Gilead Sciences, a biopharmaceutical company, based on research, discovers, develops, and commercializes novel medicines. Gilead’s main therapeutic areas include HIV, liver diseases, cardiovascular disease, oncology, and inflammation. It has operations in over 30 countries around the world.
Understanding Gilead Business Model
Gilead is an infectious disease-focused pharmaceutical company. Gilead has 21 products in its portfolio. It is divided into one operating segment. The company’s biopharmaceutical product portfolio covers the following therapeutic segments:
Human immunodeficiency virus (HIV). Program: Gilead provides nine market-leading products throughout the retrovirus lifecycle. The company sells Nucleoside Transcriptase Inhibitors and Nucleotide analog Reverse Transcriptase Inhibitors. Combinations of these medications are called antiretroviral treatment (ART), combination antiretroviral treatment (cART), or highly active antiretroviral medicine (HAART). Gilead offers Genvoya/Stribild, Complera/Eviplera, and Truvada.
Liver diseases: Gilead provides Viread and Hepsera to treat Hepatitis B Virus, Harvoni and Sovaldi to treat the Hepatitis C virus (HBC), and Harvoni.
Cardiovascular: Gilead has Letairis to treat pulmonary arterial hypertension, Ranexa to treat chronic angina, and Lexiscan/Rapiscan to perform myocardial perfusion image (MPI).
Hematology/Oncology: Gilead offers Zydelig for blood cancer,
Inflammation/Respiratory: Gilead offers Cayston for treating respiratory systems in cystic fibrosis and Tamiflu for treating and preventing influenza A and B.
Understanding Gilead Acquisition Strategies
Because of its emphasis on strategic acquisitions, Gilead has been a huge success. Gilead acquired 16 companies that have complementary capabilities since 1999. Gilead bought Corus Pharma, Inc., and Myogen, Inc. in 2006 for approximately $2.9 billion. Gilead’s entry into the cardiopulmonary and respiratory treatment markets was solidified by acquiring these two companies. Gilead purchased CV Therapeutics, Inc. in 2009 for $1.4 billion to enter the lucrative heart market. To expand oncology research and development, Gilead purchased three companies between 2010 and 2011. Gilead’s most significant acquisition was Pharmasset, Inc., which was acquired in 2011 for $10.4 billion. This acquisition allowed Gilead to acquire the Hepatitis C treatment Sovaldi (Sofosbuvir). The company recently acquired Galapagos and Nimbus Apollo, two strategic acquisitions to gain access to treatment for non-alcoholic steatohepatitis (non-alcoholic steatohepatitis) and hepatocellular cancer.
Understanding Pharmaceutical Products Business Model
Gilead uses direct and indirect channels in the Pharmaceutical Products Business to influence prescribers (Doctors).
You can prescribe new medications to patients who are already taking them.
Make sure patients are aware of their conditions so you can get new patients to take your existing medication.
Providers should be encouraged to suggest new indications for current medications.
These products are sold mainly to pharmacies, retailers, hospitals, and government agencies. The following diagram illustrates how Gilead generates revenue in the pharmaceutical products business.
Gilead Revenue model
Gilead sells Pharmaceutical Products to patients through pharmacies, retailers, hospitals, and government agencies. It also sells Surgical Devices through wholesalers to hospitals. To sell its products worldwide, the company works with regional business partners, generic licensing partners, and the Medicines Patent Pool.
Gilead Revenues by Business Segment FY’15
Gilead’s total revenues for FY’15, which ended December 31, 2015, was $32.6 billion. Gilead accounted for 32.6 billion of these total revenues.
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The Pharmaceutical products contributed $32.1 billion to the total revenues or 98.5%.
$0.5 billion in revenues, 1.5% from Royalty, contract, and other revenues
Gilead Profits and Profit Margins FY’15
Out of the $32.6 billion in Gilead’s total revenues for FY’15, $4.0 Billion was the cost of goods sold. This led to a gross profit of $28.6 million and an 87.7% gross margin. Other operating expenses for Gilead were $6.4 billion. These expenses include marketing and administrative expenses and research and development (R&D). This led to $22.2 billion in operating profit and an operating margin of 68.0%. Gilead’s net profit after interest, other non-operating income, expenses, and income taxes was $18.1 billion. The net margin was 55.5%.
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