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Tuesday November 03, 2009
Gilead (GILD): 4-in-1 HIV drug
The contributing editor to Personal Finance explains, "Already the market leader in HIV antivirals, Gilead is in the beginning stages of developing Quad, the first-ever, four-in-one AIDS pill." Here is her review. "The manufacture of HIV drugs, which accounts for more than three-quarters of revenue, is Gilead’s highest-grossing business. "This segment has held up through the Great Recession; in the second quarter product sales for the antiviral franchise grew 26% from a year ago to $1.41 billion. 
"The spike resulted from higher sales of Truvada and Atripla, two frequently prescribed HIV drugs. Truvada’s sales totaled $608.1 million, an 18% increase from the second quarter of 2008; Atripla’s sales shot up 60% to $569.1 million. "In total, second quarter revenue rose 29% to $1.65 billion, largely due to the $1.4 billion purchase of CV Therapeutics. With this acquisition Gilead expanded its cardiovascular drug portfolio, improving its ability to compete with its peers. "Revenue from the firm’s HIV drugs should continue to grow in coming years, but its treatments for liver disease and respiratory conditions offer additional growth potential. "It Quad four-in-one AIDS pill will combine the components of Truvada with two new experimental drugs. Patients can enjoy the convenience of taking just one pill with fewer adverse side effects compared to its competitors. "The new treatment will be made up of only Gilead compounds; even if patients move from existing Gilead HIV pills to the Quad, the biotechnology giant will still benefit from improved margins on higher revenues. "Analysts expect Quad to transform the HIV market between 2013 and 2018, at which point the drug could be the highest-selling antiretroviral treatment. "In 2008 HIV antiretroviral sales reached $11 billion and are expected to climb to $18 billion by 2018, positioning Gilead for an even brighter future of profits and growth. "With more than 1 million people infected with HIV in the US and only half being treated, Gilead will be able grab more market share. "Health care stocks have underperformed the S&P 500 by 25% in the wake of government efforts to reform an industry that accounts for a sixth of the US economy. Uncertainties about the implications for earnings have weighed on share prices. "But along with the growth in sales and revenues, second quarter ratios demonstrate that Gilead does a great job generating returns on capital and produces significant free cash flow. Even during the economic downturn, Gilead has remained stable and profitable. "The strength of its HIV franchise and upcoming products for other diseases make Gilead Sciences a buy up to 55." |
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