It has been an eventful year for Gilead Sciences Inc. (GILD – Analyst Report), a big name in the biotech sector. Gilead, which soared 100.11% in 2013, is up only around 30% year-to-date (YTD). Throughout 2014, the company was in the news mainly due to its hepatitis C virus (HCV) treatment, Sovaldi, which was approved by the FDA in Dec 2013. While the drug's approval was a welcome relief for HCV patients who had postponed treatment as they awaited better and safer treatment options, Gilead's pricing of the drug came under heavy criticism.
Sovaldi Pricing Issues
In fact, in late Mar 2014, the pricing issue came to the forefront with u.s. lawmakers questioning Gilead about the same — the $84k price tag for a 12-week treatment period was considered too expensive.
This shook the entire biotech sector and resulted in a selloff that was fueled further by speculation about a biotech bubble. Rumors that other drugs would also come under the same pricing scrutiny started doing the rounds.
Despite pricing concerns, Sovaldi showed no signs of slowing down with the product bringing in sales of $8.6 billion in the first nine months of 2014. Gilead had more good news in store — another HCV treatment, Harvoni, with huge commercial potential gained approval this year.
Express Scripts Chooses AbbVie's HCV Treatment
However, Gilead again saw some weakness in its share price with AbbVie (ABBV- Analyst Report) gaining approval for its cocktail HCV treatment, Viekira Pak and signing up with pharmacy benefit manager Express Scripts (ESRX – Analyst Report). Express Scripts, which covers about 25 million Americans, said that from Jan 1, 2015, AbbVie's HCV treatment will be the exclusive option for patients with genotype 1 hepatitis C, regardless of symptoms or disease progression.
Sovaldi, Harvoni and Johnson & Johnson's (JNJ – Analyst Report) Olysio would no longer be on the Express Scripts National Preferred Formulary. This news triggered concerns about pricing pressure in the overall biotech sector and Gilead fell on concerns regarding the growth prospects of its HCV drugs.
