Gilead Sciences, Inc. (NASDAQ:GILD), the undisputed leader in the HCV drugs market, is now set to establish a firm foothold in the global HIV drug market too, by tapping into new high-growth opportunities. The biotech giant earned a significant victory yesterday in the form of an approval from the European Commission for its blockbuster HIV drug, Truvada. The approval would allow the drug’s use in combination with safer-sex practices to minimize the risk of sexually acquired HIV-1 infection.
The news was hailed by investors as a big victory for Gilead. The biotech’s stock went up nearly 0.7% to touch its high of $81.53 in midday trading on Monday, August 22, 2016. This came as a much-needed boost for the drug maker’s shares which have lost nearly 20.78% of their value so far this year, significantly underperforming the market. The iShares NASDAQ Biotechnology Index (IBB) has been down by 13.16% in the same period.
This follows the positive vote from the European Medicines Agency last month which recommended the drug for use in uninfected people carrying a high risk of HIV-1 transmission. The drug’s use for such indication involves a technique known as pre-exposure prophylaxis, or PrEP. The European Commission is not supposed to follow the advisory committee’s opinion, but typically ends up doing so. Truvada’s approval for PrEP was, therefore, highly expected.
Truvada gained its very first approval in the European Union back in 2005 as a drug to be used in combination with other antiretroviral agents for treating adult patients suffering from HIV-1. The drug has gained a significant market share in the EU’s HIV drug market in the past decade, and the recent approval is expected to further enhance the drug’s dominance in the space.
Professor Jean-Michel Molina at Hôpital Saint Louis in Paris highlighted the high growth potential of Truvada, as the HIV drug market inside Europe is set to grow at an exponential rate. He said: “In the past 30 years, we have seen significant progress in the way we treat HIV; however, infection rates have continued to rise. In 2014, we saw the highest number of newly diagnosed cases in the European Union ever recorded, with 94 percent of those with known cause transmitted through sexual contact,”
The latest approval allows the drug’s use for PrEP in all 28 countries of the EU, where the drug is already considered the top-selling antiretroviral treatment used as a combination regimen. Besides the EU, Truvada is already being sold in the US, Australia, Canada, Kenya, Peru, and South Africa.
Norbert W. Bischofberger, PhD, Executive Vice President, Research and Development and Chief Scientific Officer at Gilead Sciences, Inc. was hopeful about extending its reach across the EU’s HIV market with the latest approval. He said: “The approval of Truvada for PrEP represents an important step forward in addressing the incidence of HIV in Europe. When taken as directed and used in combination with other prevention strategies, Gilead believes Truvada for PrEP can have a meaningful impact on public health by helping to reduce HIV transmission rates across Europe.”
Gilead’s HIV Drugs Portfolio Set to Show High Growth
The recent approval for Truvada is set to further enhance the dominance of Gilead’s HIV drug portfolio in the fast-expanding industry. The company caters to more than 60% of the drug market, with GlaxoSmithKline (GSK) its biggest rival.
Gilead’s increased efforts and focus on research and development on a new class of HIV drugs are bearing impressive results. Gilead’s HIV drug portfolio currently has three successful medicines belonging to an emerging class of HIV drugs known as tenofovir alafenamide (TAF)-based regimens, including the recently approved Descovy and Odefsey, while Genvoya was approved as the first-ever TAF-based HIV therapy in the US last year.
Genvoya, which was launched in November last year, is meant to be a successor to Gilead’s two older HIV drugs, Stribild and Atripla. Odefsey and Descovy, in contrast, are expected to be advanced versions of the older drugs, Complera and Truvada. Gilead’s top-selling HIV drugs — Viread, Complera and Truvada — are set to face patent cliffs in 2018, 2023 and 2021, respectively. Gilead has played smartly by coming up with TAF-based HIV drugs that not only contain the losses from older HIV medicines, but also boost growth opportunities for its HIV portfolio.
Gilead’s HIV drug portfolio currently earns a strong $13.5 billion in revenue for the company, according to last year’s sales report. The Street is expecting the biotech’s HIV drug franchise to show striking growth in the coming years on these new drug launches. Total sales of this segment are expected to touch the $18.4 billion mark by 2020, up from 36.3% from current sales level.
The recent approval for Truvada is set to further enhance the dominance of Gilead’s HIV drug portfolio in the fast-expanding industry. The company caters to more than 60% of the drug market, with GlaxoSmithKline (GSK) its biggest rival.
Gilead’s increased efforts and focus on research and development on a new class of HIV drugs are bearing impressive results. Gilead’s HIV drug portfolio currently has three successful medicines belonging to an emerging class of HIV drugs known as tenofovir alafenamide (TAF)-based regimens, including the recently approved Descovy and Odefsey, while Genvoya was approved as the first-ever TAF-based HIV therapy in the US last year.
Genvoya, which was launched in November last year, is meant to be a successor to Gilead’s two older HIV drugs, Stribild and Atripla. Odefsey and Descovy, in contrast, are expected to be advanced versions of the older drugs, Complera and Truvada. Gilead’s top-selling HIV drugs — Viread, Complera and Truvada — are set to face patent cliffs in 2018, 2023 and 2021, respectively. Gilead has played smartly by coming up with TAF-based HIV drugs that not only contain the losses from older HIV medicines, but also boost growth opportunities for its HIV portfolio.
Gilead’s HIV drug portfolio currently earns a strong $13.5 billion in revenue for the company, according to last year’s sales report. The Street is expecting the biotech’s HIV drug franchise to show striking growth in the coming years on these new drug launches. Total sales of this segment are expected to touch the $18.4 billion mark by 2020, up from 36.3% from current sales level.
Declining Growth ofHCVDrugs
Growth in its HIV drug portfolio is expected to play a key role in offsetting the decline in its high-growth segment of HCV drugs, by making up more than 60% of the company’s total revenue.
Gilead HCV drugs portfolio holds two leading products: Sovaldi, launched in 2013 came as a breakthrough treatment in comparison to conventional HCV treatments, reducing the standard treatment duration to only twelve weeks, while Harvoni, a more advanced version of Sovaldi, struck market a year later. These two drugs have garnered striking revenue growth for the biotech in the last three years, raking in combined sales worth $12.4 billion and $19.1 billion in FY14 and FY15, respectively.
However, the high-growth trend of these two drugs is now at risk as the HCV patient population approaches stagnation. Other factors expected to eat away into Gilead’s HCV revenue growth include price erosion and rising competition. Gilead’s direct rival, Abbvie, is fast extending its market share in the HCV drug market via its Veikira Pak, launched in 2014. Merck is expected to deal a serious blow to Gilead’s dominance in the HCV drug space with Zepatir, which won an FDA nod in January this year.
Gilead’s HCV revenue is declining. For the first quarter of 2016 (1QFY16), Harvoni and Sovaldi chipped in combined sales worth $4.3 billion, showing a fall of 6% year-over-year (YoY). The decline extended even further in 2QFY16 when sales came in at $4.13 billion, with an even higher 18.4% YoY fall.
The declining sales of HCV drugs have seriously affected Gilead ‘s overall revenue. For the recent quarter, total revenues stood at $7.65 billion, with a 6% YoY fall, missing the consensus estimate of $7.77 billion.
However, Gilead will not let go of its dominance in the high-yielding HCV drug market that easily. Its new HCV drug, Epclusa, became the pioneer in treating chronic hepatitis C virus infection. The drug was granted an FDA nod in June this year followed by an approval from the European Commission in July.
New drugs, both in the company’s two main segments of HIV and HCV drugs, are expected to yield a much-needed turnaround to the company’s declining revenue decline. Growth from new products would also eliminate the need for any split-up of these two divisions, an option which is being explored by some analysts at the moment.
However, last week, Piper Jaffray completely rejected the split-up idea, saying that such a step would only lead to duplication of expenses, making this option highly costly for the biotech.
By: Nida Ahmed (Bidness Etc).
Photo: The Wall Street Journal.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
For The #FacebookTeam
Growth in its HIV drug portfolio is expected to play a key role in offsetting the decline in its high-growth segment of HCV drugs, by making up more than 60% of the company’s total revenue.
Gilead HCV drugs portfolio holds two leading products: Sovaldi, launched in 2013 came as a breakthrough treatment in comparison to conventional HCV treatments, reducing the standard treatment duration to only twelve weeks, while Harvoni, a more advanced version of Sovaldi, struck market a year later. These two drugs have garnered striking revenue growth for the biotech in the last three years, raking in combined sales worth $12.4 billion and $19.1 billion in FY14 and FY15, respectively.
However, the high-growth trend of these two drugs is now at risk as the HCV patient population approaches stagnation. Other factors expected to eat away into Gilead’s HCV revenue growth include price erosion and rising competition. Gilead’s direct rival, Abbvie, is fast extending its market share in the HCV drug market via its Veikira Pak, launched in 2014. Merck is expected to deal a serious blow to Gilead’s dominance in the HCV drug space with Zepatir, which won an FDA nod in January this year.
Gilead’s HCV revenue is declining. For the first quarter of 2016 (1QFY16), Harvoni and Sovaldi chipped in combined sales worth $4.3 billion, showing a fall of 6% year-over-year (YoY). The decline extended even further in 2QFY16 when sales came in at $4.13 billion, with an even higher 18.4% YoY fall.
The declining sales of HCV drugs have seriously affected Gilead ‘s overall revenue. For the recent quarter, total revenues stood at $7.65 billion, with a 6% YoY fall, missing the consensus estimate of $7.77 billion.
However, Gilead will not let go of its dominance in the high-yielding HCV drug market that easily. Its new HCV drug, Epclusa, became the pioneer in treating chronic hepatitis C virus infection. The drug was granted an FDA nod in June this year followed by an approval from the European Commission in July.
New drugs, both in the company’s two main segments of HIV and HCV drugs, are expected to yield a much-needed turnaround to the company’s declining revenue decline. Growth from new products would also eliminate the need for any split-up of these two divisions, an option which is being explored by some analysts at the moment.
However, last week, Piper Jaffray completely rejected the split-up idea, saying that such a step would only lead to duplication of expenses, making this option highly costly for the biotech.
By: Nida Ahmed (Bidness Etc).
Photo: The Wall Street Journal.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
For The #FacebookTeam