Gilead Sciences: The economy-saving drug

While investors are split on whether the economy is heading into a bullish rally or if there's worse to come, most can agree on one thing: an effective vaccine to the Coronavirus will truly bring the economy back on its feet.

One of the leading pharmaceutical companies, Gilead Sciences, has been quick in developing its Coronavirus vaccine, remedesivir. In early trials done on this treatment, the U.S National Institute of Allergy and Infectious Diseases had found that remedesivir users experienced a 31% faster recovery rate than non-users. Both Dr. Anthony Fauci and President Donald Trump enjoyed the good news, with the president even stating that "it's a very positive event". In fact, the CEO of Gilead, Daniel O'Day, has announced that their drug will be readily available in U.S hospitals starting next week. The company projects production to increase to 500,000 by fall time and a million by the end of the year.

With the good news, consumers have also expressed concerns as to the pricing of this drug, and if pharmaceutical companies will remain ethical with the distribution of their treatments. One doesn't have to look too far back in history to see the possible corruption in the drug business, as just two years ago, former chief executive of Turing Pharmaceuticals, Martin Shkreli, raised the price of a specific drug for AIDS treatment by 5000%.

The World Health Organization has also endorsed the use of the Gilead drug and hopes that it can be made more widely available as more data emerges that proves it's effectiveness. The FDA has also approved remedesivir for emergency use but will continue to monitor ongoing clinical trials of the drug before it's officially approved for treatment use.

With this news, it seems as if remedesivir has become the company's best-known drug for the time being, and that has driven their share price higher than it's ever been in the past 2 years. Starting in late January, the stock began its climb from $63.20 on January 31 to hitting a high on April 31 of $84.00. People are getting sick of staying at home, and a drug that has the potential to indirectly cure the current economic climate would definitely catch the investor's eyes.

Gilead Sciences obviously has produced more drugs other than remedesivir, those being used in treating AIDS, liver disease, and more. The thing with these pharmaceutical companies, however, is the fact that if they aren't constantly coming up with innovation, their stock plateaus or might even dip. A promising drug in development causes share prices to go up, while news of a failed or ineffective drug drops share price. If you're planning on buying Gilead Sciences, don't just bank on shares going up because of remedesivir, bank on the company being able to produce multiple innovative drugs in the future, and have more than just one source of revenue.

With Gilead Sciences, it's hard to say if the share price will continue to go up since much of the company's hype as of late is contingent on the success of remedesivir. If anything goes wrong during the process, a bad result happens on a clinical trial, or if the drug ends up not getting official FDA approval, then shareholders can expect prices to drop. At this point, it's just about too late to hop on the remedesivir bandwagon.

If investor's are betting on the companies ability to consistently produce innovative drugs, then by all means invest. However, those looking to get rich quick off the back of a Coronavirus treatment should be wary of investing in the long term.

Any thoughts? Feel free to comment below

Follow Us

  • Facebook
  • Twitter
  • YouTube
  • Pinterest
  • Tumblr Social Icon
  • Instagram

©2020 by FinancialCanadianBlog