The company I chose to analyze is Novartis since they came out with a breakthrough product known as the KYMRIAH in 2017 that specializes in immunotherapy. A look at Novartis’s financial statements show a gross profit margin ranging from 65-67% over the past year, which is not ideal, but implies that the company’s costs are only about one-third of the revenue (for every $3 received, they owe $1). The net profit margin from March 2017 to 2018 is only 14-16%, but on June 2018, that value shot up to to 57.75%, indicating that their sales increased almost four-fold. The current ratio as of today is 1.15, though a more in depth look at Novartis’s liabilities shows that their quick ratio is at a value of 0.89. Although this value implies that Novartis is currently in debt, it can be attributed to their high GPM and NPM values in that they recently invested in a product that is currently earning them high profit, which can lead to the assumption that the low quick ratio value will increase significantly assuming no unprecedented liabilities in the next few years. The current debt-to-equity ratio is at 0.3, which is considered good (0.4 or below). The overall health of Novartis seems to be very satisfactory with any adverse ratios being temporary as a result of the costs of the investments made.

The recent success displayed by Novartis can likely be correlated to their breakthrough work in cell therapy focused at treating conditions such as cancer, HIV, hepatitis, and other blood-based pro-inflammatory conditions. Have there ever been any breakthrough medical devices or techniques that have had a dramatic impact of the financial ratios of a company? On the other hand, have there been any medical device products that have sunk its company and what would the trends in ratios have displayed?

References:

“FDA Approval Summary: Tisagenlecleucel for Treatment of Patients with Relapsed or Refractory B-Cell Precursor Acute Lymphoblastic Leukemia”
Maura C. O’Leary, Xiaobin Lu, Ying Huang, Xue Lin, Iftekhar Mahmood, Donna Przepiorka, Denise Gavin, Shiowjen Lee, Ke Liu, Bindu George, Wilson Bryan, Marc R. Theoret and Richard Pazdur
Clin Cancer Res October 11 2018 DOI: 10.1158/1078-0432.CCR-18-2035