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Gilead Sciences: The Sales Tell The Story

May 03, 2018 1:06 PM ETGilead Sciences, Inc. (GILD)ABBV, JNJ, MRK79 Comments
David Butler profile picture
David Butler


  • Gilead's first quarter is a real bummer.
  • The company continued their trend of falling sales, and subsequently smaller earnings.
  • With no big catalysts for change in the near future, I am bearish on the stock.

I've been right about Gilead Sciences (NASDAQ:GILD) for three years. The company has suffered from competition, rather than public scrutiny on pricing. The stock performance can be accurately tracked through their product performance. The sales trends through the past quarters have told us everything we need to know. As their once lucrative lineup of Hepatitis C drugs declines in sales, the company has not been able to counter the sales declines with a substitute. Sure, they have HIV gains, and the huge purchase in oncology could be quite fruitful. But right now there are declines in net income that can't be overlooked. The market reaction to Gilead's first quarter results demonstrate that.

A 59% fallout in Hep C drug sales does not a good quarter make. HCV drug sales are down to $1.04 billion in Q1. That's a stark contrast to Q1 2017's $2.57 billion. The company cited the fallout to be primarily linked to both Harvoni and Sovaldi, the company's biggest Hep C products. Though the release also admitted the fallout in Epclusa due to growing competition in the United States. I predicted the effects of this competition last year when competitors began to ramp up their own Hep C. treatments.

The market has become so overwhelmed with players, and subsequent pricing wars, that Merck (MRK) gave up further development in the field last fall. They are selling their current drug, Zepatier, and not planning on putting any further investment into new treatments. Johnson & Johnson (JNJ) has also ceased investment.

It's sort of the catch 22 of curing a disease. You create a finite customer base for yourself. It worked well for Gilead when they were the only big honcho. But now there are multiple players in a rapidly declining market space. Abbvie's (ABBV) drug "Mavyret" has proven to

This article was written by

David Butler profile picture
Bit of a stock nerd. Contributor for SeekingAlpha and Jim Cramer's Real Money. I like earnings, and have very little time for chart analysis. It doesn't matter how many squiggles a chart has if the company doesn't drive meaningful earnings per share.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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