Jazz Pharmaceuticals plc (NASDAQ:JAZZ) is a global biopharmaceutical company focused on developing and commercializing innovative medicines. The company primarily targets areas such as neuroscience and oncology. In the competitive landscape, Jazz faces peers like BioMarin Pharmaceutical Inc., United Therapeutics Corporation, Incyte Corporation, and Alnylam Pharmaceuticals, Inc., each with varying efficiencies in capital utilization.
Jazz Pharmaceuticals has a Return on Invested Capital (ROIC) of 7.88% and a Weighted Average Cost of Capital (WACC) of 8.85%. This results in a ROIC to WACC ratio of 0.89, indicating that Jazz is not currently generating returns that exceed its cost of capital. This suggests a need for the company to improve its capital efficiency to enhance shareholder value.
In comparison, BioMarin Pharmaceutical Inc. has a ROIC of 5.68% and a WACC of 5.26%, resulting in a ROIC to WACC ratio of 1.08. This indicates that BioMarin is generating returns above its cost of capital, showcasing better capital efficiency than Jazz. This efficiency can be a competitive advantage in the biopharmaceutical industry.
United Therapeutics Corporation stands out with a ROIC of 15.44% and a WACC of 6.81%, leading to a ROIC to WACC ratio of 2.27. This high ratio highlights United Therapeutics' strong efficiency in generating returns, making it the most efficient among the peers analyzed. This efficiency can contribute to stronger financial performance and investor confidence.
Incyte Corporation and Alnylam Pharmaceuticals, Inc. show inefficiencies in capital utilization. Incyte has a ROIC of 0.17% against a WACC of 7.33%, resulting in a low ROIC to WACC ratio of 0.02. Alnylam's negative ROIC of -4.21% compared to its WACC of 5.88% results in a ROIC to WACC ratio of -0.72, indicating significant challenges in covering its cost of capital.
