Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Biotech giant Gilead's revenue has quadrupled and its market cap has tripled since 2011. It has the fastest-growing drug in history, with patent protection well into the next decade. And yet its shares hit their lowest point since May 2014 on Tuesday and are down nearly 23 percent this year. What gives? 

The Doldrums
After years of breakneck growth, Gilead looks like it's sitting still, at best
Source: Bloomberg

Gilead soared to prominence almost overnight with its 2011 purchase of Pharmasset, which netted blockbuster hepatitis C (HCV) drugs Sovaldi and Harvoni. But sales of those drugs are declining earlier and more rapidly than expected, and Gilead's meteoric rise faces a reversal that could be just as sudden.

Despite this and clamoring from analysts for more details on the company's spending plans, management has avoided making big deals and has offered no particularly convincing plan for returning to growth. Without real action, the stock is likely to end up in the same kind of managed decline as its HCV franchise.

The company still has a commanding lead in the HCV market. Its drugs outsold its two leading competitors by more than $3 billion in the second quarter. But the company has been forced to provide major discounts to keep health-care providers from picking other options.

Analyst's sales expectations may still be too high, even after the company cut 2016 revenue guidance earlier this year. Multiple analysts have written recently that HCV prescriptions for the current quarter look worryingly slow, meaning there could be a sharp drop in the third quarter from an already disappointing second quarter. 

Then I Saw Those Scrips
Analysts now believe Gilead's HCV franchise will see multi-billion-dollar declines in the near term
Source: Bloomberg

Gilead's HIV drugs are a bright spot, including Genvoya and Descovy, expected to combine for more than $5 billion in sales by 2019. But these also have a major competitive overhang: GlaxoSmithKline announced on August 16 it is testing whether its newest HIV drug will work in combination with just one other drug, bucking the industry's triple-combo standard. That could help reduce costs and side effects, shaking up the market. A Wall Street Journal article hyping GSK's approach sent Gilead shares down 2 percent on Monday. GSK's combo is still far from market, but is a genuinely scary proposition for Gilead.

Gilead's pipeline could produce a drug that eases such concerns. But the company has yet to prove it can do much outside of HIV and HCV, and investors and analysts don't expect much. 

Management needs to do more than wait on a pipeline savior, whether it's actually pulling the trigger on a deal that would make it a major player in cancer drugs, and more than a two-trick pony -- something investors have wanted for years -- or finding a better strategy to stem accelerating HCV declines. Because it's getting too easy for investors to assume Gilead's peak has already passed. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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