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Is The Sky Falling Only On Gilead?


GILD’s HCV revenues are falling.

This is affecting earnings as well.

Pressure on GILD’s HCV offerings have caused the stock’s price to fall.

Is GILD the only company with these problems in the HCV sector?

The Sky is Falling!

Gilead Sciences (NASDAQ:GILD) stock price is falling, revenues falling, and earnings falling. The stock is selling like the company is on fire. Net income from Q2 2016 of $3.5 billion was down from the $4.5 billion in Q2 2015. Q2 revenues of $7.8 billion were also down year over year from $8.2 billion. Because of these falling revenues, the company's share price has also been falling over the past year, from up to above $110/share down to the low $80's.

GILD Price over the Past Year

Source: Thanks to the folks at where you can find interactive charts like these.

The revenue drops were largely because of declining revenues from Harvoni, one of GILD's flagship Hepatitis C treatments. Harvoni revenues in Q2 dropped to $2.6 billion down year over year from $3.6 billion. It seems that as GILD's hepatitis C virus, HCV, treatment revenues go, so does GILD. This seems somewhat rational because HCV revenues were roughly $4 billion of GILD's $7.8 billion in Q2 revenue, 51%.

Is the HCV Market Shrinking?

GILD's HCV revenues are shrinking, but the rest of the HCV treatment market seems to be doing the opposite. In 2015 an estimated 3 million in the U.S. lived with hepatitis C, and an additional 250,000 new patients were added to that number.

Source: Statista, chart by author.

This growth rate is essentially around 50%, a massive rate of growth. That being said, GILD has treated 486,000 HCV patients in the U.S. since 2013. Assuming a posted 94-99% cure rate, GILD has cured at least 462,000 HCV patients in the U.S. alone. As it's been tallying up its cures, revenues have been growing as well.

Source: GILD

Annualizing 2013's HCV revenues (Sovaldi the first, approved by the FDA on December 6 of 2013) would make an estimated $2 billion in sales during 2013. Assuming GILD brings in $15 billion in HCV revenue during 2016, the company's compound annual growth rate would reach 66%, far outstripping the past 5 years' HCV patient growth rate of 50%. The global HCV market value is predicted to grow by 17%...