Gilead's first-quarter profit doubles on strong sales of hepatitis C franchise

Gilead Sciences on Thursday said that its first-quarter profit nearly doubled to $4.3 billion, up from $2.2 billion in the year-ago period, due to better-than-expected sales of Sovaldi and Harvoni. The two therapies amassed nearly $4.6 billion in combined revenue, besting analyst estimates of $3.5 billion to $3.6 billion.

The company reported that total product sales reached $7.4 billion for the three-month period, compared to $4.9 billion in the corresponding quarter of last year. "Gilead just put up a nice beat driven by both top line (massive hepatitis C beat) and expense control," remarked Evercore ISI analyst Mark Schoenebaum.

Specifically, in the quarter, sales of Harvoni totalled $3.6 billion, up from $2.1 billion in the prior quarter, while Sovaldi revenue reached $972 million, down 57 percent versus the year-ago quarter. Schoenebaum stated that analysts were expecting sales of $1.3 billion for Sovaldi and $2.2 billion for Harvoni.

Gilead has been criticised for the prices of its hepatitis C drugs Sovaldi and Harvoni. Pharmacy benefit manager Express Scripts awarded AbbVie's hepatitis C therapy Viekira Pak preferred status over Gilead's therapies after AbbVie agreed to significant discounts.

Conversely, Harvoni and Sovaldi were granted preferred status on CVS Health's commercial plans and formularies, while Harvoni was designated by Anthem as the primary treatment option for patients infected with genotype 1 hepatitis C virus. Earlier this year, Gilead revealed that discounts in the US for its hepatitis C treatments will reach an average of 46 percent in 2015, versus 22 percent in 2014. For related analysis see ViewPoints: Viekira Pak sales may hint at a big beat coming for Gilead's HCV franchise and ViewPoints: Gilead reveals the extent of AbbVie's pricing war in hepatitis C, as well as ViewPoints: Gilead's new HCV deal suggests some payers may value more than just price.

Gilead also raised its full-year revenue guidance to $28 billion to $29 billion, up from a previous forecast of $26 billion to $27 billion. Schoenebaum said that the company "tends to be conservative, so for them to raise revenue guidance this early in the year speaks volumes."

For further analysis see ViewPoints: Gilead's blowout print, while not unexpected, a reminder of the value biopharma can create.

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