen Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in thousands)
Economic profit¹	488,257)	3,425,717)	4,902,297)	3,607,482)	1,893,669)
Invested capital²	13,824,500)	12,625,400)	14,142,400)	13,170,435)	12,476,129)
Performance Ratio
Economic spread ratio³	3.53%	27.13%	34.66%	27.39%	15.18%
Benchmarks
Economic Spread Ratio, Competitors⁴
AbbVie Inc.	4.79%	-3.06%	7.21%	—	—
Amgen Inc.	7.37%	11.70%	13.90%	—	—
Bristol-Myers Squibb Co.	1.56%	-14.01%	-3.68%	—	—
Danaher Corp.	-2.15%	-3.55%	-6.95%	—	—
Eli Lilly & Co.	12.28%	18.94%	15.78%	—	—
Gilead Sciences Inc.	9.01%	-4.06%	7.26%	—	—
Johnson & Johnson	10.27%	5.05%	3.95%	—	—
Merck & Co. Inc.	11.81%	4.65%	11.23%	—	—
Moderna Inc.	117.98%	53.83%	-145.81%	—	—
Pfizer Inc.	11.77%	-2.94%	5.67%	—	—
Regeneron Pharmaceuticals Inc.	67.29%	39.16%	28.41%	—	—
Thermo Fisher Scientific Inc.	-1.05%	-0.06%	-3.94%	—	—

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 488,257 ÷ 13,824,500 = 3.53%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Biogen Inc. economic spread ratio deteriorated from 2019 to 2020 and from 2020 to 2021.

Biogen Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in thousands)
Economic profit¹	488,257)	3,425,717)	4,902,297)	3,607,482)	1,893,669)
Revenue	10,981,700)	13,444,600)	14,377,900)	13,452,900)	12,273,900)
Performance Ratio
Economic profit margin²	4.45%	25.48%	34.10%	26.82%	15.43%
Benchmarks
Economic Profit Margin, Competitors³
AbbVie Inc.	8.17%	-6.94%	13.60%	—	—
Amgen Inc.	12.21%	18.71%	23.40%	—	—
Bristol-Myers Squibb Co.	2.70%	-29.71%	-14.13%	—	—
Danaher Corp.	-5.38%	-10.40%	-22.52%	—	—
Eli Lilly & Co.	11.34%	18.96%	15.19%	—	—
Gilead Sciences Inc.	15.93%	-8.38%	10.31%	—	—
Johnson & Johnson	10.76%	6.02%	4.67%	—	—
Merck & Co. Inc.	17.16%	5.54%	12.87%	—	—
Moderna Inc.	61.54%	55.71%	—	—	—
Pfizer Inc.	12.69%	-7.28%	13.26%	—	—
Regeneron Pharmaceuticals Inc.	45.50%	38.15%	23.58%	—	—
Thermo Fisher Scientific Inc.	-2.15%	-0.11%	-8.12%	—	—

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

¹ Economic profit. See details »

² 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × 488,257 ÷ 10,981,700 = 4.45%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Biogen Inc. economic profit margin deteriorated from 2019 to 2020 and from 2020 to 2021.

Biogen Inc. (NASDAQ:BIIB)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin