Why Gilead Sciences, Inc. (NASDAQ:GILD) Crashed 2016, Despite Strong Drugs In Market?

Biotech Stocks

In 2016, Gilead Sciences, Inc. (NASDAQ:GILD) shocked the peer with $40 billion in value and mind it, none of its top selling drugs went off patent. In fact, this company had brought to the market, a range of new products, which included Odefsey and Descovy for HIV. Its latest product in the hepatitis C franchise, Epclusa, is another thing to talk about.  But, what we are more concerned here is about its spluttering. How can a biotech company with hands full of happiness stammer in such a plight? From where we see, the problem lies mainly in the one and only wrong strategic move.

Refusal to buy revenue growth

The company had a ferociously aggressive pricing strategy for the two drugs, Sovaldi and Harvoni, which in turn, paved the doom’s way for falling share price in 2016. The aggressive pricing led to discontent among other players, which caused a war over prices altogether. When Viekira Pak, the AbbVie’s drug came to the market, it could not create a competition that would crush Gilead’s market share. But, what it did was, allowed the players to force this company in offering good amount of discounts for hep C drugs.

The result of this action was Gilead’s hep C drugs falling revenue. The condition was such that the revenue dropped over 18% during first three quarters of 2016.

All that the market cars about is, the company’s top-line growth

The investors in this market are not concerned how much cash you are maintaining in your financial books. There is a need of just one thing- the top-line growth, which will drive the ultimate revenue and keep the company buzzing with profit.

Irrespective of the valuations a biotech company has, the investors are looking for the continued growth through better revenues. The hep C revenue of the company is what might be the need of the hour. Rewarding revenues, enduring growth and a pricing strategy that will take on the competition with survival- this is what the investors of a biotech firm like this one, need!


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