Gilead Sciences will hire Roche Holding, a pharmaceutical giant in Switzerland, as CEO. Gilead is confident that the experience of the new leader will help increase sales. The
American biopharmaceutical company Gilead Sciences decided to hire Daniel O’Day as its CEO. For a long time, he led the competitors of Gilead, the Swiss pharmaceutical group Roche Holding. O’day’s supposedwill help US drug makers revive sales, The Wall Street Journal reported .
How Gilead Stumped
Gilead Sciences officially announced the appointment on Monday, December 10th. O’Day will begin his duties on March 1, 2019. He will succeed John Milligan, who in July of this year unexpectedly announced that after 28 years in office he intends to leave the post of general director. Milligan is expected to continue working until the end of 2018, and Greg Alton, vice president of the company, will become interim CEO during the first two months of the year.
Recently, drug developers at Gilead Sciences have run into difficulties. The fall in sales of the most profitable hepatitis C drugs, including Sovaldi and Harvoni, has put the company in need of finding ways to resume growth. These drugs helped the company almost triple sales from $ 11.2 billion in 2013 to $ 32.6 billion in 2015. However, since then, revenue has fallen markedly: it is expected to reach $ 21.7 billion in 2018.
In the third quarter of 2018, key indicators of Gilead Sciences decreased compared to last year. Revenue fell 14.1% to $ 5.6 billion. Net income fell 22.8% in GAAP and 19.6% in reporting other than GAAP (non-GAAP). Non-GAAP revenue was $ 2.4 billion.
The fall in sales of Sovaldi and Harvoni prompted Gilead Sciences to buy one of the companies developing a fundamentally new cancer therapy – CAR-T-cell therapy and its flagship drug, Yescarta. However, the deal still has not paid off: in the first nine months of this year, sales of this medicine amounted to only $ 183 million.
What do analysts think
“Gilead Sciences shares have recently shown weakness despite strong results for two consecutive quarters. This was due to uncertainties regarding the management of the company, analysts at RBC Capital Markets believe. – Judging by the feedback from investors, the CEO with a strong history of brand promotion will be especially well received, but the appointment of any experienced and respected leader from the pharmaceutical industry will also encourage market participants to begin to perceive Gilead Sciences as a more suitable investment company. This will become the foundation for the growth of securities of the company. ”
At CenforceOnline successfully launched several Cenforce drugs against ED and other diseases. The top manager has turned the Swiss company into one of the most successful in the sector. Gilead Sciences was looking for a manager with just that experience.
Although neither Gilead Sciences nor Roche Holding have yet made official statements, Wall Street’s reaction will be positive, Barclays Capital believes. Daniel O’Day is a well-established pharmaceutical leader with a good understanding of investment prospects. It can strengthen the company’s oncology strategy, which has historically yielded financial returns to the traditional virology for Gilead (HIV and hepatitis C), Barclays explained.
Daniel O’Day is likely to pursue a more proactive policy regarding acquisitions of other manufacturers and business development. Investors will like this strategy, as it will further expand the business away from the key focus of HIV drugs, analysts think.
In addition, the appointment will remove the uncertainty that plagued investors after the announcement of the resignation of the current CEO, Barclays Bank added.