Gilead Science (GILD) is a pharmaceutical research company that competes with companies such as GlaxoSmithKline (GSK) and Pfizer (PFE). From an IPO of $86.25 million in 1992, the company has since grown to a multi-billion-dollar market cap and now competes with other large-cap companies in its sector.
A number of successful products contributed to Gilead Sciences' growth - notably Truvada, an HIV drug, and Tamiflu, a treatment for influenza. In 2005, Congress approved a $1 billion earmark for purchasing Tamiflu in the wake of fears that bird flu would spread. This, in addition to major acquisitions such as NeXstar Pharmaceuticals, Triangle Pharmaceuticals and Pharmasset, has positioned Gilead to compete directly with the pharmaceutical industry’s biggest players. Pharmasett’s $11 billion acquisition was especially noteworthy for including Sovaldi, a drug for hepatitis C that is positioned to be the primary treatment of the disease. Sovaldi not only beat investor estimates in its first year of sales but also emerged as the most financially successful debut ever for a new drug on the market.
While Gilead’s diversified product and research lines put it in direct competition with the major pharmaceutical producers, it is the successful Sovaldi launch that has been a primary target for larger competitors, and that product's success has been key to Gilead's valuation. AbbVie (ABBV) released a competing product, Viekira Pak, which has forced Gilead to compete on price. Merck (MRK) has also announced intentions to compete in the hepatitis C market, pursuing an option that would shorten the treatment period from Sovaldi’s eight weeks to a four-week schedule. Like many of Gilead’s competitors, Merck continues to pursue alternatives to Sovaldi, though initial results have been mixed, and Sovaldi remains dominant. Other companies have tried to squeeze into the space with products complementary to Sovaldi. Achillion Pharmaceuticals is a small-cap company that has been pursuing a drug to be used in combination with Sovaldi and has reported promising results.
Prior to Sovaldi, 75% of Gilead’s revenue came from drugs treating HIV and AIDS, and these remain a large source of its revenue. The star is Truvada, which has been on the market since 2004 but experienced a breakthrough in 2012 when the FDA approved it as the first preventative drug for HIV. In addition to Truvada, Gilead offers Atripla, Complera, Viread and Emtriva for treating HIV.
Like the hepatitis C space, competitors have been challenging Gilead’s domination of HIV products. GlaxoSmithKline has partnered with Pfizer to produce Dolutegravir, a competitor to Gilead’s Atripla. GlaxoSmithKline was the first to market with HIV treatment drugs in the 1980s but has since been surpassed by Gilead, and GSK has been pushing to take back the lead. Other major competitors competing for Gilead’s market share in HIV treatment are Bristol-Myers Squibb (BMY) and Roche Holding AG (RHO6).