Currently, the biotechnology firm Gilead Sciences Inc. (NASDAQ: GILD)’s major sources of revenue are HIV therapy medications and COVID-19.
However, Gilead Sciences Inc. (GILD) experienced issues in both markets: first, the firm lost patent protection for several HIV medications, and subsequently, intense competition and diminishing infections placed pressure on sales of the COVID-19 therapy. Gilead Sciences plans to compensate for the potential losses with new treatment.
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Its revenues decreased by more than 70% year over year when Gilead Sciences Inc. (GILD) lost the ability to patent Truvada. Sales of the complete range of HIV treatments have not yet been affected, but the business is already making plans to make up for the expected loss.
It plans to promoteLenacapavir in particular, the first six-month long-acting subcutaneous injectable for HIV treatment that is cheap. The business found it challenging to win permission at this point. When regulators initially rejected the drug’s approval this year, they cited problems with Gilead Sciences’ proposed packaging for the Lenacapavir solution.
The management, however, is sure that they can find a solution, and there is a good probability that the FDA will soon approve the therapy.
Veklury (a medication for COVID-19) sales are continually rising and increased by 5% year over year in the most recent reporting period. However, the advent of rival medicines as well as shifting coronavirus strains in the upcoming quarters may have an effect on sales.
But COVID-19 could turn endemic long after the pandemic is over. This implies that even while Veklury’s sales may be on the decline, they will still contribute significantly to the company’s overall revenue for at least a few more years.
At the present pricing, Gilead Sciences Inc. (GILD) continues to pay dividends with a yield of around 5%. The corporation also has a payout ratio that is extremely low—around 36%.
Gilead Sciences Inc. (GILD) therefore has plenty of room to raise dividends and implement further shareholder return initiatives. Keep in mind that the corporation has boosted payments by 40% over the last five years, or an average of 8% annually.