Dive Brief:
- Gilead's disappointing second-quarter performance may have a silver lining: strong launches for the company's trio of new HIV drugs brought in new revenue and nearly offset the sharp decline seen in sales of Harvoni.
- Leading Gilead's new HIV drugs was Genvoya, a drug approved last November. Genvoya sales hit $302 million in the second quarter, a 91% increase over the preceding quarter. Descovy and Odefsey, Gilead's two other TAF-based drugs, together brought in $119 million in new revenue.
- The three drugs are aimed at replacing Gilead's current portfolio of TDF-based HIV meds, sales of which have slowly edged downwards.
Dive Insight:
Harvoni and Sovaldi have minted money for Gilead over the past two years, but a sharp drop in product sales through the first six months of this year has solidified investors concerns over a shrinking market in hepatitis C.
Both drugs effectively cure over 90% of patients, leading to undetectable hepatitis C virus after a 12-week treatment course. This is great for patients, but will eventually shrink the pool of patients Gilead can treat.
Compared to last year, revenues from the hepatitis C drugs dropped by 12% ($1.2 billion) during the first half of 2016. And since Gilead's hepatitis C franchise represented nearly 60% of total revenues in 2015, investors are rightly worried.
But while the attention is rightly on the performance of Harvoni and Sovaldi, Gilead's HIV portfolio has grown in relevance, especially with recent approvals for three new treatments.
Last year, Gilead's HIV sales grew at an average of 7.3% per quarter, nearly double the average sales of 2.5% per quarter in hepatitis C.
And if sales of Harvoni continue to fall, Gilead's HIV portfolio could close the gap and come to rival hepatitis C for equal share of total revenues. In the second quarter, for example, sales of HIV drugs represented 40% of overall product revenue, up from 33% a year prior.
Hepatitis C, by comparison, accounted for 50% of total sales, down from 59% a year prior.
FDA approval of the TAF-based drugs Genvoya, Descovy, and Odefsey was bound to up HIV's share of Gilead's revenues, but it remains to be seen if their strong launches can fully offset declining hepatitis C revenue.
Less than a year since the Genvoya's approval, sales hit $158 million in Q1 and $302 million in Q2. But Descovy and Odefsey show promise, too, pulling in a combined $119 million during their first quarter in the market.
Gilead can also look to the approval of its new pan-genotypic hepatitis C drug Epclusa for future sales growth, but strong performance from its HIV drugs could prove a needed counterbalance.
But with investors anxious, and nearly $25 billion in cash on the company's books, questions for the future will likely center on what Gilead might buy instead of organic growth alone.