This February is the time for big companies to report their fourth-quarter sales. For Gilead Sciences Inc, this may be a hard time, as it projected disappointing sales for its main product, namely hepatitis C drugs. As reported by Deena Beasley on Reuters, some factors might be related to the declining trend. They include the fact that fewer patients started hepatitis C treatment and harder competition. Consequently, its shares showed declining trend by more than 5% on average.

Gilead Sciences Inc Performs Worse than Prediction

Before, Wall Street had expected that hepatitis C drug sales would decrease. However, the company expected much lower amount than the expected sales. Gilead Sciences Inc predicted that its sales from the hepatitis D drug would be around $7.5 billion to $9 billion. In addition, its earnings are predicted to be around $6.60 to $9,00 per share. These are also way lower than what the analysts had estimated, namely around $10.71 per share.

As mentioned above, the decreasing sales could be partly explained by the fact that fewer patients start hepatitis C treatment this year. Last year, it was around 231.000 patients and is falling to around 160.000 patients this year. The good news is that there may be fewer patients with advanced disease. The bad news is that many patients may delay treatment because of various reasons, such as unstable lifestyle or alcohol dependency.

Not only in the United States are the hepatitis C drug sales expected to decrease. A similar fact is expected to happen in Europe and Japan, where Gilead Sciences Inc also sells its hepatitis C drugs. This was admitted by Gilead Sciences Inc’s CEO, John Milligan. He reported that the company was facing difficult time for developing new product for the coming few years unless it made a significant acquisition.

The Declining Trend Applies for HIV drugs

Now, the company still depends much on its Sovaldi and Harvoni drugs, both of which are direct-acting anti-viral treatment. These drugs have been shown to be 90% effective in clinical trials. However, the company was under pressure from health insurers and payers that forces it to provide significant discount rate for its products. As a comparison, harvoni’s list price was $31.500 per bottle of 28 pills in 2016, but the price per bottle was less than $10.000 for Medicaid, which covers the poor and disabled people in the US.

The problems become worse as more companies, such as AbbVie Inc, launched hepatitis C drugs at more competitive prices. Because of the decreasing sales, Gilead Sciences Inc total quarterly sales, which include those of Sovaldi, Harvoni, and HIV drugs (Epclusa) decreased from $4.9 billion to $3.2. The total sales for Epclusa itself are also dissatisfying. The company predicts that its sales will be between $22.5 billion and $24.5 billion. It decreases from $30 billion in 2016.

Because of these declining trend, Gilead Sciences Inc, which was based in Foster City, California, has to see declining shares by more than 5% within only few hours of trading on the Nasdaq. If the trend persists, the company may need to consider different strategies for its sales and products.