The market has been too adamant on seeing topline growth from Gilead Sciences, Inc. (NASDAQ:GILD) and the absence of it has led the shares price to be punished. Revenue growth in red due to plummeting HCV sales and supposition that a bottom is nowhere in picture which have been discounted into the stock are major risks. Yet, the potential reward from company far offsets the threats on the long-term.
Most investors and analysts spent the better part of 2016 attempting to pick a bottom for Gilead shares price with little success. The firm’s share price dropped by 29% effectively eroding $35 billion of its value as the year ended. This was the outcome of the investors’ fear playing out pertaining to its biggest concern, whether company could stabilize its dropping HCV sales.
Gilead’s dominance in the HCV segment through its drugs Harvoni and Sovaldi came under massive pressure with the launch of lower cost options such as Zepatier and Viekira Pak which in turn prompted the company to provide substantial rebates for its medicines.
Still, this wasn’t sufficient to stop the massacre considering that the preliminary difference between Gilead’s treatment plan and Merck’s was $40,000 and hence, there was no surprise that the former lost a notable part of its market share. The company’s HCV sales dropped by over 18% over the course of the initial nine months of 2016 and dropped 31% in the fourth quarter, painting a bleak picture for investors.
Moreover, while the firm’s peers aggressively pursued purchases to drive growth, Gilead chose to stay on the sidelines in spite of recording plenty of funds in its balance sheet. Considering all these factors, the market hasn’t been awestruck with company and this has been seen in its abysmal share price as shareholders just can’t see a quick turnaround. Going forward, this can change as the company is taking substantial steps to revitalize its business in this year.