The big question for Gilead: Who are you going to buy?

Gilead President John Milligan

Last night Gilead ($GILD) execs basked in the glow of market-bending sales numbers, backed by the continuing megasuccess of its two hep C drugs, Harvoni and Sovaldi, which racked up close to $5 billion in revenue for the second quarter. So naturally analysts want to know how they plan to spend the cash.

"The biggest question on everyone's mind for Gilead is who you're going to buy, who you're going to buy, who you're going to buy, who you're going to buy, who you're going to buy," chanted Evercore/ISI's Mark Schoenebaum, last heard urging George Scangos at Biogen ($BIIB) to get out there and grab something in the middle of a biotech buyout orgy.

Gilead President John Milligan came back with a description that would fit everything from a toaster oven to one of those multibillion-dollar "transformative" deals that has investors eagerly buying up everything that looks M&A-worthy--which covers a long list.

"As you suggested we could contemplate small deals, we could contemplate larger, perhaps even transformative deals," responded Milligan. "And we're in position of strength so we could be fairly selective in terms of the things that we like to do and take our time to make sure that those things that we do choose to do we can execute on them fairly effectively, bring new products to market and continue to grow our top line revenue and EPS and so we'll take all those."

Gilead CEO John Martin

Gilead CEO John Martin helped stoke all the chatter after big revenue numbers were posted following the first quarter, saying that the company is "taking suggestions" on who should be on its target list. And there has been no end of responses.

Among the big targets most often mentioned in the same breath as Gilead you'll find Vertex ($VRTX), rebounding with a newly approved cystic fibrosis combo. Nomura's M. Ian Somaiya likes Incyte ($INCY), now that Celgene ($CELG) has a deal to snap up Receptos. And he believes Gilead can't sit around much longer on the sidelines. "Nomura believes Gilead has a finite window to take advantage of its cash generation (an estimated $50bn FCF from 2015-17) and low cost of capital to acquire a pipeline," the group opined today.

Then there are the favorite takeout targets that always come up in these discussions, most notably BioMarin ($BMRN)--a regularly mentioned takeover target specializing in rare diseases--Medivation ($MDVN) and Alexion ($ALXN).

If it does make a move, Gilead could find itself pitted against Biogen, which was hammered mercilessly last week after reporting a significant drop in revenue and some less-than-stellar Alzheimer's data. Allergan ($AGN) has a $40.5 billion windfall on its hands now, and Brent Saunders has been crystal clear that he is buying. Pfizer CEO Ian Read used his conference call with analysts today to repeat his interest in any opportunities that come along. Even Celgene CEO Bob Hugin hasn't sworn off big deals, after executing a string of them, though most analysts expect the big biotech will at least take a breather before the next blockbuster deal.

Not every big company is an aggressive buyer in this market, though. Roche ($RHHBY) CEO Severin Schwan and Eli Lilly ($LLY) chief John Lechleiter are both shaking their heads over the huge valuations that are being attached to biotechs these days.

The only sure bet is that there will be more bets--and sizable ones at that--despite an unprecedented increase in the price of a biotech acquisition.

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