When Gilead paid $11 billion for Pharmasset in 2011, it was seen as a risky move. Now, it’s clearly one of the biggest biotech steals in many years.
Gilead announced today another quarter of blockbuster sales for its extremely effective Hepatitis C drugs Sovaldi (the reason it acquired Pharmasset) and Harvoni, a once a day combination of Sovaldi with another drug. Sales rose 26% from a year ago to $8.24 billion, more than half of which came from those two drugs. Net income was $4.49 billion.
The rise of these drugs has been nothing short of meteoric. For the past two quarters, Harvoni alone has outsold AbbVie’s Humira, an anti-inflammatory drug that had been the world’s best seller for years. When you combine Sovaldi and Harvoni together, it’s not even close. They’re the top selling new drugs in the history of the industry:
These drugs have led to a huge increase in Gilead’s stock over the past few years, with the company’s market cap growing by more than $100 billion since acquiring them. It’s one of the six companies that have driven the vast majority of the total gains in the Nasdaq this year (paywall). Shares were up a further 3% in after hours trading.
These sales results haven’t come without controversy. The drugs are priced at around $84,000 and $94,000 per treatment in the United States, prompting scathing criticism from the government, patients, and physicians. Pushback from insurers eventually led to significant discounts. Despite that backdrop and a competing hepatitis drug from AbbVie called Viekira Pak, sales have continued to soar.
The good times might not last forever, though. Merck has a competing drug that should debut next year, and pressure Gilead’s market share.
A huge amount of cash, and a fear that sales might be peaking, have increased calls for Gilead to join in this year’s pharmaceutical M&A frenzy. It will be extremely tough to find another one as good as Pharmasset.