Biotech boom only at stage 1

I wrote about the health-care boom on 8 January 2014. An article titled; Health-care bull. I talked about the health-care boom and the sector you should be in. I also talked about the oil price and said it could plunge and  Opec can face huge problems.

Saudi billionaire businessman Prince Alwaleed bin Talal said a few days ago that no one anticipated that the oil price was going to plunge, and people who said that the oil would plunge is not telling the truth, he said.

Prince Alwaleed bin Talal is an expert on oil. Not trading, I guess. Many saw that plunge coming.

But, I`m not gonna talk about oil today, because the oil sector is not hot now. What`s really hot is the health-care sector. Let`s take a look at a biotech stock today, which is Gilead Sciences Inc (GILD).

Gilead is a research-based pharmaceutical company that discovers, develops and commercializes medicines. Gileads`s primary areas of focus include human immunodeficiency virus (HIV)/AIDS, liver diseases, such as hepatitis B and C and cardiovascular/metabolic and respiratory conditions.

Gild2

(Picture: Gilead Sciences Inc)

The company has operations in North America, Europe and Asia-Pacific, and among the most known products they have is Tamiflu. They acquired Pharmasset Inc in January 2012, and on February 2013, they acquired YM BioSciences Inc.

Gilead signed an exclusive Hepatitis C deal with pharmacy-benefits manager EnvisionRx. Right before the deal it was a big price war between Gilead and AbbVie, but Gilead won. This is the fourth deal with PBM, and that`s three more than AbbVie which has only one.

EnvisionRx will be offering Gilead`s products called Harvoni and Sovaldi on its formulary. AbbVie`s product Viekira Pak will only be prescribed as an exception in rare cases. competitive price, the safety and efficacy profile of Gileads`s HCV products have solidified EnvisionRx`s choice to place Gileads`s products in an exclusive position.

Harvoni, which is an enhanced version of Gilead`s blockbuster drug Sovaldi, cost $94,500, while Viekira Pak costs $83,300. The price is for a 12-week treatment course, and both companies drugs have proven their efficacy, but Harvoni has least side-effects and requires lesser dosage than Viekira Pak.

Most of Gilead`s financial performance has been driven by the success of their products Sovaldi and Harvoni, but they have competition with AbbVie. A few weeks ago AbbVie signed a contract with the U.S`s largest pharmacy benefit manager Express Scripts (ESRX).

Harvoni`s easier compliance and better safety profile can give Gilead an edge over their competitor Viekira Pak. Data shows that their product has not had any major impact on Harvoni, and investors are still bullish. The stock is trading at $103,03 today. The price was about $16 in January 2010. Up over 543% since 2010. EPS is 5,65 and market cap is 164,34 billion.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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