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Does Gilead Sciences need to diversify its portfolio more?

Gilead Sciences, Inc. (GILD) is a pharmaceutical company best known for developing successful medications for HIV and hepatitis C patients. In the past two years, the company has also introduced Veklury, an antiviral medication for the treatment of COVID-19. Some investors, however, believe the company’s portfolio is not properly diversified. Gilead Sciences’ revenues were $22 billion before the pandemic hit in 2019, but they’ve dropped $3 million since then, despite the fact that income from Veklury boosted the firm last year.

Gilead Sciences’ primary business is the development of antiretroviral medications. However, sales of these drugs have lately increased modestly. Gilead Sciences’ overall revenues in the first quarter of 2022 were $6.5 billion, up 3% year over year. The majority of the money came from HIV medications ($3.7 million) and Velkury ($1.5 billion). The remainder of the company’s drugs, on the other hand, only brought her $1.3 billion in the first quarter. However, there is some good news: HIV medicine sales increased by just 1.6 percent year on year, while other items increased by more than 4.5 percent. Despite the fact that HIV medications are the company’s core business, Gilead Sciences has struggled to diversify.

As a result, the corporation is working hard to diversify its portfolio. It paid $4.9 billion for Forty Seven, an immuno-oncology startup, in 2020. Magrolimab, the major asset purchased as part of the acquisition, is a cancer treatment now in clinical testing. Gilead now has a cash reserve and a strong, but not very diverse, portfolio that it can use to pay for new purchases.

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