CASE STUDY

By: Darnell Shane BENEDICTO

Selynn CO
Samy GRIFFIT
Dulcy ISMAEL
Jonathan KOBLAN-HUBERSON

OUTLINE
I.

ANALYSIS
Introduction
Background
International Growth
External Analysis
Environmental Analysis
Competitive Analysis
Internal Analysis
Resources and Competences
II. DECISION-MAKING
Competitive Advantage
Strategic Options
Advantages and Disadvantages
Recommendations
Implementation

INTRODUCTION

What is Gilead Sciences, Inc.?

Biopharmaceutical company which creates medicine in the

field of unmet medical needs

Financial Figures
Product Sales
($ in 000s)
12,000
10,000
8,000
6,000
4,000
2,000
0

Financial Figures

3,000

Net Income
($ in 000s)

2,900
2,800
2,700
2,600
2,500
2,400

2009.0 2010.0 2011.0 2012.0

International Growth

Expansion
in Europe
Partnershi
p and
Acquisition
US Market

Caribbean
and Latin
American
Markets

Developing
Markets

Step 1: US Market

1996: The US FDA approved Vistide (cytomegalovirus retinitis in

patients with AIDS) - first commercial product
2004: Truvada (once-a-day fixed-dose co-formulation of Emtriva and
Viread for HIV combination therapy)
2006: Atripla (once-daily single tablet regimen for adults with HIV-1
infection) top-selling HIV drug
By 2013: It has released drugs focusing on HIV/AIDS, liver diseases,
cardiovascular diseases, respiratory diseases, and oncology
-> Horizontal integration Strategy and Related Diversification

Step 2: Partnerships and Acquisitions

1999: acquires Colorado-based NeXstar Pharmaceuticals

2000-2013: acquired numerous pharmaceuticals such as
CV Therapeutics, CGI Pharmaceuticals, Pharmasset, YM
BioSciences.
Partnered also with other pharmaceuticals to develop
new drugs and technology
-> growth through continuous innovation and acquisition
of technology

Step 3: Expansion in Europe

1999: With the acquisition of NeXstar, entered

European market through AmBisome (fungal infection
treatment)
Launched HIV/AIDS medicine in many European
markets

Step 4: Caribbean and Latin America

2005: expands its Access Program to include

countries in the Caribbean and Latin America,
meaning that 97 countries, representing an
estimated 70 percent of the global HIV/AIDS
epidemic, are now included in the companys access
effort.

Step 5: Developing Markets

Expansion in developing countries, through

manufacturing by Indian-based companies

EXTERNAL ANALYSIS

Market Overview: Pharmaceutical Market

Almost

$1T

In sales in 2012 globally

+2.4
%

Growth in 2012: slowing down

Numero
us
Players

Pfizer, Merck, GlaxoSmithKleine,

Roche Holding, Novartis, BristolMyers Squibb Company, etc.

Market Overview: Pharmaceutical Market

1200
1000
800
600
400
200
0

-> steadily growing market

HIV MARKET

HIV Drugs Market Share

Market Share
Gilead
Sciences, Inc.
Bristol-Myers
Squibb
Abbvie Inc.
Abbott
Laboratories

PESTEL ANALYSIS

Impact

POLITICAL

Social policy and public

health policy

Restriction of health
spending

ECONOMICAL

Intensive drug
consumption

Constant pressure on the

purchasing power of
household

SOCIAL

Growth and aging of

the population and
development of chronic
diseases

Climate of mistrust

TECHNOLOGICAL

Therapeutic advances

Patents published and

lost productivity of R & D

ENVIRONMENTAL

Opportunity because of
environmental
degragation

Impact of products

Restriction of health
spending and tightening
of product registration

---

LEGISLATIVE

--+
-

Porters Five Forces

Competition
Opportunities
Industry sales
growing
Significant
differentiation

Threats
Numerous
Competitors
High barriers of
entry
High fixed cost
High exit
barriers

Porters Five Forces

Potential entrants
Opportunities
Economies of Scale
Differentiated Products
High Switching Costs
Controlled Distribution
Channels
Must be able to pass
government regulators
such as FDA

Threat
s

Porters Five Forces

Bargaining Power of
Buyers
Opportunities Threats
Strong profits
High Volume
Purchases
Differentiated
Cant
manufacture
own

Porters Five Forces

Bargaining Power of
Suppliers
Opportunitie Threats
s
Many
High
suppliers
switching
costs
Not a lot of
substitutes
Differentiated

Porters Five Forces

Substitutes
Opportunitie Threats
s
Few substitutes
Herbs, Fruits,
Accupuncture

Value Chain Analysis

Product
Development
(Trials,
Approval)

Discovery

Manufacturin
g

Marketing and
Sales

CONTRACTING/OUTSOURCING
Research
Organizations

Manufacturing
Organizations

Sales
Organizations

INTERNAL ANALYSIS

Vision

To discover, develop
and commercialize
innovative
therapeutics in the
areas of unmet
medical need that
improve patient care.

Mission

To discover, develop
and commercialize
therapeutics that
advance patient care,
while challenging
employees to make
a difference and
building a thriving
worldwide
enterprise.

PRODUCTS

HIV/AIDS

Respiratory

Liver
diseases

Oncology

Cardiovascular

STRENGTHS
Focus on innovation of
HIV drugs
Market Leader in HIV
franchise
Strong technological
base for R&D

WEAKNESSES
Heavy reliance on HIV
franchise increasing risk

COMPETITIVE ADVANTAGE

Acquisition of
TRIANGLE
PHARMACEUTICALS

EMTRIVA
+
VIREAD

TRUVAD
A

TRUVADA

-> once-daily 2-in-one drug

STRATEGIC OPTIONS