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Gilead Sciences Fourth Quarter Earnings

The U.S. based organization has posted better than expected earnings earlier this week.

On Tuesday, the biotech giant, Gilead Sciences Inc. announced its fourth quarter earnings. Getting ahead of Wall Street’s analysts expectation of $3 earnings per share and revenue of $8.14 billion, the company posted the revenue of $8.5 billion and EPS of $3.18. The revenue of the company is 16.5% higher year-over-year.

The large-cap biotech revenue was chiefly generated through the high sales of its HCV treatment drugs; Sovaldi and Harvoni. In the year 2015, around $32.15 billion revenue was generated through the drugs sales. The company launched the drug Sovaldi back in December 2013 which offered 90% cure rate of the chronic liver diseases including Hepatitis C. Moreover, the drug lessened the time period of the treatment from 6-12 months to only 3-6 months. Within a year later, in October 2014, the biotech titan introduced Harvoni which was more advanced than its predecessor. Together the two drugs reduced the treatment span to 2-3 months. On top of it, Harvoni offers almost 100% cure rates too. The Californian based firm has estimated that around 3 million Americans are effected by hepatitis C.

Although, in the fourth quarter, the sales of the drugs had 2.5% sequential increase however, the drug sales in U.S. were weaker. The drugs revenue constitutes 52% of Gilead’s overall revenue. The major growth in sales was generated from Japan. The weak sale in U.S. is due to the criticism the company has received including the regulatory authorities for the “hefty” price of them. The recent accusation is by Massachusetts Attorney General Maura Healey who claimed last month that the drug price “may constitute an unfair trade practice in violation of Massachusettslaw.” Harvoni’s tentative 12-week program has an accumulated cost of $94,500 which has been forced to a discount by health insurers and other payers including U.S. Department of Veteran Affairs. Additionally, Merck& Co.’s –one of the Foster City, Calif. firm’s rivals –Zepatier drug, a cure for HCV, is at a price 42% lesser than Gilead’s drugs. That is to say, Merck’s Zepatier 12 week treatment program will cost about $54,600.

Following the approval of the Zepatier drug, the Gilead stock has been under a lot of pressure. However, the $125 billion pharmaceutical company has many plans up its sleeves to implement in the future. The stock can be plunged up after the company’s likely buyback of $12 billion. Moreover, it has increased its dividend by 10%. It has also hinted about its cash hoarding for future mergers and acquisitions. Talking about the opportunities of acquisitions, on a conference call, Gilead’s current COO John Milligan, who will take the position of CEO in March, stated that “the environment has shifted dramatically in our favor.” The drug maker has also stated that it anticipates the 2016 sales to be around $30-$31 billion..

As at the market which closed on Wednesday, Gilead’s stock price was $86.39.

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