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Merck Seen As Having Potential 'Category Killer' In HIV Market

Investors are underestimating the negative impact that upcoming macro trends and potential government actions could have on the HIV drug market, warned Citi. As a result, the firm downgraded GlaxoSmithKline (GSK), whose joint venture, ViiV, has a leading HIV treatment. The firm believes Gilead Sciences (GILD) would have an advantage over other players in the market if the Affordable Care Act, or ACA is not repealed, while Merck's (MRK) HIV treatment, contrary to market expectations, could be a "category killer." The Street, which sees the HIV market as primarily a battle between Gilead and ViiV, has an "oversimplified" view, according to the firm.

MACRO FACTORS: The growth of the overall HIV market is slowing "as Medicaid enrollment (spurred by the ACA) plateaus," wrote Citi analyst Andrew Baum today in a research note. Moreover, the repeal and replacement of the ACA could cause the HIV market to decline by increasing the number of people who are uninsured and making...