On April 28, Gilead Sciences (NSDQ:GILD) reported disappointing results for its Q1 2016, which missed EPS expectations by $0.12 (3.8%). First-quarter revenue rose 2.6% to $7.794 billion from a year earlier, also missing the average analyst prediction of $8.135 billion. As a result, Gilead’s shares have dropped 12.7% in the following days. However, in my opinion, the company can still achieve a significant growth due to its rich pipeline with over 25 different programs under development and by a large acquisition.

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Gilead’s blockbuster hepatitis C drugs Harvoni and Sovaldi accounted for most of the decrease in first quarter sales. Harvoni missed badly in the U.S. but outperformed abroad, while Sovaldi sales increased in the U.S. Sales of Harvoni and Sovaldi accounted for 55.9% of total product sales in the first quarter of 2016, for 59.5% in 2015, and 50.7% of total product sales in 2014. HCV products sales were $4,294 million in the first quarter of 2016, a 12.2% decrease from the previous quarter, and 5.6% decline year-over-year. Gilead’s HCV drugs sales in the last nine quarters are shown in the chart below.

Source: company’s reports

Also on April 28, AbbVie (NYSE:ABBV) reported that its Harvoni competitor Viekira also came up short of consensus, which the company attributed to Merck’s (NYSE:MRK) unexpected aggressive pricing of recently launched rival Zepatier. Merck reported its first-quarter 2016 financial results on May 05, showing only $50 million revenues from Zepatier. The table below presents first quarter revenues of the three companies’ HCV drugs which clearly indicate that Gilead HCV drugs continue to hold more than 90% market share. However, the damage to Gilead by its competitors was not on market share but pricing. Gilead’s HCV drugs Harvoni and Sovaldi sales in the U.S. have dropped due to the increase in discounts required to open up access to patients with lower fibrosis scores and a modest shift in payer mix toward more deeply discounted government payer segments.