Cash-rich Gilead hits acquisition trail
US biotech group scouts for drugs ‘complementary’ to liver diseases after hepatitis C successes
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DECEMBER 7, 2015 by: David Crow in New York
Gilead, the US biotech company behind the most lucrative drug launch yet, is on the hunt for acquisitions as it seeks another blockbuster, the group’s chief scientist told the Financial Times.
Since Gilead launched its hepatitis C drugs at the tail-end of 2013, the medicines have earned the group about $27bn in revenue, thanks in part to its contentious decision to implement a list price that works out at about $1,000 a pill. But many analysts think that sales have peaked, because the treatment is so effective that patients do not need to keep taking it.
“People ask, ‘What are you going to do with all your money?’?” Norbert Bischofberger, executive vice-president of research and development, said in an interview. “Well, we have our eye on the external world — we have incredible cash flows and we are looking for opportunities.”
Any deal would come after a bumper year for mergers and acquisitions in the drugmaking sector, including Pfizer’s agreed takeover of Allergan for about $160bn.
Since the start of the year, more than $649bn of healthcare deals have been announced, according to data from Thomson Reuters — more than the previous two years combined.
Gilead, based in Foster City, California, is traditionally known for its HIV medicines, but in 2012 it completed what is now considered one of the shrewdest deals in the history of pharmaceuticals: the $11bn takeover of Pharmasset, a developer of drugs for hepatitis C.
Harvoni, which can cure hepatitis C in more than 90 per cent of patients, and Sovaldi, an older version of the drug, accounted for three-fifths of the company’s $24bn of revenues in the first nine months of the year.
The company estimates that about 600,000 patients have been cured in the US and Europe by taking a course of one of its drugs.
However, investors fret that Gilead will eventually run out of patients to treat. The introduction of a competing drug from Merck next year could also push down prices, helping to explain why the company’s stock price trades at a relatively low multiple of about 10 times earnings despite the runaway success of its hepatitis C medicines.