Gilead Sciences’ Hepatitis C Market Expansion Strategy



Market expansion strategy

To increase its share of the global hepatitis C, or HCV, market, Gilead Sciences (GILD) has been actively launching its drugs Sovaldi and Harvoni across key markets in Europe and Japan as well as emerging markets in Egypt and Pakistan.

The above graph shows the cumulative number of HCV patients treated by Sovaldi and Harvoni in the different markets around the world. Sovaldi obtained approval in the US market on December 6, 2013, and in Europe on January 17, 2014. Harvoni received approval in the US market on October 10, 2014, and in Europe on November 18, 2014. Sovaldi and Harvoni are currently approved in 51 and 40 countries, respectively.

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US market

Sovaldi has been approved in the US for HCV patients with genotypes 1, 2, 3, and 4, while Harvoni is approved only for genotype 1 patients. Among the HCV patients treated in the United States, about 140,000 started treatment with Gilead’s HCV drugs in full-year 2014. This figure is expected to be surpassed in full-year 2015, as 130,000 additional people have already started treatment with these drugs in the first half of 2015.

Gilead Sciences has strengthened its relationship with health insurers by offering them steep pricing discounts for Sovaldi and Harvoni. Hence, as of June 30, 2015, about 80% of the total covered individuals in the United States had access to Harvoni, as the drug gained reimbursement by health insurers. This offers a substantial growth opportunity for Gilead Sciences in the US market, despite facing tough competition from AbbVie’s (ABBV) VIEKIRA PAK as well as Bristol-Myers Squibb’s (BMY) newly approved Daklinza and future competition from Merck’s (MRK) hepatitis C drug combination, currently in the FDA approval phase.

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Europe market

Sovaldi has been approved in the European Union for HCV patients with genotypes 1, 2, 3, 4, 5, and 6, while Harvoni is approved for patients with genotypes 1, 3, and 4. Gilead Sciences witnessed a rise in total patients treated in Europe from 30,000 in 2014 to 55,000 in the first half of 2015. About 85% of the total treated population in the first half of 2015 in Europe belongs to the big five countries, the United Kingdom, Germany, France, Italy, and Spain. As with its launch in the United States, Harvoni has witnessed high revenues in Europe, as there had been pent-up demand from HCV genotype 1 patients who were diagnosed earlier yet chose to wait for the drug to be available in their markets.

Japan market

Sovaldi is approved in Japan for genotype 2 HCV patients and entered the market on May 25, 2015. Harvoni, approved for genotype 1 in July 2015, will launch in the Japanese market in the third quarter of 2015.

Additionally, Gilead Sciences is involved in several licensing arrangements around the world to make available its HCV medications at heavy discounts to individuals in emerging economies.

Investors can gain diversified exposure to Gilead Sciences but avoid company-specific risks by investing in the iShares NASDAQ Biotechnology ETF (IBB). IBB maintains 7.89% of its portfolio invested in Gilead Sciences.


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