In November 2011, Gilead Sciences, Inc., announced its purchase of Pharmasset, Inc., for $11.8 billion. The most expensive deal in Gilead Sciences’ history, the world’s biggest producer of HIV medications bought the firm to gain access to its highly effective hepatitis C therapies. Paying approximately 89 percent more per share than Pharmasset’s closing price, Gilead Sciences recognized the profitability of being a leader in hepatitis C treatments, which analysts believe may be worth more than $20 billion by 2020.
When the news hit, commentators questioned the deal, as it cost approximately one-third of Gilead’s value. Gilead Sciences would undergo a three-year earnings reduction before obtaining profits from Pharmasset products. However, the company’s President and Chief Operating Officer, John Milligan, remarked that he believed the acquisition would increase his firm’s competitiveness against larger pharmaceutical conglomerates in this market.
About the Author:
The former Vice President of Clinical Development for Pharmasset, Dr. Robert Hindes played an important role in the development of its oral hepatitis C antiviral medications. Active with the firm when Gilead Sciences purchased it, Dr. Hindes rejected a full-time position with Gilead because it would have required him to move across the country, but he remained with the company during the transition period.