Opinions on Gilead’s Decision to Buy Pharmasset

In November 2011, Gilead Sciences, a research-based biopharmaceutical company, acquired Pharmasset, Inc., a developer of antiviral drugs. Pharmasset had developed a revolutionary all-oral treatment regimen for hepatitis C, and Gilead purchased the company for $11.8 billion. Critics, however, warned that Gilead had paid too much and might lose money on what was described as a risky purchase.

However, a year later, in the November 2012 issue of Forbes magazine, Ab Nicholas, the founder of asset manager Nicholas Co., gave his perspective on the deal. Mr. Nicholas praised Gilead as a potentially good investment, including it on a list of health care companies that represent steadiness and safety within the market. In addition, the article reported that, at the time of its writing, shares of Gilead were selling at 19.4 times forward earnings, and have now more than doubled since the time of the Pharmasset purchase.

About the Author:

Board-certified in Internal Medicine and Infectious Diseases, Robert Hindes, MD, was Vice President for Clinical Development at Pharmasset.