Better Buy: Gilead Sciences (GILD) vs. Pfizer (PFE)

Posted On October 4, 2018 2:00 pm

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This has been a strange year for Pfizer Inc. (NYSE:PFE) and Gilead Sciences, Inc. (NASDAQ:GILD), and investors are right to wonder which stock makes more sense at the moment. Pfizer practically wrote the book on big acquisitions but has recently shifted gears to focus on its own new drug candidates, as its longtime CEO waves goodbye.

Pfizer’s moves don’t seem nearly as odd as Gilead Sciences’ recent decision to sell cheap generic versions of its own branded drugs. The whole pharmaceutical industry hasn’t gone crazy, but it’s a good time to stack these drugmaker stocks side by side to see which is the better buy right now.

The case for Gilead Sciences, Inc.

This company’s next-generation antiviral treatments were the first to cure just about anyone with the hepatitis C virus (HCV), but competition with AbbVie has pushed prices so low that Gilead recently launched generic versions of its drugs at discounts around 70% of their initial list prices.

Gilead hasn’t gone crazy — it’s already cutting discounts and rebates to insurers that probably make the net price it receives from branded versions roughly in line with the price on its generic versions. Since patient co-pays are usually based on a drug’s list price, the availability of a generic version at a price more patients can actually afford could stop the HCV segment’s decline.

In the second quarter, HCV sales plummeted to just $1 billion from $2.9 billion a year earlier because AbbVie fielded a new drug, Mavyret, and priced it to compete. Now that Mavyret has to contend with Gilead’s generic HCV treatments, though, the losses should finally stop. That gives the company’s recently launched HIV and cancer treatments a fighting chance to move the needle forward again.

Gilead’s new HIV pill, Biktarvy, launched this spring and will probably achieve…

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