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Gilead Sciences: Taking its own counsel

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Source: Gilead

Gilead Sciences: Taking its own counsel

2011: $1.23 billion
2012: $1.07 billion
As a percentage of revenue: 15%
Research chief: Norbert W. Bischofberger

Gilead ($GILD) has had to endure some sharp criticism for the prices it charges for leading HIV treatments, but the revenue has funded one of the most ambitious biotech R&D programs in the industry. And while the company has recently made big progress in expanding on its HIV franchise, Gilead has also been diversifying the pipeline, putting itself center square in the frenetic race to develop a new oral hepatitis C treatment that won't rely on interferon injections.

On the HIV front, Gilead won an FDA panel vote in May 2012 for its four-in-one HIV pill Quad, putting it on track for a likely approval by Aug. 27. And that came just after agency experts endorsed Truvada as a preventive therapy for HIV.

But its Gilead's agreement to buy Pharmasset for $10.8 billion that still attracts alternating rounds of criticism and acclaim in the drug development business. Positive new PSI-7977 data has helped burnish Gilead's prospects in the field. But even there the biotech has been afflicted with scathing criticism about its development program.

A combo study of 7977 with Bristol-Myers Squibb's ($BMY) daclatasvir, an NS5A drug, wowed analysts at the April EASL meeting. But Gilead so far has resisted BMS' call to push ahead with a late-stage study. And some analysts attribute the reluctance to Gilead's preference to match its hep C star with its own NS5A drug. That would deliver more revenue, but take more time, forcing patients to wait for a better treatment. But Gilead has grown a thick hide over the years, sticking with high price tags on HIV drugs, betting big on hep C and pursuing its own distinct vision for the future--regardless of whatever anyone else might say.

The company also plans to put the pedal to the metal on the R&D front. First-quarter 2012 R&D costs rang in at $458 million, up a jaw-dropping 80% over the year before. Even excluding acquisition-related costs, Gilead's research budget swelled $94 million in the quarter, largely related to its increased clinical activities.

That kind of track record can only be vindicated by a blockbuster approval or two. Win or lose, though, Gilead is unlikely to start turning overly sensitive anytime soon when it comes to outside reviews of its research work.