Gilead Sciences, Inc. (NASDAQ:GILD) Has Highest Drug Efficacy in Market

March 29, 2016

Portfolio Manager Chad Clauser of Lawson Kroeker Investment Management says Gilead Sciences, Inc. (NASDAQ:GILD) is a standout in the pharmaceutical sector, and one of his firm’s top investment picks.

Gilead kind of bucks the trend with what we are seeing in the pharmaceutical space, which are cheap acquisitions, cut R&D basically, strip a lot of the costs out of the business. Gilead kind of does the exact opposite. This is really an innovation incubator with some of the best R&D on the street. What they are good at, they are very good at.

The products that they have are over 50%-plus market share, but not only that, but also have the highest efficacy in the drugs that they create. So it’s not something that’s prone to patent cliffs and genetics coming in and basically eroding their pricing power. Their efficacy is so high, but there is not really a close second competitor around their products compared to most pharmaceutical companies.

If they want to switch the gears on the research and development, they are at their highest levels of cash that they have ever had. So this is a very large holding with no debt that they could deploy, should they want to expand their product offering if there was something they felt they needed to do. But historically, the nice thing about these guys is it’s not been an acquisition story at all, it’s been an internal development story by and large.

Chad C. Clauser