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Gilead Sciences Inc GILD

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Large-Cap Biopharma Capital Allocation Supports Primarily Wide-Moat Industry

Damien Conover, CFA Sector Director

Analyst Note

| Damien Conover, CFA |

The majority of the large-cap biopharma firms have moats, but almost all the drugs currently sold by the group will face generic competition over the next two decades, making successful capital allocation (evaluated by our capital allocation methodology) critically important in securing the current strong moat ratings within the group. We believe the patent life of drugs (typically 20 years, but with many years used during development) makes the biopharma group particularly reliant on successful redeployment of capital because of the need to constantly reinvent drug portfolios. We view a key part of successful capital allocation at big biopharma companies as a combination of (1) sound internal research and development (both in magnitude of investment and strategically focused in innovative therapeutic areas) and (2) successful external acquisitions and partnerships. The combination of successful internal development and external deals allows the big biopharma industry to consistently reinvent product portfolios and secure economic moats, protecting high returns on invested capital.

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Company Profile

Business Description

Gilead Sciences develops and markets therapies to treat life-threatening infectious diseases, with the core of its portfolio focused on HIV and hepatitis B and C. The acquisitions of Corus Pharma, Myogen, CV Therapeutics, Arresto Biosciences, and Calistoga have broadened this focus to include pulmonary and cardiovascular diseases and cancer. Gilead's acquisition of Pharmasset brought rights to hepatitis C drug Sovaldi, which is also part of combination drug Harvoni, and the Kite, Forty Seven, and Immunomedics acquisitions boost Gilead's exposure to cell therapy and noncell therapy in oncology.

Contact
333 Lakeside Drive
Foster, CA, 94404
T +1 650 574-3000
Sector Healthcare
Industry Drug Manufacturers - General
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type High Yield
Employees 13,600

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