More Screening Will Ensure Patient Starts Remain Robust
Analysts are basically pricing in negative growth in the near-term and flat earnings growth over the next five years. The reasoning behind these projections is because there is a plethora of quality drugs in the HCV space at present which have the potential to cure patients at a much faster clip than before. Furthermore, fierce pricing competition, especially from the likes of Merck’s Zepatier, has resulted in Gilead having to offer larger discounts to keep its strong market share in this area. Initially, there was a whopping $40,000 difference between Merck’s HCV treatment plan and Gilead’s Harvoni, and this difference definitely led to lower sales in recent quarters. However, what the bears are missing here is that Gilead is the only company with substantial treatment plans across all genotypes. Merck’s Zepatier, for example, is only approved for genotypes 1&4, and although it is much cheaper, it’s restrictions definitely come against it on a general scale.
Epclusa Will Continue To Gain Market Share
This is where Epclusa has the potential to steal market share from its competitors due to its approval across all genotype HCV infections. The drug is cheaper than Sovaldi and it presently being used for genotype 2 & 3 patients because of limited competition. Epclusa brought in $640 million in its first full quarter in Q3 but I see meaningful potential here for a few reasons. Firstly because it can be used across the whole patient range, the drug has been added to medicare and medicaid programs which mean it will be the preferred go-to option for many insurance policy holders. Secondly, initial results state that the drug is achieving higher cure percentages, which means at present, its 12-week treatment plan is the most effective in the HCV space. Combine this with a cheaper price (especially against genotype 3 competition) and it becomes apparent that Epclusa should continue to steal market share from its competitors.
Also Read: New Revolutionary Drugs To Drive Gilead Sciences
Summary
To sum up, the market has basically written off a stabilization in HCV sales for a number of years. Many investors believe that heightened competition from the likes of Merck will cripple Gilead’s margins over time. However, Gilead will continue to concentrate on quality, which over time will result in more sales. Buyers will always pay a premium for quality in every market and this is no different. This is why I would back the company, especially considering its track record when it acquired Sovaldi by buying out Pharmasset in 2012.
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The article GILD Stock: Can Gilead Sciences Inc Turn Around Its HCV Sales? originally appeared on amigobulls.com. Watch our analysis video on GILD (1).
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