Abstract
In 2006, Gilead took a gamble, believing the short-term costs incurred through
the acquisitions of Corus Pharma, Myogen and Raylo Chemicals would lead to
long-term growth for the company. The consequence of which was, despite record
sales, Gilead reported its biggest income losses in recent corporate history.
In the wake of this, in 2007, Gilead focused on the integration of its
worldwide organisation and infrastructure to regulate the company' s capital
requirements. Through this strategy, Gilead recovered stronger operating
results for fiscal 2007 and, in fiscal 2008, double-digit growth was seen in
company revenue and income.
Traditionally, the company has been strongly focused on the treatment of
infectious diseases, especially HIV, and was in danger of becoming
pigeon-holed within an increasingly competitive market. The take-overs of
Corus Pharma and Myogen signalled a new direction for Gilead, moving the
company into the fields of respiratory and cardiopulmonary disease. These
purchases included several late-stage, novel candidate compounds which have
doubled the size of Gilead' s R&D pipeline.
Gilead' s HIV product portfolio remains its strongest asset, generating 81.2
per cent of total company sales in 2008. Atripla and Truvada are expected have
combined sales approaching US$5 billion by 2013, and will remain the main
growth drivers for the company in the foreseeable future. Beyond the HIV
portfolio, AmBisome and Hepsera remain important products for Gilead and are
forecast to contribute strongly to sales. In addition, the acquisition of
Myogen has provided Gilead with exclusive rights to Letairis, which was
launched for pulmonary hypertension in the US and Europe in 2007 and 2008
respectively. Initial sales of Letairis have been promising, further
validating Gilead' s move into non-virology fields. Viread is the only major
product forecast to experience declining sales, and this can be attributed to
cannibalisation effects caused by the success of Atripla and Truvada. Seeking
to maximise the value of Viread, Gilead is looking to launch the product for
the treatment of hepatitis B. The acquisition of Raylo Chemicals and Nycomed' s
Irish subsidiary provides Gilead with the manufacturing facilities and
infrastructure to meet growing demand for all its products, especially the new
HIV combination drugs.
It would seem Gilead' s gamble seems justifiable, with the acquisitions
providing the company with the tools for long-term growth. One remaining
significant threat to this growth is Gilead' s reliance on its key agreements
with other pharmaceutical companies. In 2007, royalty and contract revenue
accounted for 11.8 per cent of company revenue, and much of this can be
attributed to improved sales of Tamiflu by Roche. This contribution has been
reduced to 4.7 per cent of company revenue in fiscal 2008 due to lower demand
for Tamiflu. Further declines are anticipated. Furthermore. Atripla has
already been cited as a key product for future growth, however, its success
will depend on the working relationship between Bristol-Myers Squibb, Merck &
Co and Gilead, who are working in a three-way joint venture centred on the
marketing of this product.
This new strategic analysis report Gilead Sciences: Pipeline " Products "
Performance " Potential, provides a complete and critical review of the
company and includes unique and independent assessments and forecasts of key
products. Buyers of the web edition receive online access for one year via an
easy-to-use interface with fast navigation and a full text search facility.
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