Chapter 1

Executive Summary
The summer internship project was with a company named 5 catalyst
research pvt ltd incorporated in 2012. It is managed by experts having
rich experience in the field of equity research.
The project with 5 Catalyst research Pvt Ltd was analyzing companies in
Global healthcare. The analysis comprised of detailed analysis of
companies business line, Product pipeline, shareholding pattern of the
company, press releases and the impact of this press releases on the
stock prices.
It also involved analysis of financial statements of the company covering
Income statement, Profit & loss Statement, Cash Flow Statement and
even Financial ratios and valuation ratios to understand the financial
viability of the company. it involved analyzing various sources through
which this companies generated revenue and the amount spent by these
companies on research and development. It also involved studying the US
FDA approval process from clinical Stage to approval stage.
Biogen is a global pharmaceutical company focused on discovering,
developing, manufacturing and delivering therapies for neurological,
autoimmune and hematologic disorders. Zinbryta is filed with FDA for
approval.Revenue of biogen has grown at a CAGR of 24% from 20112014. The amount spend by this company on R&D has also Shown a
increasing trend over the four years.
Sucampo is a global pharmaceutical company focused on innovative
research and development of proprietory drugs to treat gastrointestinal,
ophthalmic and oncology-based inflammatory disorders. Revenue of
Sucampo has grown at a CAGR of 28% from 2011-2014. The amount
spent by Sucampo on R&D has shown a decreasing trend over the four
years.
The Medicines Company is a biopharmaceutical company focused on
saving lives, alleviating suffering and contributing to the economics of
healthcare by focusing on leading acute/intensive care hospitals
worldwide.Revenue of MDCO has grown at a CAGR of 14% from 20111

2014. The amount spend by MDCO has shwon an increasing trend over
the four years.

Chapter 2
Introduction
2.1 Introduction to the Topic
Healthcare continues to be an attractive but challenging area for
Private Equity investment. In 2014, investors of all size faced
steep valuations, thanks to strong financial markets, strategic
buyers deep pockets and the large number of healthcare
investors competing to put dry powder to work.
Despite the difficulties, healthcare offers some undeniable
strengths that keep PE interest in the space high. Conditions for
exit remain strong for some of the same reasons that valuations
are high: strong public equity markets and hungry strategic
buyers. In fact, 2014 was a record-breaking year for healthcare
IPOs in the US. Furthermore, while strategic buyers have been
acquiring assets to add new growth engines to their portfolios,
they have been divesting noncore assets, creating attractive
carve-out opportunities for PE. Finally, the desire to reduce
healthcare spending in regions across the globe continues to fuel
interest in assets that help reduce the cost to deliver healthcare.
Healthcare is an industry in transformation. It faces the new reality
that the high, noncyclical growth rates it has enjoyed in the past
are unlikely to continue, given global pressures to contain
healthcare costs. This recognition triggered unprecedented M&A
activity among corporate healthcare firms, which bolstered their
portfolios with growth assets, shed low-growth assets and tried to
take advantage of financial opportunities such as tax inversions.
As a result, strategic M&A activity reached an all-time high of
nearly $380 Bn, even after adjusting for deals that were canceled
after announcement.
Investors pursued product and services assets in healthcare
heavy and healthcare light segments. Some funds were able to
secure gem assets, or assets with strong leadership positions in
3

their core markets, although many of them came at a steep price.

Investors also pursued carve-outs, which in some cases gave
funds the opportunity to deploy their turnaround capabilities. In
light of the shortage of mega-deals, some funds continued to
move down-market, making investments in early and sometimes
venture-stage assets. Finally, buy-and-build strategies remained
popular in 2014, with many firm building out previously acquired
platform assets and a few firms buying new platforms.

2.2 Introduction to the Industry

a) The pharmaceutical industry is responsible for the development,
production and marketing of medications. The total level of
pharmaceutical revenue worldwide had reached nearly one
trillion U.S. dollars. North America is responsible for the largest
portion, generating more than 40 percent of these revenues.
This is mostly due to the leading role of the U.S. pharmaceutical
industry. But as in many other industries, the Chinese
pharmaceutical sector shows the highest growth rates over the
last years. Thus, its immense importance as a global sector is
evident.
b) The leading pharmaceutical companies come from the United
States and Europe. Based on prescription sales, NYCbased Pfizer is the worlds second largest pharmaceutical
company. In 2014, the company generated some 46Bn U.S.
dollars in pure pharmaceutical sales, while total revenue stood at
nearly 50Bn U.S. dollars. Other top global players from the
United States are Johnson & Johnson, Merck and AbbVie. Novartis
and Roche from Switzerland, GlaxoSmithKline and AstraZeneca
from the United Kingdom, and French Sanofi are the European
big five.
c) The United States is the worlds largest market for
pharmaceuticals and the world leader in biopharmaceutical
research. According to the Pharmaceutical Research and
Manufacturers Association (PhRMA), U.S. firms conduct the
majority of the worlds research and development in
pharmaceuticals and hold the intellectual property rights on
most new medicines. The biopharmaceutical pipeline also has
4

over 5,000 new medicines currently in development around the

world with approximately 3,400 compounds currently being
studied in the United States - more than in any other region
around the world.
d) The markets for biologics, over-the-counter (OTC) medicines, and
generics show the most potential for growth and have become
increasingly competitive. Biologics account for a quarter of all
new drugs in clinical trials or awaiting U.S. Food and Drug
Administration approval. OTC market growth will be driven by a
growing aging population and consumer trend to self-medication,
and the conversion of drugs from prescription to non-prescription
or OTC status.
e)

f) The global pharmaceuticals market is worth US$300 Bn a year, a

figure expected to rise to US$400 Bn within three years. The 10
largest drugs companies control over one-third of this market,
several with sales of more than US$10 Bn a year and profit
margins of about 30%.The global pharmaceutical industry
revenue is forecasted to reach an estimated $1,226.0 Bn by
2018, with good growth over the next five years (2013-2018)
Industry subsectors
a) The innovative pharmaceutical industry in the United States
produces chemically-derived drugs developed as a result of
extensive R&D and clinical trials in both humans and animals.
The innovator relies on patents and other forms of intellectual
property rights to justify the investment required to bring a
product to market (the U.S. patent term is 20 years). The
pharmaceutical industry is heavily dependent on the
development of new molecules to replace the revenue stream of
older drugs that have come to the expiration of their patent
terms. Several large multinationals produce the majority of
innovative pharmaceuticals globally, but they have come to rely
more heavily on research performed by industry partners,
including smaller, innovative manufacturers.
Pricing of
innovative pharmaceuticals is designed to recapture R&D
expenditures.
b) The biopharmaceutical industry produces medical drugs derived
from life forms (biologics). These include proteins (including
antibodies), and nucleic acids (DNA, RNA or antisense
oligonucleotides) used for therapeutic or in vivo diagnostic
purposes, and are produced by means other than direct
extraction from a native (non-engineered) biological source. A
potentially
controversial
method
of
producing
biopharmaceuticals involves transgenic organisms, particularly
plants and animals that have been genetically modified to
produce drugs. The biopharmaceutical industry relies heavily on
research performed by small companies and academic
institutions that is either acquired by large companies that can
6

bring the products to commercialization, or independently

financed.

The Drug Approval Process

The main consumer watchdog in the medical system in The United
States of America is FDA's Centre for Drug Evaluation and Research
(CDER). New drugs need to be evaluated and approved by the
center before they can be sold. CDER's evaluation prevents
quackery and provides doctors and patients the information they
need to use medicines wisely. The center ensures that drugs, both
brand-name and generic, work correctly and that their health
benefits outweigh their known risks.

Drug companies seeking to sell a drug in the United States must

first test it. The company then sends CDER the evidence from these
tests to prove that the drug is safe and effective for its intended
use. A team of CDER physicians, statisticians, chemists,
pharmacologists, and other scientists review the company's data
and proposed labelling. If this independent and unbiased review
establishes that a drug's health benefits outweigh its known risks,
the drug is approved for sale. The center doesn't actually test drugs
itself, although it does conduct limited research in the areas of drug
quality, safety, and effectiveness standards.

Before a drug can be tested in people, the drug company or

sponsor performs laboratory and animal tests to discover how the
drug works and whether it's likely to be safe and work well in
humans. Next, a series of tests in people is begun to determine
whether the drug is safe when used to treat a disease and whether
it provides a real health benefit.

Heres a breakdown of how a drug undergoes the FDAs approval

process, which takes an average of eight to 12 years. The FDA itself
does not test drugs; its role is to review test data and to approve or
disapprove a drug to be marketed for a specific medical use.
8

Preclinical studies: The process begins with the identification of a

unique molecule that has the potential of treating human disease.
Preclinical testing involves toxicology, pharmacokinetics and dosing
studies conducted on animals to help establish dosing limits and
potential adverse effects. It is critical that potential drug adverse
effects are identified.

Investigational application: After obtaining promising data from

preclinical studies, the pharmaceutical company must first file an
Investigational New Drug Application (IND) in order to begin the
clinical testing on humans. The IND document is a roadmap of the
proposed study. It includes the study protocol, the relevant data
from the pre-clinical studies, drug manufacturing data and, most
importantly, the informed consent document and other data
relevant to the recruitment of human subjects. The FDA has 30
days to review.
Phase I: The Phase I study examines the pharmacologic actions
and safe dosage range of a drug. Two numbers are very important:
Therapeutic Index (TI) and No Observable Adverse Effect Level
(NOAEL). The TI is the ratio of the lethal dose in 50% of test
subjects (LD50) to the effective dose in 50% of test subjects
(ED50). Any ratio below 20 is considered dangerous. Because lethal
doses are never used in human studies, the NOAEL is a useful
analog to the TI for human trials.
Phase I studies normally recruit a small number of healthy human
volunteers. Dosages start at very low levels (well below NOAEL) and
are gradually increased. Blood levels are measured and
bioavailability is established. Drug half-life and protein binding are
measured to assist in establishing proper dosing levels and
intervals for future trials. These studies are particularly focused on
identifying drug side effects. To help recognize the true side effects
of the test drug, Phase I studies usually include a placebo test
group. Under a double-blind protocol.
Phase II: Phase II studies help to identify unsafe medications and
drug side effects, along with identifying drug efficacy. For this
reason, the selected test subjects have the condition for which the
drug is intended. This means Phase II studies can make or break a
drug. Phase II studies evaluate a small group of individuals. If
efficacy and safety cannot be established at this level, then it is
impossible for the drug study to proceed with a larger population.
A critical component of a Phase II study is the establishment of a
treatment dose. This includes both the amount of drug and its
10

proper dosing interval. Dose the patient too low and the drug
demonstrates no efficacy; too high and it produces unacceptable
toxic side effects. One technique to establish a best dose is to
randomize test subjects into low-, medium- and high-dose groups.
This is a more efficient method of quickly identifying dosages that
are unacceptably low or high. All Phase II studies are double blind.

11

Phase III: If Phase II studies demonstrate drug efficacy and safety,

then this most expansive phase of drug testing is justified. Phase III
studies involve a large number of patients who have the disease
that the study drug intends to control or cure. A critical element
that differentiates Phase III from Phase II studies is the dosage form.
The test dose in Phase III must be in the form that is intended to be
approved and marketed to the public.
Next in importance is the protocol of the study. Proper patient
selection is critical. Investigators must establish inclusion and
exclusion criteria, and carefully define the drug indication.
The goals of therapy (endpoints) must also be well delineated.
Test populations and control groups need to be large enough to
yield statistical relevance, and the groups must be matched by age.
To improve statistical credibility in certain drug trials, multiple,
parallel Phase III studies are performed. Additionally, an extension
of a Phase III study may occur, with subjects continuing drug
therapy under open label conditions, where the actual treated.
In addition to safety and efficacy, the Phase III studies must
demonstrate, via animal studies, acceptable levels of the drugs
mutagenic potential, or the tendency to induce cancer in patient.
At the completion of the Phase III trial, the data are evaluated and
the safety and efficacy profile of the drug is established, as well as
the initial recommended dosage amount and frequency.
NDA: At the conclusion of Phase III studies (assuming these prove
successful), the pharmaceutical company files a New Drug
Application (NDA) with the FDA. All study informationincluding
efficacy and safety information from drug trials, manufacturing data
and pharmaceutical datamust be included in this extensive
document.
Phase IV studies: Following FDA approval, Phase IV studies
(called post-approval or post-marketing studies) have several
purposes. First, their design must mirror that of the other preclinical
12

studies, although the rigor of design is less intense. A Phase IV

study can be used to expand the indications for a drug that was
approved for limited applications, or it can be a comparator study
(a study intended to demonstrate clinical superiority over a
competitors product)..

2.3 Introduction to the Company

Biogen is a global pharmaceutical company focused on discovering,

developing,
manufacturing
and
delivering
therapies
for
neurological, autoimmune and hematologic disorders. Their
principal products for multiple sclerosos are AVONEX, TECFIDERA
AND FAMPYRA , for hemophilia B is ALPROLIX, for hemophilia A is
ELOCTATE. They also collaborate on the development and
commercialization of RITUXAN for the non-Hodgkins lymphona,
chronic lymphocytic leukemia and other conditions and share
profits and losses for GAZYVA which is approved for the treatment
of chronic lymphocytic leukemia.
Management Team
Name

Management Team
Qualification
Capacity

Previous
designation
President & CEO
of Exelixis inc
VP of business
Planning
Board of director

George A.
Ph.D.
Director and
Scangos
CEO
Paul J.
B.S. in Finance,
Executive VP,
Clancy
M.B.A
CFO
Stelios
Ph.D.
Director and
Papadopoul
Chairman
os
Alexander J. Ph.D.
Director
Director at Icahn
Denner
Capital
(Source: https://www.biogen.com/en_us/about-biogen/leadership )
Table 2.3.1
13

Research and Development

2,000.00

1,219.60

1,334.90

1,444.10

2011

2012

2013

1,893.40

1,000.00
0.00
2014

(Source: Biogen Annual report 10k)

(Chart 2.3.1)
Product Pipeline

Dapirolizuma
b pegol(SIE)
BIIB061(MS)

ISIS-DMPKR
(Myotonic
Dystrophy)
AntiBDCA2(SIE)

BIIB037
(Alzheimer
disease)
Anti- Lingo(MS)

Anti-Tweak(Lupus
Nephritis)
BAN2401(Alzhei
mers disease)
Neublastin(Neurp
hatic Pain)
14

TYSABRI
ZINBRYTA(MS)
(Secondary
progressive MS)
GAZYVA (NonHodgkins
lymphona)
ISIS-SMNR
(Spinal muscular
atrophy)

STX100(Idiopathic
pulmonary
fibrosis)
TYSABRI(Acute
Ischemic Stroke)
E2609(Alzheimer
s Disease)
(Source: Biogen Annual report_10k)
Shareholding Pattern
Shares
held(%)

Owner Name
FMR LLC
PRIMECAP MANAGEMENT CO/CA
VANGUARD GROUP INC
PRICE T ROWE ASSOCIATES INC/MD/
STATE STREET CORP
Others

10
8
6
5
5
66

Total

100

(Source: http://www.nasdaq.com/symbol/biib/ownership-summary )
(Table 2.3.2)
Financial Information
Profit & Loss Statement (In USD mn)
Particular
2011
2012
2013
Revenue
5,049
5516
6,932
4582

6,074

8,532

7060
7528
8,945
1076
1232
2,136
4.39
5.13
8.96
Balance Sheet (In USD mn)
Particular
2011
2012
2013
Total Asset
9050
10130 11,863
Shareholder equity
6427
6964
8,621
Total Debt
1064
1140
595.92

11,717
3,281
13.83

Gross Profit
Operating Profit
Net Profit
Diluted EPS

15

4971

2014
9,703

2014
14,317
10,814
585.19

7
Cash Flow Statement (In USD mn)
Particular
2011
2012
2013
Net income
1267
1380
1,862
Cash flow from
operating activity
1728
1880
2,345
Cash flow from investing (1650
(1,605
activity
)
(950)
)
Cash flow from
Financing activity
320
877
(717)
(Source: Annual Report_10k)
(Table 2.3.3)

7
2014
2,942
2,942
(1,543)
(756)

Sucampo is a global pharmaceutical company focused on

innovative research and development of proprietory drugs to treat
gastrointestinal, ophthalmic and oncology-based inflammatory
disorders. They cuurently generate revenue mainly from product
royalties, development milestone payments, product sales and
clinical development activities.
Management Team
Name
Qualificatio
n
Peter
BBA, MBA
Greenleaf
Matthias
Law Degree
Alder
Steven
Medical
Caffe
degree
Andrew
Business and
Smith
accounting

Capacity

Previous
Designation
CEO
CEO of Histogenics
Corporation
Executive
Executive VP Cytos
VP
Biotechnology AG
Senior VP
Senior VP at AMAG
Pharmaceuticals Inc
CFO
Finance Director and
Company secretary for
Retroscreen Virology
Ltd
(Source: http://www.sucampo.com/about/management )
(Table 2.3.4)
16

Research and Development

33263

20757

21231

20217

2012

2013

2014

2011

(Source: Sucampo Annual report_10k)

(Chart 2.3.2)

Product Pipeline
Compound

Lubiprostone (PFC)

Lubiprostone (Alternate Formulation)

Cobiprostone- Oral Mucositis
Cobiprostone (NERD)

(Source: http://www.sucampo.com/science-innovation/pipeline/ )
Shareholding Pattern
Shares
held(%)

Owner Name

GRANAHAN INVESTMENT MANAGEMENT

INC/MA
BLACKROCK FUND ADVISORS
DIMENSIONAL FUND ADVISORS LP
KRENSAVAGE ASSET MANAGEMENT, LLC
BLACKROCK INSTITUTIONAL TRUST
COMPANY, N.A.
Others
Total
17

11
6
6
5
4
68
100

(Source: http://www.nasdaq.com/symbol/scmp/ownershipsummary )
(Table 2.3.5)

18

Financial Information

Particular

Profit & Loss Statement (In USD mn)

2011
2012
2013

Revenue

Gross Profit
Operating Profit

Net Profit
Diluted EPS
Particular

2014
115,45
0

54,761

81487

89,594

54761

78457

77,192

99,18
1

(27,419)

10550

10940

35149
15059
9
0.24

(27,342) (92037)
-0.44
0.07
Balance Sheet (In USD mn)
2011
2012

(100534
)
0.12
2013

Total Asset
157569
127796
136,877
Shareholder equity
38594
43030
58,969
Total Debt
59627
52851
52720
Cash Flow Statement (In USD mn)
Particular
2011
2012
2013
Net income
(17306)
5061
7,015
Cash flow from operating
activity
(19991)
12000
(4,209)
Cash flow from investing
activity
27901
(589)
(12,616)
Cash flow from Financing
activity
(8081)
-8446
10,581

(Source: Sucampo_ Annual report_10k)

(Table 2.3.6)

19

2014
141,57
4
82,312
25818
2014
13,128
30,878
(12,95
9)
(15,41
4)

The Medicines Company is a biopharmaceutical company focused

on saving lives, alleviating suffering and contributing to the
economics of healthcare by focusing on leading acute/intensive
care hospitals worldwide. Principal products are Angiomax,
Cleviprex, Minocin, Orbactiv, Recothrom. They have the right to
develop, manufacture and commercialize ALN-PCSsc under the
collaberation agreement with Alnylam Pharmaceuticals inc.
Management Team
Name

Qualificatio
n
Ph.D.

Capacity

Previous
Designation
Clive A.
Chairman and
CEO of
Meanwell
CEO
Histogenics
Corporation
Glenn P.
MBA
President and
VP and CFO of
Sblendorio
CFO
Eyetech Pharma
Jeff Frazier BBA
Executive VP
VP at Novo
Nordisk Inc
Stephen
A.B and J.D
Senior VP and
Associate at
Rodin
General Counsel Proskauer Rose
LLP
(Source: http://www.themedicinescompany.com/about/leadershipteam )
(Table 2.3.7)
20

Research and Development

110180

126423

146930

159181

2011

2012

2013

2014

(Source: MDCO_ Annual Report 10k)

(Chart 2.3.3)
Product Pipeline
Compound

Carbavance

MDCO-216
ABP-700
ALN-PCSsc

(Source: http://www.themedicinescompany.com/pipeline )
Shareholding Pattern
Shares
Owner Name
held(%)
WELLINGTON MANAGEMENT GROUP LLP
13
BLACKROCK FUND ADVISORS
7
VANGUARD GROUP INC
6
PRICE T ROWE ASSOCIATES INC /MD/
5
INVESCO LTD.
4
Others
65
Total
100
(Source: http://www.nasdaq.com/symbol/mdco/ownershipsummary )
(Table 2.3.8)

21

Financial Information
Profit & Loss Statement (In USD mn)
Particular
2011
2012
2013
Revenue
5049
5516
6,932
327,8
66

424,8
99

436,7
78

7060
7528
8,945
1076
1232
2,136
4.39
5.13
8.96
Balance Sheet (In USD mn)
Particular
2011
2012
2013
Total Asset
9050
10130 11,863
Shareholder equity
6427
6964
8,621
Total Debt
6587
25378
26991
Cash Flow Statement (In USD mn)
Particular
2011
2012
2013
Net income
1267
1380
1,862
Cash flow from
operating activity
1728
1880
2,345
Cash flow from investing
activity
-1650
-950
(1,605)
Cash flow from
Financing activity
320
877
(717)
(Source: MDCO_Annual Report_10k)
(Table 2.3.9)

11,717
3,281
13.83

Gross Profit
Operating Profit
Net Profit
Diluted EPS

22

381,2
49

2014
9,703

2014
14,317
10,814
19799
2014
2,942
2,942
(1,543)
(756)

2.4 Introduction to the Project

The Project is about the analysis of various companies in the Global
Healthcare. The analysis comprises of analyzing the financial
statements, drug pipelines and the performance of the stock to
various positive or negative news.
Covering Balance Sheet, Profit & Loss Statement, Cash Flow
Statements and Financial Ratios of the company to understand the
financial viability of the company, different sources through which
funds are generated in a Pharmaceutical Company and also the
amount which they spend on Research & Development.
Comparison between various players in the Pharmaceutical Sector
on the basis of Earning per Share is being carried out.
NO.APPLICATIONS FILLED WITH FDA FOR US. PHARMA
INDUSTRY

23

(Source: Cognizant_US pharma_sector_Report)

(Source: Cognizant_US pharma_sector_Report)

Chapter 3
Project Details
3.1 Objective
To understand Biogen, Sucampo and The Medicines Company
business model, history, growth drivers and financial analysis and
compare with its peers in the industry.

24

25

3.2 Literature Review

a) The study comprises of analyzing the financial statements
(Income statement, Balance sheet and cash flow) from 10K and
10Q reports
b) Performance of the stock on NASDAQ positive or negative news
c) Study about the company profile in detail involving mergers &
acquisitions, collaborations, risk factors, patents, marketed
molecules and other operations.
d) Investor presentations and press releases from the company
website to plot the event calendar.
e) Analysis of previous five year data of a companies
f) Followed audio web cast and interviews given by company
person.

26

3.3 Methodology
Research was completely based on secondary data through
company websites and NASDAQ websites.
EQUITY RESEARCH PARAMETERS
a) Management Team
b) Technology
c) Pipeline
d) Patents
e) Merger & Acquisition
f) Marketed molecules
g) Shareholding pattern
h) Historical Quotes and Data
i) Revenue Trends
j) Valuation Ratio
k) Collaboration

27

3.4 Limitations of the Report

The project undertaken to study and analyses global pharma
companies was very helpful in understanding the field of equity
research. To conduct the study, secondary data related to the
companies were used like the annual reports and the information
available in the official websites of the companies. Various press
releases, webcasts and presentations were also used to analyses
the companies.
In spite of being able to gain a lot of knowledge about the
companies and the pharmaceutical
sector with the help of
secondary data, it was felt that some primary information would
have been more helpful in giving us a deeper insight into the
companies operations and finances. There was no scope of
interacting with the management of the companies which would
have given an opportunity to understand the future growth and
prospects of the company. Such information are significant for both
existing and potential investors.
Conducting the study from outside the scope of the companies
could have led to prejudices or having left out any significant
premise of analysis which can have adverse and misleading effects
on the decisions made by the investors. Therefore, these limitations
were realized while doing the project and were considered as steps
that could be taken to conduct a better and more detailed analysis
in the field of equity research.

28

Chapter 4
Analysis & Findings
4.1 Financial Statements
Company name: Biogen
Income Statements (Non-GAAP values in USD 000s)
Profit and Loss
Statement

2011

2012

2013

2014

5049

5516

6,932

9,703

467

545

858

1,171

Gross Profit

4582

4971

6,074

8,532

SG&A

1051

1275

1,707

2,226

R&D

1216

1324

1,440

1,888

Operating Profit

(1125)

1234

(1,439)

(1,887)

Profit Before Tax

1711

1855

2,848

4,428

Net Profit
1076
1232
(Source: Biogen_Annual Report_10k)
(Table 4.1.1)

2,136

3,281

Revenues
COGS

Balance Sheet (All values in USD 000s)

Balance Sheet

2011

2012

2013

2014

Cash and Cash

Equivalents

515

571

603

1,205

Accounts receivables

585

687

824

1,292

Inventories

327

447

659

804

29

LT Investments

1417

2037

626

1,471

Net Fixed Assets

1571

1742

1,751

1,766

9050

10130

11,86
3

14,31
7

453

2623

3166

3,242

3,503

8,621

10,81
4

Total Assets
ST Loans(notes payable)
Total Liabilities

Shareholders' Equity
6427
(Source: Biogen_Annual Report 10k)
(Table 4.1.2)

6964

Cash Flow Statement (All values in USD 000s)

Cash Flow Statement

2011

2012

2013

2014

Net Income

1267

1380

1,862

2,942

Cash from operating

1728

1880

2,345

2,942
(1,54
3)

Cash from investing

(1650)

(950)

(1,60
5)

Cash from financing

320

877

(717)

(756)

52

24

643

Net Cash generated

(242)
(Source: Biogen_Annual Report 10k)
(Table 4.1.3)
Event Calendar

30

500
450
400
350
300
250
200
150
100
50
0

(Source: http://media.biogen.com/ )
(Chart 4.1.1)

Ratios
Particular

2011

2012

2013

2014

Gross Profit Margin

90.75

90.12

87.63

87.93

Operating profit
margin

-22.29

-22.36

-20.75

-19.45

Net profit margin

21.31

22.34

30.82

33.82

31

ROE

18.20

18.40

27.42

33.77

ROCE

-0.16

-0.16

25.0

32.1

ROIC

1569.8
5

2269.8
4

26.9

34.6

4.39

5.13

8.96

13.83

36.22

44.68

Diluated Eps
Book value

27.23
29.38
(Table 4.1.4)

32

Company name: Sucampo

Income Statement (Non-GAAP values in USD 000s)
Particular

2011

2012

2013

2014

54761

81487

89,594

115,45
0

3030

12,402

16,269

Gross Profit

54761

78457

77,192

99,181

SG&A

48917

47150

45,021

43,815

R&D

33263

20757

21,231

20,217

Operating Profit

(27419)

10550

10940

35149

Profit Before Tax

(31644)

10210

12687

35051

Net Profit

(36252)

13126

16615

49056

0.12

0.24

Revenues
COGS

Diluted EPS
(0.44)
0.07
(Source: Sucampo_Annual Report_10k)
(Table 4.1.5)
Balance Sheet (All values in USD 000s)
Balance Sheet
Cash and Cash
Equivalents
Accounts receivables

Inventories
LT Investments
Net Fixed Assets

2011

2012

2013

2014

50622

52022

44,102

71,622

4616

1360

5,407

5,338

114916

92914

11,353

122,32
4

998

14408

7,219

13,540

1669

1540

1,156

763

33

157569

127796

136,87
7

ST Loans(notes
payable)

20400

19129

26,892

8,240

Total Liabilities

118975

84766

77,908

59,262

Shareholders' Equity
38594
43030
(Source: Sucampo_Annual Report 10k)
(Table 4.1.6)

58,969

82,312

Total Assets

141,57
4

Cash Flow Statement (All values in USD 000s)

Cash Flow Statement
Net Income
Deprecation & Amortization
Change in Working Capital
Cash from operating

Cash from investing

2011

2012

2013

2014

(17306)

5061

7,015

13,128

1308

1488

1,488

1,090

(4734)

1531

(11,538)

(6,040)

(19991)

12000

(4,209)

30,878

(12,616)

(12,959
)

27901

(589)

Cash from financing

(8081)

(8446)

10,581

(15,414
)

Net Cash generated

1419

1360

(7,920)

27,520

34

Net Income
Deprecation & Amortization

(17306)

5061

7,015

13,128

1308

1488

1,488

1,090

(Source: Sucampo_Annual Report 10k)

(Table 4.1.7)
Event Calendar
Event Calendar
25
20
15
10
5
0

(Source: http://www.sucampo.com/press-release-archive/ )
(Table 4.1.2)

Ratios
Particular

2011

2012

2013

2014

Gross Profit Margin

100.00

96.28

86.16

85.91

Operating profit margin

-50.07

12.95

12.21

30.45

Net profit margin

-66.20

16.11

18.54

42.49

35

ROE
ROCE

ROIC
Diluated Eps
Book value

-78.45

32.16

32.58

69.44

-0.25

0.11

0.11

0.32

52945.84

59024.86

58875.34

68241.0
5

-23.63

9.20

12.56

35.23

1.39

1.85

0.92

(Table 4.1.8)

36

1.03

Company name: The Medicines Company

Income Statement (Non-GAAP values in USD 000s)
Particular

2011

2012

2013

2014

Revenues

484,732

558,588

687,684

724,408

COGS

156,866

177,339

262,785

287,630

Gross Profit

327,866

381,249

424,899

436,778

SG&A

159,610

171,753

264,958

342,164

R&D

110,180

126,423

146,930

159,181

Operating Profit

(110,112
)

(126,355
)

(146,929
)

(159,180
)

Profit Before Tax

127,877

51,170

15,260

(32,348)

Net Profit

484,732

558,588

687,684

724,408

Diluted EPS
2.35
0.93
(Source: MDCO_Annual Report_10k)
(Table 4.1.9)

0.25

(0.50)

Balance Sheet (All values in USD 000s)

Balance Sheet

2011

2012

2013

2014

Cash and Cash Equivalents

50622

52022

44,102

71,622

4616

1360

5,407

5,338

Accounts receivables

Inventories

114916

92914

11,353

122,32
4

998

14408

7,219

13,540

LT Investments
37

Net Fixed Assets

1669

1540

1,156

763

157569

127796

136,87
7

20400

19129

26,892

8,240

118975

84766

77,908

59,262

Shareholders' Equity
38594
43030
(Source: MDCO_Annual Report 10k)
(Table 4.1.10)

58,969

82,312

Total Assets
ST Loans(notes payable)
Total Liabilities

141,57
4

Cash Flow Statement (All values in USD 000s)

Cash Flow Statement

Net Income
Deprecation & Amortization

2011

2012

2013

2014

(17306
)

5061

7,015

13,128

1308

1488

1,488

1,090

1531

(11,53
8)

(6,040)

Change in Working Capital

(4734)

Cash from operating

(19991
)

12000 (4,209)

30,878

27901

(12,61
6)

(12,95
9)

10,581

(15,41
4)

Cash from investing

Cash from financing

(8081)
38

(589)

(8446)

Net Cash generated

1360 (7,920)

27,520

5061

7,015

13,128

Deprecation & Amortization

1308
1488
(Source: MDCO_Annual Report 10k)
(Table 4.1.11)
Event Calendar

1,488

1,090

Net Income

1419
(17306
)

45
40
35
30
25
20
15
10
5
0

(Source: http://ir.themedicinescompany.com/phoenix.zhtml?
c=122204&p=irol-news&nyo=4 )

(Table 4.1.3)

Ratios
Particular
Gross Profit Margin

2011

2012

2013

67.64%

68.25%

61.79%

39

2014
60.29

-21.37

21.97
%

Operating profit
margin

-22.72%

22.62%

Net profit margin

26.38%

9.16%

2.22%

-4.47%

ROE

49.47%

9.32%

2.06%

-3.05%

ROCE

-0.41%

-0.22%

0.19%

0.17%

ROIC

2207.52
%

4174.91

4486.48

3737.0
3

Diluated Eps

2.35
0.93
(Table 4.1.12)

40

0.25

(0.50)

4.2 Comparison
Revenue
140000
120000
100000
80000
60000
40000
20000
0
-20000
-40000
-60000

Biogen
Sucampo
The Medicines
Company
2011

2012

2013

2014

(Chart 4.2.1)
Net Profit
150000
100000
50000 Biogen

Sucampo

The Medicines Company

0
2011

2012

-50000

(Chart 4.2.2)
EPS

41

2013

2014

15
10

Biogen
Sucampo

The Medicines
Company

0
2011

2012

2013

2014

-5

(Chart 4.2.3)

Chapter 5
Conclusions & Recommendations
5.1 Conclusions
a) Company profiling helps us in understanding the companies
viability as a long term prospective.
b) Detailed analysis of financials covering Income Statement,
Balance sheet, and cash flow statement and the amount spend
by these companies on Research and development helps us to
understand the financial viability of the company.
c)
Complete financial review, calculation of data working on
foreign companies going through sec filings and all showed us
how systematic they were in publishing the reports and maintain
transparency for investors
d) There are 8 marketed products in Biogen and even the product
pipeline is big. Zinbryta is been filed with FDA for approval and is
likely to be approved by FDA. The amount spend by Biogen on
Research and development has increasing from four years. The
revenues of biogen have grown at a CAGR of 24%. From a long
term prospective this company is definitely good for the
investors to buy.
e) There is only one product of Sucampo which is been in the
market and there are 5 products in the pipeline in the phase 2
stage. The revenue has grown at a CAGR of 28% for the last four
years. The amount spend by sucampo on research and
42

development has shown a decreasing trend. As of now this stock

wont be an attraction to the investors
f) There are five products of the The Medicines company which are
already in the market and four products in the pipeline. The
revenue of this company has grown at CAGR of 14% and the
amount spent by these companies on R&D has also shown a
decreasing trend. As of this stocks wont be viable option for the
investor in the short run but for the long term this could be a
good option.

43

5.2 Recommendations
a) The Drug to be approved in US FDA takes very long time which
affects the companys product pipeline. They could speed up this
process which would help the company.
b) The slow approval process of FDA affects the companies with
small market capitalization.
c) Companies can tie up with foreign companies to market their
products which would help them to widen their reach and would
contribute to revenues.
d) Companies should not be totally dependent on revenues from
one product category and should diversify its manufacturing of
different product category.
e) They should also collaborate with companies which would help
them to share their R&D expenses and even speed up the
process of manufacturing.

44

ANNEXURES
A1

List of table
Sr
No
1

Table no

Particular

Page No

2.3.1

Management Team-Biogen

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

2.3.2
2.3.3
2.3.4
2.3.5
2.3.6
2.3.7
2.3.8
2.3.9
4.1.1
4.1.2
4.1.3
4.1.4
4.1.5
4.1.6
4.1.7
4.1.8
4.1.9
4.1.10
4.1.11
4.1.12

Shareholding Pattern-Biogen
Financial Information- Biogen
Management team- Sucampo
Shareholding Pattern-Sucampo
Financial Information- Sucampo
Management Team MDCO
Shareholding Pattern-MDCO
Financial Information-MDCO
Income Statement-Biogen
Balane Sheet-Biogen
Cash Flow statement- Biogen
Ratios- Biogen
Income statement- Sucampo
Balance sheet- Sucampo
Cash flow statement-Sucampo
Ratios- Sucampo
Income Statement- MDCO
Balance sheet- MDCO
Cash flow statement- MDCO
Ratios- MDCO

45

10
10
11
12
13
14
15
16
21
22
22
23
23
24
25
26
26
27
28
38

A2

List of charts
Sr
No
1
3
4
6
7
8
9
10
11

Chart
No
2.3.1
2.3.2
2.3.3
4.1.1
4.1.2
4.1.3
4.2.1
4.2.2
4.2.3

Particular

Page no

R&D Expenditure-Biogen
R&D Expenditure- Sucampo
R&D Expenditure- MDCO
Event calendar-Biogen
Event calendar-Sucampo
Event calendar-MDCO
Revenue-Comparison
Net Profit- Comparison
EPS-Comparison

9
11
14
23
26
29
31
31
31

46

B.

Bibliography
http://www.fda.gov/Drugs/DevelopmentApprovalProcess/
http://www.statista.com/topics/1719/pharmaceutical-industry/
http://www.cognizant.com/InsightsWhitepapers/The-Future-of-Pharma-AUS-Sector- Review.pdf

https://www.biogen.com/en_us/about-biogen/leadership
http://www.nasdaq.com/symbol/biib/ownership-summary
http://www.sucampo.com/about/management
http://www.sucampo.com/science-innovation/pipeline/
http://www.nasdaq.com/symbol/scmp/ownership-summary
http://www.themedicinescompany.com/about/leadership-team
http://www.themedicinescompany.com/pipeline
http://www.nasdaq.com/symbol/mdco/ownership-summary
http://media.biogen.com/
http://www.sucampo.com/press-release-archive/
http://ir.themedicinescompany.com/phoenix.zhtml?c=122204&p=irolnews&nyo=4

47

Abbreviation
a)
b)
c)
d)
e)
f)
g)
h)
i)

10Q: Quarterly Report

10k: Annual Report
ASTO: Asset turnover ratio
Bn : Billion
CAGR: Compounded Annual growth rate
FDA: Foreign Drug Authority
GAAP: Generally accepted accounting principle
EPS: Earning per share
EBITDA: Earning before interest tax depreciation and
amortization
j) Mn: Million
k) NDA: New drug application
l) ROE: Return on equity
m) ROIC: Return on investment capital
n) ROCE: Return on capital employed
o) ROA: Return on asset
p) MDCO: The Medicines Company

48