Gilead falls as hepatitis C drug discounts grow

(Bloomberg) — Shares of Gilead Sciences Inc. (Nasdaq:GILD) dropped after the world’s biggest biotechnology company forecast 2015 revenue that will be weighed down by discounts for its blockbuster hepatitis C drugs.

Product sales this year will be $26 billion to $27 billion, said Foster City, California-based Gilead. Analysts had projected $28.5 billion on average for revenue. Discounts in the U.S. for Harvoni and Sovaldi, which treat the liver virus, will climb to an average of 46 percent this year from 22 percent in 2014.

The average discount “took investors by surprise and is higher than consensus of 25 to 30 percent or so,” said Michael Yee, a San Francisco-based analyst at RBC Capital Markets, in an e-mail. Shares of Gilead sank 6 percent to $100.66 in late trading, falling sharply during the conference call after the discounts were revealed.

With Merck & Co.’s pill expected to be approved this year, investors may be worried about increased price competition in the hepatitis C market, Yee said. The discounts could be offset by more patients gaining access to the drugs, he said.

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Gilead’s one-pill-a-day medicines have transformed the way the liver infection is treated, with most patients being cured after a 12-week course. They’ve also drawn criticism for their cost of more than $1,000 a day before discounts, and a competing treatment introduced late last year by AbbVie Inc. has put pressure on Gilead’s prices.

Gilead and AbbVie have gone back and forth with health insurers and pharmacy benefit managers, trading discounts on the treatments in return for preferred spots on lists of covered therapies.

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