Gilead May Take Page Out of Pfizer's Game Plan as Firm Hunts for M&As to Sustain Growth
February 3, 2016
By Alex Keown, BioSpace.com Breaking News Staff
FOSTER CITY, Calif. – Gilead Sciences is atop the hepatitis C market with its blockbuster treatments Harvoni and Sovaldi, with some analysts predicting strong revenue streams for years to come. However, challenger drugs on the hep C market, such as Merck ’s Zepatier, priced far below Gilead’s drugs, the company may look for acquisition opportunities to sustain growth, Bloomberg reported.
A top 10 pharmaceutical company, Gilead is projecting that revenue from its hepatitis C drugs will be “fairly flat or stable” in the United States, with some growth in Europe, Bloomberg reported. Harvoni and Sovaldi are projected to generate revenue of $20 billion this year. Still, John Miligan, Gilead’s executive officer, told Bloomberg that he was eying some growth opportunities, particularly in the oncology, inflammatory diseases and liver disease fields. Those opportunities would likely come through acquisitions and company revenue could grow at a rapid pace, much in the same way Pfizer grew in the 1990s. Writing in Forbes, John LaMattina, the former head of Global Pfizer R&D, said in the 1990s Pfizer’s internal research and development pipeline struggled to keep up with the demands of shareholders, which meant strong M&A activity. After snapping up several companies such as Wyeth and Hospira, Pfizer most recently struck a deal with Ireland-based Allergan, which is expected to create a combined pipeline of more than 100 mid-to-late stage programs in development and greater resources to invest in R&D and manufacturing is expected to sustain the growth of the innovative business over the long term.
On Feb. 2, Gilead reported 2015 revenue of $32.6 billion, a big increase from 2014 revenue of $24.9billion. Gilead’s product sales during 2015 were $32.2 billion compared to $24.5 billion in 2014, primarily due to sales of Harvoni which was launched in October 2014, partially offset by a decrease in sales of Sovaldi, the company said in a statement.
Only a few weeks ago Sean Williams, an analyst with the Motley Fool, predicted Gilead will continue to dominate the HCV market, as well as maintaining a strong position in the HIV market. Williams said with about 4 million people diagnosed with HCV in the United States, Gilead’s Sovaldi and Harvoni, a combination of Sovaldi and ledipasvir, have only been used to treat about 300,000 patients. Globally, there are approximately 180 million people diagnosed with HCV, which means “Gilead's HCV franchise looks to have a multi-decade growth opportunity on its hands,” Williams said. Additionally, in January, Gilead submitted a New Drug Application to the U.S. Food and Drug Administration for tenofovir alafenamide, an investigational, once-daily treatment for adults with chronic hepatitis B virus infection. The company is also continuing to use Sovaldi in combination with other drugs, including “a triplet drug comprised of Sovaldi, velpatasvir, and a protease inhibitor” for the treatment of genotype 3 HCV patients, Williams said. Also, in the waning days of 2015, Harvoni was approved for expanded use in patients with genotype 4, 5 and 6 chronic hepatitis C virus (HCV) infection and in patients co-infected with HIV by the U.S. Food and Drug Administration. In addition, Harvoni plus ribavirin (RBV) for 12 weeks was approved as an alternate therapy to 24 weeks of Harvoni for treatment-experienced, genotype 1 patients with cirrhosis.
While Gilead is possibly eying growth through acquisition, the company is facing scrutiny for the price of its hepatitis treatments, which can reach $95,000 for a 12-week regimen. The company is being eyed by a congressional committee looking at the price of prescription treatments and has also been threatened with a lawsuit in Massachusetts over the pricing of Harvoni and Sovaldi.
The high cost of Gilead’s drugs has led some prescription services, such as Express Scripts Holding Company to drop coverage of Sovaldi because of the costs. Likewise, the Southeastern Pennsylvania Transportation Authority filed a lawsuit against drugmaker Gilead charging the company is abusing its rights as a patent holder “by charging discriminatory prices that apparently have no other rational basis other than to inflate the company's bottom line.” In addition, the U.S. Senate report said the high cost of the drugs has also been damaging to Medicaid programs. According to the investigation, Medicaid programs spent $1.3 billion before rebates for the hepatitis C drugs to treat fewer than 2.4 percent of enrollees diagnosed with the liver disease. More than 700,000 hepatitis C patients on state Medicaid programs are still waiting to receive their medications.