Gilead (GILD) put up some pretty sweet numbers this quarter totally blowing away analyst expectations with both revenue and net income up over 25% each.
Other high points included a gross profit margin of 84%, prompting some to make the claim that the era of spending 30% of your revenue on sales and marketing is over. I roundly reject this hypothesis. The age of large sales forces is not over.
Gilead is an exception to the rule. They don’t make drugs for restless leg syndrome, erectile dysfunction, social anxiety disorder or any number of consumer driven products. Their major markets (HIV and PAH) are niche diseases where practitioners already know the product and its differentiation; there is simply just less of a need for a huge sales force.
I give Gilead a lot of credit for resisting the urge to add bloat for the sake of it. Their smart management team is just one of the many reasons they flirted with being the second largest biotech company in the world as measured by market capitalization earlier this year.