Incepta Pharmaceuticals Ltd. has come forward with a generic version of the drug Sovaldi, of the Gilead Sciences Inc. (NASDAQ:GILD).This latter drug had been the block-buster hepatitis C drug of Gilead Sciences Inc. (NASDAQ:GILD) and had enjoyed immense popularity. However, it will now be sold at a price of $10.

This generic drug of Sovaldi, developed by Incepta Pharmaceuticals Ltd. goes by the name of Hopetavir and will be sold at $900 for a period of 12 weeks. On the other hand, Gilead Sciences Inc.’s (NASDAQ:GILD) Sovaldi tended to be very expensive. Up till now, it was the most effective drug for hepatitis C treatment and was being sold at $86,000 for a period of twelve weeks. Owing to this reason, Gilead Sciences Inc. (NASDAQ:GILD) had to face a lot of criticism, regarding the overpricing of its drugs. Another drug manufactured by Gilead Sciences Inc. (NASDAQ:GILD) of the like kind, Harvoni, comes with an even higher price tag of $94,500 for 12 weeks.

The hefty prices of these drugs makes them unaffordable. Quite a large of number of people are suffering from Hepatitis C, particularly in developing countries, and such expensive treatments are out of question for them. Therefore, there was a dire need for a generic version of this drug; so that people who cannot afford such highly priced drugs can still have access to hepatitis treatment.

Since Gilead Sciences Inc. (NASDAQ:GILD) has been coming across a lot of criticism regarding the high rates of its drugs, therefore recently it has been striving to make its drugs a little reasonable, so that they can be afforded in the less economically privileged countries

In accordance with these efforts, Gilead Sciences Inc. (NASDAQ:GILD) has been making quite a number of deals with drug manufacturing companies in India, allowing these companies to come up with cheaper and generic versions of Sovaldi. These low-cost HCV drugs are being manufactured for 91 developing and under developed countries of the world.

Statistics suggest that approximately 150 million people in the world are suffering from Hepatitis C. From this 150 million, a large proportion of affected people belong to either developing or under developed countries. Of the total population that makes up the hepatitis patients, more than half i.e. approximately 73% of the patients come from low-income countries. This data has been brought forward by Doctors without Borders.

A recent deal was finalized between Gilead Sciences Inc. (NASDAQ:GILD) and Natco Pharma Ltd. (BOM:524816) for the production of generic versions of Sovaldi in Nepal. In context of this deal, a statement was made by Hitesh Mahida, who happens to work as an analyst at Antique Stock Broking. Mahida said that even though the competition between the manufacturing of these generic drugs is going to be intense; however the market is very wide to welcome all these versions.

Although, Gilead Sciences Inc. (NASDAQ:GILD) has been giving licenses to many pharmaceutical companies for the production of generic versions of its block buster HCV drug, Sovaldi; yet, Incepta Pharmaceuticals Ltd. did not seek any such license from Gilead Sciences Inc. (NASDAQ:GILD). A major reason for this is that the latter company belongs to Bangladesh, and Bangladesh is alleviated from all patent protection rules, being a very non-developed country, according to the WTO treaty.

Both Sovaldi and Harvoni have been making enormous business for Gilead Sciences Inc. (NASDAQ:GILD) on the market. These drugs have been attracting investors ever since they were manufactured, tested out and approved by the FDA. These two drugs started the revival of the biotech industry. Now these two drugs are the most valued commodities in the market. But times are changing and competition in the industry is getting fierce. AbbVie Inc. (NYSE:ABBV) has sharpened its teeth and is now a serious competitor on the market. It’s as good as Gilead Sciences Inc. (NASDAQ:GILD) and its business is stable and steady. The company might find itself at a loss of new products as compared to AbbVie Inc. (NYSE:ABBV) which is rolling out new products almost every other year. The investors prefer AbbVie Inc. (NYSE:ABBV) because it has more vitality as compared to the veteran Gilead Sciences Inc. (NASDAQ:GILD).

But Gilead Sciences Inc. (NASDAQ:GILD) can’t be written off just as yet. The company knows all the tricks of the trade and there are numerous drugs in the pipeline which will be tested out and if they get approval from the FDA, the company will be as good as new. Till then, Gilead Sciences Inc. (NASDAQ:GILD) will have to find itself a spot so that its finances keep running; otherwise it’ll grow stale as compared to the growth of AbbVie Inc. (NYSE:ABBV).

Gilead Sciences Inc. (NASDAQ:GILD) has been striking associations with different companies in a bid to capitalize on their products and create a mixture of drugs formed from the inventories of both the companies, which have proved to be vital for eliminating various diseases. The company is also looking to replenish its waning sales which have been forecasted by biotech gurus on the market. It hasn’t disappointed its investors yet but it is certainly growing slow as compared to its rival AbbVie Inc. (NYSE:ABBV).

Gilead Sciences Inc. (NASDAQ:GILD) wouldn’t go down that easily. It has tricks up its sleeves which the rival companies don’t expect, which it will reveal later on when the drugs get FDA approval. The pipeline of the company is still strong enough to match any company on the market. Therefore, Gilead Sciences Inc. (NASDAQ:GILD) can’t be written so soon, not when the biotech market is still doing business. The company will last as long as the whole industry lasts, for it has been the only company that contributed to biotech market’s revival.

The company saw an impressive year-over-year revenue increase of 122% which gave the company a boost of $25 billion, which is the reason behind its decision of paying dividends. Gilead (NASDAQ:GILD) is also optimistic that it will win the price war with AbbVie (NYSE:ABBV) which the two companies are having over a hepatitis C drug. The company has also announced a share buyback program of $15 billion which will be carried out in the next five year’s time.

Robin also recognized that the solid cash flow which Gilead (NASDAQ:GILD) is collecting can be used in the exploration of M&A along with the other programs. This is the first time that the company is indulging in paying dividends and there are a few things that should be overviewed to analyse if this is the best way of utilizing the company’s cash flow or not. Despite the increasingly growing revenues, Gilead’s (NASDAQ:GILD) shares has been looking undervalued amidst its peer companies.

The company’s stock is currently trading at a ratio of forward price-to-earnings of 10 which makes it the cheapest company as far as the health industry is concerned. However, despite reporting good quarterly results, the company’s shares have been stuck on the mark of $100 since previous September. In other words the market has not been favourable for the growth of Gilead (NASDAQ:GILD) probably because of Viekira Pak’s launch Hepatitis C drug.

Now that the matter seem to have resolved it looks like the management is trying to increase the company’s value by expanding its shareholder base. Investors tend to comprehend the longer term outlook of the market and since the company’s shares have been going all over the place, it is a good idea for Gilead (NASDAQ:GILD) to pay dividends and move forward. It will prove to be a good decision to utilize the company’s growing cash flow.

The company’s increase in cash flow has been a result of the supervision of its CEO John Martin. John Martin acquired a number of companies which brought variety in the biotech company’s portfolio. Although Gilead (NASDAQ:GILD) might not want to invest in the acquisition of big companies in the future that require a huge investment, however it might consider smaller deal. For the next five years the management at Gilead (NASDAQ:GILD) is allocating around 20% of its revenues to the rewards for the shareholders.

Therefore the company will not be able to explore M&A unless it is ready to indulge in its $11.7 billion in cash and cash equivalents.

However, there are some concerns regarding the future sales of Gilead, especially when AbbVie (NYSE:ABBV) announced that its new drug, Viekira Pak, will be an exclusive treatment for those patients who have genotype 1 hepatitis C.  What is more interesting to note here is the fact that a number of healthcare companies have implied that they would prefer AbbVie’s drug over Gilead. This caused the ranking of AbbVie go up. The stocks of Gilead Sciences (NASDAQ:GILD), on the other hand, fell down by 20 percent as soon as the news hit the market.

Around 150 million individuals all across the globe are suffering from hepatitis C. When Gilead launched its Sovadi drug last year, not only was it a blessing for the infected people but it was also a game changer for the company. Before that, the patients were given a combination of drugs, including Incivek of Vertex Pharmaceuticals (NASDAQ:VRTX). Where this combination of drugs had its advantages, it certainly had a number of side-effects too, which included ribavirin and pegisterferon.  The treatment was quite painful as well, for it involved injections. Moreover, the success rate was 80 percent.

As a result, when Gilead announced its Sovadi drug, the patients as well as doctors happily welcomed it.  The drug’s success rate was 90 percent, and its side effects were also less severe than that of Incivek.  Where Sovadi had a number of advantages, it also had a set back; the drug was far more expensive than other drugs in the market. The cost of one pill is $1000.

Same is the case with other drugs of Gilead Sciences (NASDAQ:GILD). The company recently introduced a new drug, Harvoni, which is a combination of Ledipasvir and Savaldi. The cure rate is 99 percent, but here again the costs of a 12 week treatments come to a total of $94,500.

The healthcare industry was looking an affordable alternative, and it got one, when AbbVie received its FDA approval last week. Market experts are of the view that this new drug will reduce Gilead’s user base by almost 25 million, which means lower revenues for the coming quarters.

As far as the current stock prices of Gilead Sciences (NASDAQ:GILD) are concerned, the shares are being traded in the range of $96.13 to $97.3. The company has a total market capitalization of $146 billion with a beta of 1.18. The EPS (earnings per share) of the company is quite high, which may be the only good news for its investors right now.

Gilead (NASDAQ:GILD) viewpoint:

According to Gilead (NASDAQ:GILD), the price of Sovaldi is justified because it saves a lot of money in the future. According to John Milligan the president of Gilead (NASDAQ:GILD), the value of a cure is underestimated in terms of the overall advantage that the healthcare system receives from the high price tag of the drug.

As per the center of disease control, approximately 3.2 million Americans are affected by Hepatitis C. This chronic Hepatitis is also one of the main causes of more than 6000 liver transplants every year in the country. These annual transplants cost around $280,000 each. Hepatitis C costs more than $750 million every year in its direct medical expenses and indirectly the disease cause the expenses of $4 or $5 billion.

Over the next 10 years, the treatment of Hepatitis C can cost U.S $50 billion, keeping the numbers in mind it can be said that the cost of Sovaldi and Harvoni is actually saving money over the long run.

The rules of economics are also in favour of Gilead (NASDAQ:GILD). The market rules of products demand and its supply affects the pricing of the product. While there have been many complaints about the drug being over priced, there hasn’t been much of a change in its demand. People are still buying both Solvadi and Harvonis despite the price.

There is a lot of competition in the medical field and these two drugs are also faced with rivals in the form of other medicines by various medical companies. AbbVie (NYSE:ABBV) is one other company that sells drugs for the cure of Hepatitis C. The drug by AbbVie (NYSE:ABBV) is called as Viekira Pak and it is being sold at $83,319 for a 12-week treatment. The price is just a little below the price of Sovaldi and is around 12% under the price of Harvoni. By looking at the numbers, and the demand of the product and the competition, it can be said that the drugs by Gilead (NASDAQ:GILD) are priced just right and people are buying the product, which shows that the drugs are in demand.

Whether the lawsuit will change anything or not is something that will be interesting to see. The company believes that the cost of the drugs that they have decided is justified and now only a market survey will decided whether Gilead (NASDAQ:GILD) were fair or not.

The reason is perhaps that Gilead Sciences (NASDAQ:GILD)’s drug Harvoni might be overpriced as considered to the drugs AbbVie (NYSE:ABBV) is offering. That isn’t sitting well with investors. Investors are urging AbbVie (NYSE:ABBV) to undercut Harvoni’s price. The hepatitis C therapies works on the mechanism that the new drug replaces the old one. Vertex Pharmaceuticals (NASDAQ:VRTX)’s hepatitis C drug called Incivek sales plummet after Sovaldi was approved.

Same goes for Johnson & Johnson’s (NYSE:JNJ)’s Olysio when Harvoni gained the Food and Drug administration’s approval. The reason Harvoni will be hard to replace is because the drug has an excellent cure rate of 94 percent. Other drugs have tried to oust Harvoni by lowering the time duration of the therapy but that hasn’t worked at all. AbbVie (NYSE:ABBV) might have something to say with the inexpensive price tag on its drug but we don’t think it will be enough to wipe out Harvoni completely.

The investors are probably oblivious to the amazing pipeline Gilead Sciences (NASDAQ:GILD) holds. The company made several acquisitions in the past couple of years in order to expand its portfolio. Now it has got several drugs in the pipeline that can prove to be instant hits in the market. These drugs are for blood-based diseases. If anyone wants to measure the success of Gilead Sciences (NASDAQ:GILD), they should just take a look at what Gilead Sciences (NASDAQ:GILD) is holding for the future.

Gilead Sciences (NASDAQ:GILD) is attractive to the long term investors. It’s true the company lost 10 percent in one month but a visionary would always look ahead. We’re looking ahead and we see Gilead Sciences (NASDAQ:GILD) coming out with marvelous therapies that will hike the stock price and make Gilead Sciences (NASDAQ:GILD) one of the hottest companies to bet on, not only in the pharmaceutical category, but all of the stock market.

Our advice to Gilead Sciences (NASDAQ:GILD) will be to keep working on the drugs it has under development, because that is the only key to make sales in the pharmaceutical business. Once the drugs start rolling out to the market, revenue will start pouring in. Gilead Sciences (NASDAQ:GILD) shouldn’t be disturbed by the 10 percent hiccup as it can be easily covered in the oncoming months, given that the company takes the right steps at the right time in the right direction. Gilead Sciences (NASDAQ:GILD) should also be wary of AbbVie (NYSE:ABBV) that is closing in on the company.