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.

Gilead Sciences Inc. still has no excuse.

The drugmaker announced second-quarter earnings Wednesday afternoon that beat analyst expectations, largely on the back of its declining Hepatitis C (HCV) drugs. Sales of that franchise were down 17 percent from a year earlier, but rose 13 percent sequentially, after more patients were diagnosed with HCV and started taking Gilead's drugs than expected.

But this bit of good news, the first for Gilead in some time, doesn't get the company off the hook for its anemic response to its HCV decline. 

Gilead's hepatitis C drugs substantially outperformed expectations, spurring hope that the franchise's decline might be slowing
Source: Bloomberg/Gilead

Gilead's medicines cure HCV, so every treated patient shrinks the addressable population. Finding new patients will become more difficult and expensive over time. Competition from AbbVie Inc. and Merck & Co Inc., meanwhile, is putting pressure on prices. Even if Gilead's HIV drugs continue to grow as they did in the latest quarter, Gilead is unlikely to see overall annual revenue growth until at least 2020.

There's nothing in Gilead's new-drug pipeline that looks likely to make up for HCV's billion-dollar declines. And Gilead has been reluctant to spend money on any new assets that might do so. The firm has shelled out less than $2 billion on deals since the big transaction that netted it the core of its HCV franchise in 2011.

Despite six consecutive quarters of year-over-year revenue declines, Gilead's only response has been to hoard cash (its pile now stands at more than $36 billion) and to spend money on a new dividend, often-underwater share buybacks (to the tune of more than $20 billion in 2015 and 2016) and a small number of minor deals. That's clearly not enough for shareholders: Gilead shares are up just 3.6 percent so far this year, compared to the Nasdaq Biotech Index's 23 percent gain. 

The longer Gilead can stretch out its HCV franchise, the better. But a slightly shallower sales decline for those drugs doesn't change the need to replace their lost revenue. Gilead needs to quickly get over its reluctance to act.

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

To contact the author of this story:
Max Nisen in New York at

To contact the editor responsible for this story:
Mark Gongloff at