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Gilead Sciences Inc. Message Board

  • akadvisor2020 akadvisor2020 Jul 26, 2014 5:40 AM Flag

    Bottom Line...my thoughts...please read

    Here is the bottom line in respect to the US government and GILD...

    Just like any other market segment, free markets dictate the demand and the pricing for a product or service. There is ZERO precedence of the United States Govt to regulate the pricing of ANY product or business for ANY US Business.

    There is no legal precedence (statutes or mandates) that allows the US Govt to dictate pricing of a business' product or service. As we know, once government can regulate pricing, it can regulate profitability, it can regulate operating expenses, it can regulate R&D, EBITDA, etc. etc.

    The only model where the US Govt has intervened is dis-allowing mergers and acquisitions in telecom (e.g. ATT, Sprint) so to have less of a monopoly and more price competition where the consumer wins...

    And that my friends is the moral of this story...GILD has zero competition to decrease pricing of a product that is in significant demand.

    Everyone needs to view Sovaldi as when AAPL released the IPOD or IPAD, IPHONE...changing the way we hear music, interact with the internet or use a mobile device.

    What happened afterwards was greed set in and firms such as Samsung capitalized...however AAPL was forever the market leader for those market segments.

    Listen to the CNBC video today where they report Express Script expects $55B of Sovaldi in the next 12-24 months! What was the second qtr earnings of Sovaldi? This doesn't include international markets!

    Make no mistake...GILD is forever the leader of the HCV market. They were first to market and they are kings of the HCV throne. A global $250B throne that maybe ABBV and perhaps MRK/BMY will get a piece of. But they will always be second fiddle and their market share will be much, much, much lower.

    The "reverse marketing" that GILD is getting right now in the press is in the end going to be a very good thing for investors...why?

    Because it will feel like we invested in AAPL when Jobs took over the second time...

    Sentiment: Strong Buy

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    • Free markets are the way to go and history proves this fact. No, Mercantilism is not the answer either. I will have to disagree with you on the government price freezing/fixing part of your statement. We have some history of that, all with disastrous consequences. Wilson, FDR, Nixon and Carter are some modern day examples. Understand one thing, this administration is unlike anything we have ever experiences before. They follow a Hugo Chavez type ideology. What is funny is John Martin is an Obama disciple himself. I believe the Solvaldi deal with Egypt was not stupid, but done for political reasons. The MIC markets will be key moving forward. I hope these markets are not treated as total humanitarian social projects. Let's remember China is still considered a MIC market and there are a lot of wealthy people in China.

    • Great post but still can`t figure out why a Taco stand is $700 a share trading #$%$ times earnings and GILD is @$89 after hitting the cover off the ball! My thought is the idiot we have running the country into the ground!

      Sentiment: Hold

    • Great post (altho, besides Fannie, etc, there is also Nixon's infamous gasoline price controls...). It is hard to fathom the logic of other responders concerning minor price reductions for Sovaldi: it has already been demon strated by other posts that Sovaldi, over the treatment cycle - and indeed the CURE! - is much less expensive than the current alternative! Will the government demand that ALL treatments be subject to some new stanrdard of ethiczl pricng? And what, I ask, might that be?

    • Just say "LET THE FORTUNE DETERMINE THE DESTINY".
      Is the Government going to take the liability/blame if Sovaldi fails in some factor.

      Sentiment: Strong Buy

    • skipaway@sbcglobal.net skipaway Jul 26, 2014 11:22 AM Flag

      Excellent post couldn't of said it any better your spot on!

    • "There is ZERO precedence of the United States Govt to regulate the pricing of ANY product or business for ANY US Business."

      With all due respect, I believe you are wrong about what is possible. As a shareholder of Fannie and Freddie since 2009, I can tell you that the government will overstep, they will tax, and they will set prices. This is especially true when talking about socialistic and populist positions. I voted for Obama twice, but shame on me for voting him in the second time. I've written about the GSEs on Seeking Alpha extensively.

      I share your viewpoint on what the US should and shouldn't do. In fact, late last night I was thinking in bed that the insurers have an excellent way to control their Hep C costs. They could hedge their costs by buying call options in GILD. If the drug continues to sell at $84,000 per treatment, then GILD will pop. The financial exposure to the wonder drug is high for stockholders.

    • great post AKA...I think the thing to do here and it hurts me to say this ,..sit down w congress and tell them we will drop the price from 84,000 to 79,000....it will look good for GILD and put this behind us..then we run into the 100s easy....we have to get past thios pricing issue. just the fact that we did something would be impressive....I would not drop the price below the 79K mark....anyhow times are changing and a Democracy as you knew it is fading fast...when the Government steps in and want you to control pricing we r in for a rough future....And it does kill me to even think about mentioning dropping the price.

    • It's a life saving drug. Simply seeing it as a product is inappropriate from a moral perspective.

      Sentiment: Strong Buy

      • 1 Reply to joec9915
      • Agreed...it is a life saving and life changing drug...

        However that does not allow third parties (US Govt) to dictate pricing on the innovation that GILD has brought to the table. They should not be penalized for innovation instead they should be rewarded which they are with the blowout quarterly earnings...

        The reward needs to now trickle down to the investors...

        The United States of America is a free market capitalist society...where someone like Mark Zuckerberg can become one of the wealthiest with brilliant innovation.

        Pricing economics of any pharmaceutical drug is dictated by a) demand and b) competition. Sovaldi has significant demand and no competition.

        Again, GILD should not be penalized for the fact other firms cannot innovate as GILD.
        Trust me, they won't be penalized...we are all Americans and if there is anything that overrides in the US financial markets...it is greed and capitalism.

        Capitalism will reward GILD not punish it.

        Sentiment: Strong Buy

 
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