How Would Gilead Keep Its Status With the Increasing Downward Pressure on Revenue Expectations?

Gilead has dominated the HCV drug market for years with unshakeable "absolute supremacy" since its new direct-acting antiviral (DAA) Sovaldi entered the market in December 2013. Its star HCV products Solvadi and Harvoni have led the market value of Gilead Sciences to the peak of USD 160 billion, ranking among TOP10 global pharmaceutical enterprises, which is quite legendary.

Gilead announced on December 14, 2016 that it had submitted to FDA the new drug application (NDA) of the new HCV compound drug of SOF/VEL/VOX for patients infected with HCV who have failed prior treatment with DAA regimens. This product will further perfect its HCV products and shore up its position in hepatitis C field. This article intends to compare the several main companies in the hepatitis C field, analyze the internal business mode of hepatitis C drug market, and focus on the future direction of Gilead.

I. Gilead landing on the position strongly, with unshakeable "supremacy"

According to statistics, there are nearly 200 million HCV patients in the world. Hepatitis C is the most common cause of liver cirrhosis and liver cancer. In the previous article Another New Progress in Hepatitis C Treatment: "Absolute Dominant" Gilead and "Latecomer" AbbVie, it mentions that there are mainly 6 genotypes and more than 50 subtypes of HCV.

Hepatitis C treatment has achieved breakthrough progress in recent years, from the initial interferon injection treatment and interferons in combination with antivirals, to the third-generation new DAAs. The following figure shows the several main targets of DAAs.

The DAA Sovaldi released by Gilead in 2013 has succeeded in leading hepatitis C treatment into the new era and innovated hepatitis C clinical therapies. The blockbuster drugs such as Sovaldi, Harvoni and Epclusa released by Gilead in succession significantly shorten the treatment cycle and effectively improve the sustained virologic response (SVR) (reaching above 90%, and close to 100% for some genotypes).

The HCV products of Gilead have high cure rate, complete product line and strong market competitiveness, which land on the position strongly by almost crushing others. J & J’s Olysio, Roche’s Pegasys and MSD’s PegIntron have faded out the HCV market, and Gilead’s absolute supremacy is increasingly strengthened. The following table shows a comparison of the HCV products of several companies.

II. Thriving Gilead to face large downward pressure of revenue expectation

The several star hepatitis C treatment products of Gilead have turned hepatitis C treatment from injection to oral administration, and Gilead’s HCV drugs such as Sovaldi have opened the revolutionary era of hepatitis C complete cure, however, it is those excellent drugs that put Gilead under huge downward pressure.

1. HCV product sales of Gilead expected to decline in 2017

The 2017 global pharmaceutical report recently issued by EvaluatePharma in November 2016 (see A Sneak Peak! Big Pharmaceutical Events Worth Expecting in 2017: Pharmaceutical Market and R& D Pipelines) forecasts that Gilead’s Harvoni will be on the list of Top 10 Drugs by 2017 Sales, however, its sales performance will face a nearly 30% decline.

2. Increasing price reduction pressure of drugs with a "sky-high price"

Currently, one treatment course of Sovaldi costs USD 84 thousand, that of Harvon costs USD 94.5 thousand, and that of Epclusa costs USD 74.5 thousand, averagely USD 1,000/tablet. What sky-high prices Gilead has set! However, as mentioned above, Gilead’s HCV products can completely cure patients, which means that its "effective patients", i.e., HCV patients able to pay, will become less and less; furthermore, the medical insurance system of each county is also increasing the pressure for price reduction. With no impressive performance in the investment and acquisition in 2016, where should the "dominant" Gilead break through?

III. Could Gilead’s beach landing on the third world continue its myth?

Firstly, to avoid India’s strong imitating HCV products, Gilead has reached an agreement with 7 Indian generic drug companies to authorize the production of Sovaldi and Harvoni, with the selling price even reduced to USD 10/tablet, and with the Sovaldi generic drugs produced restricted to be sold in 91 developing countries including India.

Secondly, Gilead spares no effort to enter the huge HCV market of China where the current hepatitis C treatment still is in the era of interferon in combination with ribavirin and there is a huge patient group.

Predictably, Gilead has made meaningful contributions to the HCV control worldwide, and it must enter the developing countries to continue to conduct far-sighted product acquisitions and gradually complete own product substitution, as the HCV patients are becoming less and less.