The soaring sales and profits reported by Gilead Sciences in 2014 aren't likely to be repeated as the company begins to offer steeper discounts on its blockbuster hepatitis C treatments Sovaldi and Harvoni.
Gilead CEO John Martin told analysts that increased discounts and rebates for the drugs will slow sales growth in 2015.
He expects product sales to increase between 6% and 10% in 2015. That's a sharp contrast to what the Foster City, Calif.-based drugmaker reported last week, with product sales jumping 126% to $24.4 billion in 2014, up from $10.8 billion in 2013.
The gross-to-net adjustable for sales of Sovaldi and Harvoni will be 46% this year, compared to 22% in 2014. The extent of those discounts surprised analysts.
“There is (a) range of different prices depending on the mix of private to public, and there are a range of different discounts offered across all those areas,” Martin said during a call with investors.
Analysts caution against expectations of similar stratospheric results in 2015. The approval by the Food and Drug Administration in December of a new hepatitis C drug developed by AbbVie kicked off vigorous efforts by insurers and pharmacy benefit managers to drive down prices. Merck is also developing a hepatitis C therapy.
“The price war has been started in earnest,” said Randy Budros, a principal consultant for Frost & Sullivan. “With additional drugs poised to launch, we can expect it to continue into the foreseeable future.”
Gilead scored some victories in the battle with AbbVie. Aetna, Anthem, CVS Health and Humana recently selected Sovaldi and Harvoni over AbbVie's new treatment.
The arrival of Sovaldi in December 2013 kicked off a national debate about drug pricing as public and private payers fretted over the $84,000 price tag for a course of treatment. But the market for the new class of hepatitis C treatments is getting much more crowded, in part because of the October approval of Harvoni, which costs about $94,500. AbbVie's drug Viekira Pak costs $83,320.
Sovaldi generated $10.3 billion in sales in one year, bringing in $8.5 billion from the U.S. market alone, while Harvoni racked up $2.1 billion in sales in less than three months.
Gilead said its revenue doubled to $7.3 billion in the last three months of 2014, compared to $3.1 billion in the same quarter in 2013. Net income was $3.5 billion in the fourth quarter of 2014, up from $791 million in the third quarter of 2013.
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