The Story of Gilead Sciences

A structural look at how curing a disease created the most dramatic boom-and-bust cycle in pharmaceutical history and forced a structural reinvention of the company that achieved it.

Introduction

Gilead Sciences (gild) occupies a singular position in pharmaceutical history: it is the definitive case study of the cure paradox, the structural observation that a curative therapy eliminates future demand for itself.

The hepatitis C franchise — Sovaldi and Harvoni — generated nearly $20 billion in combined peak-year revenue in 2015, a commercial achievement without precedent in the drug industry. And then it contracted, rapidly and irreversibly, because the drugs worked. Patients were cured. The treatable population shrank. The revenue curve that had ascended at a velocity never before seen in pharmaceuticals descended with comparable speed.

What makes Gilead structurally interesting beyond the hepatitis C episode is how the company responded to the revenue contraction. The HCV windfall generated tens of billions in cash, and the capital allocation decisions Gilead made with that cash — massive share buybacks, the $11.9 billion Kite Pharma acquisition for CAR-T cell therapy, the $21 billion Immunomedics acquisition for the antibody-drug conjugate Trodelvy — defined a multi-year strategic pivot from a virology-centric company to one attempting to build a durable presence in oncology. Simultaneously, the HIV franchise — anchored by Biktarvy, which commands over 50% of the U.S. treatment market — evolved into the company's structural backbone, providing the steady, recurring revenue that the hepatitis C franchise could not sustain. Understanding Gilead requires seeing all of these dynamics as interconnected: the cure paradox, the capital deployment decisions, the HIV franchise's durability, and the oncology pivot's uncertain trajectory.

The broader structural lesson Gilead offers is about the relationship between therapeutic modality and business model sustainability. Companies that treat chronic conditions — diabetes, HIV, autoimmune disease — build recurring revenue streams that compound over time as the treated population grows. Companies that cure diseases face a fundamentally different dynamic: the commercial opportunity is intense but finite. Gilead has operated on both sides of this divide, and its trajectory illustrates how these different dynamics shape capital allocation, strategic planning, and long-term company identity in ways that quarterly earnings cannot fully capture.

The Long-Term Arc

How did Gilead Sciences get its start (1987 - 2001)?

Gilead Sciences was founded in 1987 by Michael Riordan, a physician and Harvard Business School graduate whose interest in antiviral medicine was reportedly sparked by contracting dengue fever while traveling. Originally incorporated under the temporary name Oligogen due to a trademark issue, the company adopted the Gilead Sciences name shortly afterward and established its headquarters in Foster City, California — a location in the San Francisco Bay Area that placed it within the emerging biotechnology ecosystem but distinct from the more established clusters in South San Francisco and the East Bay.

The company's early strategic direction centered on nucleotide analogs — small molecules designed to interfere with viral replication by mimicking the building blocks of DNA and RNA. In 1991, Gilead in-licensed a group of nucleotide compounds including tenofovir, a decision that would prove foundational. Tenofovir's antiviral activity against both HIV and hepatitis B virus positioned Gilead at the intersection of two large and growing viral disease markets. The IPO in January 1992 raised $86 million, providing capital for clinical development during the years when revenue remained negligible and the company operated purely on the promise of its antiviral platform.

The late 1990s and early 2000s saw Gilead's antiviral strategy begin to produce commercially viable products. Viread (tenofovir disoproxil fumarate), approved in 2001 for HIV treatment, was the first major commercial milestone. The drug was not revolutionary in isolation — the HIV treatment landscape already included multiple nucleoside reverse transcriptase inhibitors — but tenofovir's efficacy profile and tolerability established Gilead as a credible player in the HIV treatment market. The antiviral focus was not accidental; it reflected a deliberate strategic bet that virology would be the therapeutic area where Gilead could build competitive advantages in nucleotide chemistry and formulation science. This bet would pay off spectacularly, but the magnitude of the payoff was not yet visible.

Hepsera (adefovir dipivoxil), approved in 2002 for chronic hepatitis B, further reinforced Gilead's antiviral identity and demonstrated the company's ability to develop nucleotide analogs across multiple viral targets. The hepatitis B market was smaller than HIV, but Hepsera's approval validated the scientific platform and built institutional expertise in liver disease that would prove critical when the hepatitis C opportunity arrived a decade later. The early product portfolio — Viread, Hepsera, and the antifungal AmBisome (acquired through the purchase of NeXstar Pharmaceuticals in 1999) — generated modest but growing revenue that sustained the company through its transition from research-stage to commercial enterprise. By the mid-2000s, Gilead was profitable and growing, but it remained a mid-cap biotechnology company — a fraction of the size it would become once the HIV combination strategy and hepatitis C revolution transformed its scale.

How did Gilead build its HIV franchise (2001 - 2012)?

Gilead's HIV franchise was built through a strategy of progressive combination therapy — developing fixed-dose combinations that simplified treatment regimens from multiple pills taken at various times to a single daily tablet. This approach addressed a real clinical need. HIV treatment adherence was — and remains — critically important; missed doses can lead to viral resistance, treatment failure, and disease progression. Reducing pill burden directly improved adherence, and Gilead recognized that the company controlling the backbone of the combination regimen would capture a disproportionate share of the market's economics.

Truvada, approved in 2004, combined tenofovir with emtricitabine into a two-drug fixed-dose pill that became the standard backbone of HIV combination therapy. Atripla, approved in 2006 in partnership with Bristol-Myers Squibb, added efavirenz to create the first complete single-tablet HIV regimen. These products did not merely generate revenue — they restructured how HIV was treated. Physicians could prescribe a single pill where multiple had been required, and Gilead's tenofovir backbone was embedded in the dominant treatment paradigm. Each successive combination product reinforced the centrality of Gilead's chemistry to HIV care.

The HIV franchise grew steadily through the late 2000s and early 2010s with additional products: Complera (2011), Stribild (2012), and eventually the tenofovir alafenamide (TAF) reformulation that would later anchor Descovy and Biktarvy. The TAF platform represented a meaningful pharmacological improvement — lower doses achieved comparable antiviral efficacy with reduced kidney and bone toxicity compared to the older tenofovir disoproxil fumarate formulation — and it provided a lifecycle management mechanism that extended Gilead's franchise position. By the early 2010s, HIV had become a chronic, manageable condition for patients with access to antiretroviral therapy, and Gilead's products were at the center of that treatment paradigm. The HIV franchise was generating billions in annual revenue with the recurring economics of chronic disease treatment — the structural opposite of what the hepatitis C franchise would soon demonstrate.

The PrEP (pre-exposure prophylaxis) indication added another dimension. The FDA approved Truvada for HIV prevention in 2012, expanding the addressable market from people living with HIV to people at risk of contracting it. This was structurally significant: PrEP created a new patient population that would take Gilead's drugs indefinitely as a preventive measure, not merely until a treatment course was complete. The PrEP market would grow substantially over the following decade, and Gilead's position as the dominant PrEP supplier added a growth vector that was independent of the treatment market's dynamics. The strategic significance of PrEP extended beyond its direct revenue contribution: it meant that Gilead's HIV franchise was no longer bounded by the existing infected population. Prevention created a second addressable market — the at-risk population — that was orders of magnitude larger than the treatment market alone and that would grow as awareness of PrEP expanded and public health systems incorporated it into their HIV control strategies.

What did the Pharmasset acquisition give Gilead (2012 - 2016)?

In January 2012, Gilead acquired Pharmasset for $11.2 billion — a price that raised eyebrows across the pharmaceutical industry. Pharmasset was a small company with no marketed products and a market capitalization that had recently been a fraction of the acquisition price. What it possessed was sofosbuvir (PSI-7977), a nucleotide analog that showed unprecedented efficacy against hepatitis C virus. In clinical trials, sofosbuvir-based regimens cured hepatitis C in the vast majority of patients — cure rates exceeding 90% across multiple genotypes, achieved with oral-only regimens lasting 12 weeks. This was a categorical change from the prior standard of care, which involved interferon injections with severe side effects, treatment durations of 24 to 48 weeks, and cure rates that varied widely by genotype and often fell below 50%.

Sovaldi (sofosbuvir) received FDA approval in December 2013, and Harvoni (sofosbuvir plus ledipasvir) followed in October 2014. The commercial launch was explosive. Sovaldi was priced at $84,000 per 12-week treatment course — roughly $1,000 per pill — a pricing decision that generated immediate and sustained political controversy but also reflected the curative nature of the therapy and the total cost savings relative to decades of chronic hepatitis C management, liver transplants, and hepatocellular carcinoma treatment. Harvoni, priced at approximately $94,500 per course, offered a single-tablet regimen that cured the most common genotype of hepatitis C without requiring the addition of ribavirin.

The revenue numbers were staggering. In 2014, Gilead's hepatitis C products generated approximately $12.4 billion in sales. In 2015, the combined HCV franchise peaked at approximately $19.1 billion. The company's total revenue reached $32.6 billion in 2015, up from $11.2 billion just two years earlier. No pharmaceutical company had ever experienced revenue growth of this magnitude and velocity from a single therapeutic area. Gilead's market capitalization surged past $150 billion, briefly making it one of the most valuable pharmaceutical companies in the world.

The political and public health dimensions of the hepatitis C franchise were as significant as the commercial ones. The $84,000 price tag triggered Congressional investigations, with a 2015 Senate Finance Committee report documenting that Gilead's pricing strategy was revenue-driven rather than cost-based. Public health systems — prisons, Medicaid programs, the Veterans Administration — faced the paradox of having a cure available that their budgets could not accommodate for all eligible patients. Some systems rationed access, treating only the sickest patients first. The pricing controversy became a defining episode in the broader pharmaceutical pricing debate and shaped public perception of Gilead in ways that persisted long after the HCV revenue had declined. The structural irony was inescapable: a drug that offered genuine curative value — eliminating the need for decades of chronic hepatitis C management, preventing liver cirrhosis, transplants, and cancer — triggered more pricing backlash than chronic treatments costing comparable cumulative amounts over years of therapy. The concentrated cost of a cure made the price visible in a way that amortized chronic treatment costs did not, revealing how the structure of healthcare payment systems — designed around ongoing treatment expenditures — struggled to accommodate the economics of one-time curative interventions.

Why did Gilead's hepatitis C revenue contract (2016 - 2019)?

The structural dynamics of curative therapy asserted themselves with mechanical precision. Each patient cured was a patient who would never need treatment again. The initial surge of pent-up demand — millions of patients who had been diagnosed with hepatitis C but had been waiting for better treatment options — was absorbed within two to three years of Sovaldi's launch. New diagnosis rates, while ongoing, could not replace the volume of the initial bolus. Competition arrived from AbbVie (abbv) with Viekira Pak and later Mavyret, and from Merck (mrk) with Zepatier, compressing both pricing and market share. The combination of a shrinking treatable population and intensifying competition created a revenue decline that was steep and sustained.

HCV revenue fell from the $19.1 billion peak in 2015 to approximately $9.1 billion in 2017, and continued declining to roughly $3 billion by 2019. Gilead's total revenue contracted from $32.6 billion in 2015 to approximately $22 billion in 2018. The stock price, which had peaked above $120 per share in mid-2015, declined below $60 by late 2016. The market was repricing not just the HCV franchise but Gilead's entire identity — from a company with the most profitable drug franchise in history to one facing the structural consequences of that franchise's self-limiting design.

This period revealed a structural truth about curative therapies that the pharmaceutical industry had understood theoretically but had never experienced at this scale: cures are medically ideal but commercially self-defeating. Chronic treatments for conditions like HIV, diabetes, or autoimmune disease generate revenue that compounds over time because the patient population accumulates — each new patient adds to the base of existing patients. Curative treatments subtract from the base. The revenue geometry is fundamentally different, and no amount of operational excellence can change the underlying mathematics.

AbbVie's (abbv) competitive entry was particularly consequential. Mavyret, approved in 2017, offered a pan-genotypic cure with an 8-week treatment duration and a significantly lower list price — roughly $26,400 per course. AbbVie's pricing strategy was explicitly designed to win formulary preference from insurers and pharmacy benefit managers who had been resistant to Gilead's higher price points. The competitive dynamics shifted the HCV market from one dominated by Gilead's clinical superiority to one where price and formulary access determined market share. This transition illustrated how even revolutionary drugs are eventually subject to the competitive forces that govern all pharmaceutical markets — differentiation erodes, competitors arrive, and payers exploit the resulting leverage.

How did Gilead deploy its hepatitis C windfall (2016 - 2021)?

The HCV windfall generated enormous cash flows during the peak years, and Gilead's capital allocation decisions during and after this period defined the company's subsequent trajectory. The most visible decision was share repurchases. Between 2014 and 2019, Gilead spent over $30 billion on stock buybacks, reducing the outstanding share count substantially. In 2016 alone, the company repurchased approximately $10 billion of its own stock. The buyback program was funded by the HCV cash flows and represented a bet that the stock was undervalued relative to the company's long-term prospects — a bet that proved costly in the near term, as the share price continued declining through much of 2016 and 2017 even as the buyback program consumed billions.

The strategic question Gilead faced was whether to invest the HCV windfall in building new growth engines or return it to shareholders. The company pursued both paths, but the buyback program's scale drew criticism from investors and analysts who argued that the capital would have been better deployed toward acquisitions or pipeline investment during the period when Gilead's pipeline was perceived as thin. The comparison with Amgen's (amgn) buyback-heavy capital allocation strategy is instructive — both companies used aggressive repurchases to support per-share earnings during periods of decelerating growth, and both faced questions about whether the financial engineering was substituting for genuine business building.

The first major strategic acquisition came in October 2017, when Gilead acquired Kite Pharma for $11.9 billion. Kite brought Yescarta (axicabtagene ciloleucel), a CAR-T cell therapy for relapsed or refractory large B-cell lymphoma that had received FDA approval earlier that month. The acquisition signaled Gilead's entry into oncology — a therapeutic area far removed from the company's antiviral roots but one that offered the large addressable markets and long-term growth potential that the declining HCV franchise could not. CAR-T therapy represented a genuinely novel modality: harvesting a patient's own T-cells, genetically engineering them to recognize and attack cancer cells, and reinfusing them. The science was compelling, but the commercial model was unproven at scale, the manufacturing process was complex and personalized, and the treatment was extraordinarily expensive — roughly $373,000 per patient for Yescarta.

The Kite acquisition was a directional bet on cell therapy as a platform, not merely a bet on a single product. Gilead invested in expanding Yescarta's approved indications and developing next-generation CAR-T products. Yescarta's revenue grew steadily, reaching approximately $1.5 billion by 2023. But CAR-T therapy's commercial trajectory proved more modest than early projections had suggested. The personalized manufacturing process limited throughput, the treatment's intensity restricted it to later-line settings where the patient population was smaller, and competing CAR-T products from Bristol-Myers Squibb (Breyanzi and Abecma) and Johnson and Johnson (Carvykti) fragmented the market. Gilead took an $820 million write-down in 2022 when it discontinued development of an anti-BCMA CAR-T candidate, acknowledging that not every cell therapy program would reach the market.

What did the Immunomedics acquisition bring Gilead (2020 - Present)?

In September 2020, Gilead made its largest acquisition ever: the purchase of Immunomedics for $21 billion in cash, representing a 108% premium to Immunomedics' prior closing price. The centerpiece of the deal was Trodelvy (sacituzumab govitecan), a first-in-class Trop-2-directed antibody-drug conjugate (ADC) that had received accelerated FDA approval in April 2020 for metastatic triple-negative breast cancer. The acquisition price was aggressive by any measure — Immunomedics had limited commercial infrastructure and Trodelvy was in the early stages of its commercial launch — but Gilead was betting on the ADC platform's potential to expand across multiple solid tumor indications.

Trodelvy's commercial trajectory has been one of steady growth rather than the explosive ramp that characterized the HCV franchise. Sales reached approximately $1.3 billion in 2024, with growth driven by expanding approvals in additional breast cancer subtypes, urothelial carcinoma, and ongoing clinical development in non-small cell lung cancer and other solid tumors. The ADC market has become intensely competitive, with Daiichi Sankyo and AstraZeneca's Enhertu emerging as a formidable competitor and multiple other ADC programs advancing through clinical development. Trodelvy's differentiated mechanism — targeting Trop-2, a different antigen than HER2-targeted ADCs like Enhertu — provides some competitive insulation, but the crowded ADC landscape means that Trodelvy's ultimate commercial potential depends on clinical differentiation in head-to-head competitive settings that have yet to be fully defined.

The combined oncology portfolio — Yescarta, Tecartus (another CAR-T therapy for mantle cell lymphoma), and Trodelvy — generated approximately $3.3 billion in 2024 revenue. This is meaningful revenue, but it represents a fraction of what the HIV franchise contributes. The oncology pivot is real but incomplete: Gilead has built a presence in cancer treatment, but it has not yet built the kind of dominant franchise position in oncology that it holds in HIV. Whether the oncology portfolio can scale to become a structural pillar comparable to the HIV franchise remains the central strategic question facing the company. The contrast with peers is instructive: Merck (mrk) built its oncology franchise around Keytruda, a single checkpoint inhibitor that grew to become the world's best-selling drug, while Gilead has attempted to build its oncology presence through multiple acquired modalities — a broader but more fragmented approach that distributes risk at the cost of concentrated scale in any single product.

What made Gilead's HIV franchise its most durable asset (2018 - Present)?

While the hepatitis C decline and oncology pivot dominated the narrative, Gilead's HIV franchise quietly evolved into the company's most structurally durable asset. Biktarvy (bictegravir, emtricitabine, and tenofovir alafenamide), approved in 2018, became the dominant HIV treatment regimen in the United States. By 2024, Biktarvy was generating $13.4 billion in annual revenue and commanding over 50% of the U.S. HIV treatment market — a market share that few single-tablet regimens have achieved in any therapeutic area. The drug's clinical profile — high efficacy, high barrier to resistance, favorable tolerability — combined with Gilead's entrenched relationships with HIV-treating physicians created a competitive position that proved remarkably resilient.

Descovy, the TAF-based successor to Truvada for PrEP, added approximately $2.1 billion in annual revenue and captured a growing share of the prevention market. When Truvada lost patent exclusivity and faced generic competition, Descovy provided a branded alternative with the improved safety profile of the TAF backbone. The transition from Truvada to Descovy in PrEP illustrated Gilead's lifecycle management capability within HIV — the ability to sustain franchise economics by introducing pharmacologically improved successors before patents expire on predecessor products.

The most structurally significant development in Gilead's recent HIV strategy is lenacapavir, a novel capsid inhibitor with a mechanism of action unlike any existing HIV drug. Lenacapavir was initially approved as Sunlenca in 2022 for treatment-experienced patients with multi-drug-resistant HIV. But the transformative application proved to be prevention. In the PURPOSE clinical trials, twice-yearly subcutaneous injections of lenacapavir demonstrated near-perfect efficacy in preventing HIV infection — 100% prevention in the PURPOSE 1 trial among cisgender women in sub-Saharan Africa, and 99.9% prevention in the PURPOSE 2 trial among a diverse global population. The FDA approved lenacapavir for PrEP under the brand name Yeztugo in June 2025, making it the first and only twice-yearly injectable option for HIV prevention.

Yeztugo's structural implications extend beyond incremental franchise revenue. A twice-yearly injection eliminates the daily adherence requirement that limits the effectiveness of oral PrEP — many people at risk of HIV do not take daily pills consistently, and the efficacy of oral PrEP drops dramatically with imperfect adherence. By decoupling prevention from daily behavior, lenacapavir has the potential to expand the effective PrEP population substantially. Gilead has announced partnerships with the Global Fund and PEPFAR to supply lenacapavir at no profit in low- and lower-middle-income countries, positioning the drug as both a commercial product in high-income markets and a global health intervention. The early commercial trajectory — approximately $54 million in the first two quarters following U.S. approval — reflects the typical ramp of a new HIV product, but the addressable market for long-acting PrEP is structurally larger than what daily oral PrEP has captured. The competitive dynamic with ViiV Healthcare's Cabenuva (cabotegravir plus rilpivirine), a long-acting injectable for HIV treatment requiring bimonthly administration, suggests that the market is moving broadly toward less frequent dosing — a trend that favors Gilead's twice-yearly approach if the clinical and access parameters align. Lenacapavir's unique capsid inhibitor mechanism also provides a foundation for potential combination regimens and expanded indications, making it not just a PrEP product but a platform molecule with broader structural significance for Gilead's HIV franchise evolution.

Structural Patterns

The Cure Paradox — Gilead's hepatitis C franchise is the definitive demonstration that curative therapies and sustainable business models exist in structural tension. A drug that cures eliminates its own demand. The revenue curve for a curative therapy is fundamentally different from one for a chronic treatment: it surges as pent-up demand is absorbed, then contracts as the treatable population shrinks. This is not a failure of execution — it is a mathematical property of the therapeutic modality. The paradox applies not only to Gilead but to any company developing curative therapies, and it shapes how the market values such companies before, during, and after the revenue peak.
Chronic Treatment as Structural Backbone — The HIV franchise demonstrates the opposite dynamic: chronic treatment creates compounding economics where each new patient adds to an accumulating base. Biktarvy's 50%-plus market share and $13.4 billion annual revenue represent the structural stability that curative franchises cannot provide. Gilead's trajectory shows why companies with both curative and chronic treatment portfolios experience structural tensions between their fast-decaying and slow-compounding revenue streams, and why the chronic franchise ultimately determines long-term enterprise value.
Acquisition-Driven Therapeutic Diversification — Gilead's pivot from virology to oncology was executed almost entirely through acquisitions: Pharmasset for hepatitis C, Kite Pharma for CAR-T, Immunomedics for ADC oncology. This pattern reflects a structural reality of the pharmaceutical industry — internal R&D pipelines at large companies struggle to produce transformative molecules at the rate that external acquisition can supply them. But acquisition-driven diversification carries its own risks: integration complexity, premium prices paid for unproven assets, and the cultural challenge of absorbing entrepreneurial organizations into large corporate structures.
Windfall Capital Allocation as Identity Signal — How a company deploys windfall cash reveals its structural priorities. Gilead's choice to allocate over $30 billion to share buybacks during the HCV peak — rather than investing entirely in pipeline or acquisitions — signaled a capital return orientation that shaped investor expectations and shareholder composition. The buyback program was not wrong in principle, but its scale during a period when the company's strategic position was eroding drew legitimate questions about whether the cash could have been deployed more productively toward earlier and larger growth investments.
Platform Lifecycle Management in HIV — Gilead's HIV strategy demonstrates how a dominant position can be sustained across decades through systematic lifecycle management: tenofovir to tenofovir alafenamide, single drugs to fixed-dose combinations, treatment to prevention, daily oral pills to twice-yearly injections. Each transition extends the franchise's commercial life while offering genuine clinical improvements. The pattern reveals that dominance in a chronic disease market depends less on any single product than on the ability to continuously evolve the treatment paradigm while maintaining the physician and payer relationships that support market share.
Modality Risk in Oncology Expansion — Gilead's oncology investments span two distinct therapeutic modalities — CAR-T cell therapy and antibody-drug conjugates — each with different manufacturing complexities, competitive dynamics, and scalability profiles. CAR-T therapy's personalized manufacturing creates throughput constraints that limit revenue scale. ADCs compete in an increasingly crowded landscape where differentiation depends on target antigen, linker-payload chemistry, and clinical positioning. The pattern reveals that oncology diversification is not a single strategic bet but a portfolio of modality-specific bets, each carrying distinct structural risks.

Key Turning Points

2012: Pharmasset Acquisition — The $11.2 billion purchase of Pharmasset was the enabling event for the hepatitis C revolution. At the time, the price was criticized as excessive for a company with no marketed products. Within two years, the acquired asset was generating more annual revenue than the acquisition price. The deal demonstrated that in pharmaceuticals, the value of a transformative molecule can dwarf the price paid for it — but it also set the stage for the cure paradox that would define Gilead's subsequent trajectory. The Pharmasset acquisition was both the best deal in pharmaceutical M&A history by near-term return on investment and the catalyst for the most dramatic revenue contraction the industry had witnessed.

2015: Peak HCV Revenue — The year Sovaldi and Harvoni combined to generate approximately $19.1 billion in sales marked the apex of the hepatitis C franchise and the moment when the cure paradox's structural force became undeniable. Gilead's total revenue of $32.6 billion made it one of the highest-revenue pharmaceutical companies in the world. But the peak was also the inflection point — prescriptions were already decelerating as the initial bolus of treatment-waiting patients was absorbed, and AbbVie's (abbv) competitive entry was intensifying. The 2015 peak illustrates how revenue maxima in curative therapies arrive faster and with less warning than in chronic treatment markets, because the demand signal and the depletion signal are the same event.

2017: Kite Pharma Acquisition — The $11.9 billion purchase of Kite Pharma marked Gilead's entry into oncology and cell therapy, signaling that the company's leadership recognized the HCV decline could not be offset by the HIV franchise alone. The acquisition was a bet on an entirely new therapeutic modality — one that required different scientific expertise, different manufacturing infrastructure, and different commercial capabilities than anything Gilead had built in virology. The Kite deal reframed Gilead's identity from antiviral specialist to diversified biopharmaceutical company, but the reframing remained aspirational until the oncology portfolio could generate revenue at franchise scale.

2020: Immunomedics Acquisition — The $21 billion purchase of Immunomedics and its Trodelvy ADC platform represented Gilead's largest single capital deployment and its deepest commitment to the oncology pivot. The deal's 108% premium reflected both the competitive intensity of the ADC landscape and Gilead's urgency to establish a presence in solid tumor oncology beyond the hematologic malignancies served by CAR-T therapy. Trodelvy gave Gilead an anchor in breast cancer and a platform with expansion potential across multiple solid tumor types, but the acquisition also concentrated substantial risk in a single asset whose long-term competitive positioning against emerging ADC competitors remained unresolved.

2025: Lenacapavir PrEP Approval — The FDA approval of Yeztugo (lenacapavir) for twice-yearly HIV prevention represented a potential structural inflection for Gilead's HIV franchise. By offering a prevention modality that does not require daily adherence, lenacapavir addresses the primary limitation of oral PrEP and could substantially expand the effective prevention population. The approval also demonstrated that Gilead's innovation capability in HIV remained intact decades after the franchise's founding, and it introduced a new growth vector — long-acting prevention — that could sustain the HIV franchise's economics even as older products face generic competition.

Risks and Fragilities

Biktarvy concentration is the most immediate structural risk. A single product generating $13.4 billion in annual revenue — nearly half of Gilead's total — creates the same kind of franchise dependence that made the HCV decline so painful. Biktarvy's core patents extend into the late 2030s, but the competitive landscape is not static. ViiV Healthcare (a GlaxoSmithKline subsidiary) competes with dolutegravir-based regimens, and the emergence of long-acting injectable treatments — including ViiV's Cabenuva and Gilead's own lenacapavir — could shift treatment paradigms in ways that erode Biktarvy's market share even before patent expiration. If Biktarvy's dominance were to decline faster than Gilead's other franchises can grow, the company would face a revenue compression dynamic reminiscent of the HCV experience, albeit on a slower timeline.

The oncology portfolio's competitive positioning remains structurally uncertain. Trodelvy competes in an ADC landscape that is evolving rapidly, with new entrants and new target-payload combinations entering clinical trials and the market at an accelerating pace. Daiichi Sankyo and AstraZeneca's Enhertu has established strong clinical data across multiple HER2-expressing tumor types, and next-generation ADCs targeting novel antigens are advancing through development. Trodelvy's Trop-2 targeting provides differentiation, but the ultimate question — whether Trodelvy can establish itself as a foundational oncology therapy or whether it will be one of many ADC options competing for physician attention and formulary position — remains open.

The CAR-T franchise faces its own structural constraints: personalized manufacturing limits throughput, the treatment's intensity restricts its use to later-line settings, and competition from other CAR-T products and bispecific antibodies creates market fragmentation. The $820 million write-down on the discontinued BCMA CAR-T program illustrates the binary nature of cell therapy development.

Gilead's balance sheet reflects the cumulative cost of its acquisition strategy and capital return program. The company carries substantial debt from the Immunomedics acquisition and years of buyback-funded capital returns. While the cash generation from HIV and the growing oncology portfolio supports this debt level, elevated leverage reduces strategic flexibility during a period when additional acquisitions or pipeline investments may be needed. The pharmaceutical industry's M&A landscape is competitive, and companies with stronger balance sheets — including some competitors in oncology and virology — have greater capacity to pursue transformative deals. Gilead's debt position is manageable but not trivial, and it imposes a constraint on the scale and frequency of future capital deployment decisions.

The global health dimensions of Gilead's HIV franchise create political and reputational exposure. The company's pricing of hepatitis C drugs generated lasting political scrutiny that extended beyond the HCV franchise itself, and any perceived imbalance between commercial pricing in high-income markets and access in low-income markets could reignite public and governmental pressure. Gilead has proactively addressed this with lenacapavir through no-profit pricing commitments and partnerships with global health organizations, but the tension between commercial value extraction and public health responsibility is a structural feature of operating in infectious disease markets with significant populations in low-resource settings. This tension does not appear on the balance sheet, but it shapes the regulatory and reputational environment in which Gilead operates.

Pipeline productivity beyond the HIV and oncology franchises represents a longer-term fragility. Gilead's efforts to diversify into inflammation — notably the filgotinib JAK inhibitor program, which was effectively abandoned in the United States after the FDA requested additional safety data in 2020 — have not succeeded. The company's research capabilities are concentrated in virology and, increasingly, in oncology through the acquired Kite and Immunomedics platforms. Building internal R&D capabilities in new therapeutic areas is a multi-year, multi-billion-dollar endeavor with uncertain outcomes, and Gilead's track record outside of virology is limited. If the oncology acquisitions underperform and internal pipeline programs in new areas do not materialize, Gilead's long-term growth depends almost entirely on the HIV franchise's evolution and whatever external assets can be acquired — a position of dependency that limits strategic optionality.

What Investors Can Learn

Curative therapies create structurally different revenue dynamics than chronic treatments — The distinction between curing a disease and treating one is not merely medical but financial. Curative revenue surges and decays; chronic treatment revenue compounds and accumulates. Understanding which category a company's key products occupy provides more insight into long-term revenue trajectory than growth rate analysis of any single quarter. Gilead's hepatitis C experience is the clearest demonstration of this principle in pharmaceutical history, and its HIV franchise is the clearest counter-example within the same company.
Windfall cash allocation reveals strategic priorities and constraints — When a company generates extraordinary short-term cash flows, the deployment decisions made during that window define the company's trajectory for years afterward. Gilead's choice to allocate heavily toward buybacks during the HCV peak — rather than front-loading acquisition spending — was rational on a per-share basis but left the company pursuing acquisitions at later dates and higher prices. The pattern applies broadly: windfall periods are finite, and the capital allocation decisions made during them are disproportionately consequential.
Franchise dominance in chronic disease creates durable structural value — Biktarvy's position in HIV illustrates how a single product with the right clinical profile, in a chronic disease market with high switching costs and entrenched physician relationships, can generate sustained revenue at a scale that multiple smaller products cannot match. The structural moat in chronic disease is not just patent-based — it includes prescribing inertia, patient reluctance to change working regimens, and the cumulative effect of years of clinical evidence that builds physician confidence. Recognizing this dynamic helps distinguish between franchises that will erode quickly upon competition and those that will decline gradually.
Acquisition-driven diversification carries modality-specific execution risk — Gilead's oncology acquisitions span fundamentally different therapeutic modalities — CAR-T cell therapy and antibody-drug conjugates — each with distinct manufacturing, competitive, and scalability characteristics. Evaluating an acquisition-driven diversification strategy requires assessing each modality's structural properties independently, not treating "oncology" as a homogeneous category. The risks of scaling personalized cell therapy manufacturing differ fundamentally from the risks of competing in the crowded ADC landscape, and the success of one does not imply the success of the other.
Lifecycle management sustains franchise value when executed systematically — Gilead's HIV strategy — progressing from single agents to fixed-dose combinations, from older formulations to improved backbones, from treatment to prevention, from daily pills to twice-yearly injections — demonstrates how systematic lifecycle management can sustain a franchise's economic value across decades. Each transition must offer genuine clinical improvement to justify adoption, and the cumulative effect is a franchise that evolves faster than competitors can displace it. Companies that treat lifecycle management as a core competence, rather than an afterthought, build structural resilience that patent timelines alone cannot provide.
The market reprices identity transitions slowly — Gilead's transition from HCV-driven growth company to HIV-anchored diversified pharmaceutical company to oncology-aspiring enterprise occurred over a decade, and the market's valuation of the company lagged each structural shift. The stock spent years in a range that reflected the HCV decline narrative even as the HIV franchise's stability and the oncology portfolio's growth were becoming visible. Structural transitions in large companies take years to execute and years longer for the market to fully recognize, creating periods where valuation and structural reality diverge. Understanding this lag — and whether it represents opportunity or justified skepticism — requires examining the structural evidence rather than the prevailing narrative.

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