Gilead Pricing Spineometer: 5 of 5 Vertebrae

Gilead, a biopharmaceutical company, had mixed Q1 2024. Revenue rose 5.3% to $6.7 billion but earnings before interest and taxes fell 350% to a negative $4.3 billion million over the same period last year.

A review of Gilead’s April 25 earnings call and associated financial reports provided insight regarding the importance of pricing on performance.

The primary topics of concern were those related to the biopharmaceutical pipeline.  Gilead provides treatments in the disease areas of HIV, COVID-19, liver disease, and oncology.

While pricing is clearly important to performance at Gilead, it wasn’t the primary topic of discussion.

Johanna Mercier, Chief Commercial Officer at Gilead did highlight the seasonality of their price capture.  She stated, “As a reminder, quarterly HIV growth is in general more variable and less indicative of overall trends than the full year. This is evident in the first quarter of every year, where inventory drawdown typically occurs following a build that generally happens towards the end of the prior year, and patient co-pays and deductibles reset at the start of every year, and together with shifts in channel mix lowers average realized price in the first quarter. As always, we typically see these quarterly pricing and inventory dynamics normalize as we progress throughout the year.”

Part of their key portfolio include Solvadi and its related product Harvoni.  My 2015 case study on Solvadi regularly features in my pricing courses to communicate how value-based pricing works and how to manage price communication with a competitor price reaction matrix.  See Competitive Price Pressures? How to React and Why.

Given the scope of Gilead’s business, industry benchmarks would suggest 54 to 270 pricing professionals to be employed at Gilead.

1. With customers concentrated in North America and Europe, we would expect pricing professionals to be collocated with these markets.
2. Given the role of government regulation and the need to negotiate with government health systems, we would expect a high level of pricing engagement in commercial negotiations.
3. Gilead manages a somewhat long-duration pipeline of potentially highly valuable treatment regimens. This raises the need for pricing to be engaged at multiple points across the new product development process to properly inform investment decisions.  See
4. Given the revenue potential of differing treatment regimens, we would expect a number of pricing professionals to be engaged in various forms of market research and competitive intelligence. See Pricing and New Product Development.

Research into the investment by Gilead in pricing yielded encouraging results.

1. The number of professionals identified to be primarily engaged in pricing is well within industry benchmarks. Also aligned with expert expectations, pricing professionals at Gilead were found across North America and Europe.
2. Professionals engaged in pricing at Gilead held a broad range of responsibilities as would be suggested by our expert expectations. Some were focused on disease areas such as oncology, HIV, liver diseases, etc. Others were focused on commercialization with clinical or government pricing.  Value access and market access were commonly found as key parts of a professional’s responsibilities.  And, in line with the need for market research to inform pricing decisions, others focused on Health Economics and Outcomes Research (HEOR).  Pricing analytics was a common job description as well.
3. Pricing professionals ranged in seniority from lead, manager, and head to director and vice president.

Given the importance and capability of pricing at Gilead as indicated in financial reports, management statements, and our pricing team research, and given their performance, we have come to the following conclusion as of May 2024.

Gilead Pricing Spineometer: 5 out of 5 Vertebrae.

GILD (Gilead Sciences, Inc.) fell from 67 the day prior to their earnings call to 65 one week later. FY 2023 revenue of $27.1 billion with a 28% operating margin and P/E ratio near 15.

For FY 2023, a 1% improvement in price would yield a 3.6% improvement in operating profits holding all else constant at Gilead.