Healthcare Pulse: Gilead Sciences, Inc. (GILD), Bristol-Myers Squibb Co (BMY), Allergan PLC (AGN)

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A US Senate report has lambasted Gilead Sciences, Inc. (NASDAQ:GILD) for focusing more on profits rather than patients interest with its Hepatitis C treatments. The sentiments follow findings that showed the US state Medicaid program spent $1.3 billion before rebates on the company’s drugs.

Senator Ron Wyden has faulted Gilead Sciences, Inc. (NASDAQ:GILD)’s for focusing more on maximizing revenue rather than making its treatments affordable and accessible. Legislators have taken the company to task over the prices for Sovaldi and Harvoni which they feel do not reflect the cost of R&D or costs paid to acquire them.

The situation gets even worse on suggestions that the drugs only treated fewer than 2.4% enrollees with liver disease. A majority of the more than 700,000 people on state Medicaid programs have yet to receive any Hepatitis C treatment according to the probe.

Gilead prices Sovaldi at $84,000 for a course treatment. Patients have been forced to spend all they have on the drug as it is way much better than any previous treatment with lower cure rates and troublesome side effects.

Bristol-Myers Squibb Co (NYSE:BMY) has priced its new cancer treatment Empliciti at $142k even as legislators continue to cause havoc over pricing practices in the sector. The drug is to be used in combination with Celgene’s Revlimid and dexamethasone and would cost about $10,000 a month. With a two-month induction period, a one-year dose of the drug will end up costing $142,000.

The pricing puts it in line with other drugs already in the market. Celgene Corporation (NASDAQ:CELG) prices Revlimid at $14,000 a month with Takeda’s Velcade going for $9,000. It is still unclear whether Bristol-Myers Squibb Co (NYSE:BMY) will find its way in terms of sales as competition in the market remains stiff.

Empliciti sales could be hurt by doctors relegating it to third line use in terms of prescriptions. Competition is stiff with the likes of Amgen, Inc. (NASDAQ:AMGN) Johnson & Johnson (NYSE:JNJ) also having products targeting the same condition.

Allergan PLC (NYSE:AGN) investors remain skeptical of the purported benefits that would come into being, upon merging with Pfizer Inc. (NYSE:PFE). To confirm the skepticism, the Ireland-based drug maker continues to trade way below its proposed takeover price of $370.3 a share. Nomura analyst, Shibani Malhotra believes the investors have got it wrong when it comes to what is at stake with the merger.

Pfizer relocating its headquarters to Ireland according to the analyst will result in more financial flexibility for the combined company. Shibani foresees a possible dividend increase upon the two merging.

Allergan also stands to leverage Pfizer Inc. (NYSE:PFE)’s global foot print, which could help it penetrate key markets of Japan and China. Malhotra also expects the combined company to benefit a great deal from cross-firm benefits once executives from the two firms join hands

Allergan PLC (NYSE:AGN) CEO, Brent Saunders has already said there’s a lot to be gained by merging the company’s ‘growth Pharma’ model and philosophy with Pfizer legacy.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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