Biotech Values

[Rocky3]

HCV world-wide sales for 4Q16 and all of 2016:

--------3Q16---------------2016-------
GILD -3,229 - 80.62% - 14,834 - 79.77%
BMY - 226 - 5.64% - 1,578 - 8.49%
ABBV - 311 - 7.76% - 1,522 - 8.30%
MRK - 229 - 5.72% - 555 - 2.98%
JNJ - 10 - .25% - 106 - .57%

TOTAL - 4,005 -- 18,595

Since the 2015 total was 22,703, '16 sales are down 18.1%. Given GILD's forecast and ABBV's comment (as well as BMY sales disappearing) '17 should be down another 35%+, or to <12,000. Since the current run rate is 16,000, the implicit closing run rate may be as low as 8,000. Not a total cliff, but looking more and more like a very steep hill. Not at all good for GILD or ABBV's next generation and much worse for any product that JNJ might come up with.

GILD is getting killed in Japan (starts will be down >50% in 2017) and starts are down everywhere else too. $7.5-9.0B sales are more than was estimated for '17 when Sovaldi sales started and still a huge drug in the real world, but making up $6-7B of sales in one year is really impossible. And no one knows the constant annual sale number for the industry will be. It looks like it will be much less than $8B/yr. Both GILD and ABBV management seem to have greatly overestimated the staying power of sales. Not really surprising after they had underestimated the amount sales when the products were introduced.

As always, JMO.