8. Gilead Sciences

Gilead's declining numbers have taken a toll on its stock price, which has investors very restless.

8. Gilead Sciences
Headquarters: Foster City, California
2016 revenues: $30.39 billion
2015 revenues: $32.15 billion

After astounding the industry for several years with a doubling and then tripling of revenues as its hep C meds dominated the market—and often the news—2016 was a tough go for Gilead Sciences, and this year is shaping up to be worse.  

Sales of its hepatitis C drugs overall were off 22% to $14.8 billion in 2016, with pioneering hep C cures Harvoni and Sovaldi falling 34% and 33%, respectively, pressured by market saturation and intense pushback on prices. In fact, Gilead said that the net price for Harvoni for the year was $15,000 per bottle after discounts and rebates, less than half of its list price.

That all led to diluted earnings per share of $9.94, down from $11.91 the year before. What’s more, even with new antivirals in its portfolio, Gilead told investors to expect all product sales to come in even lower in 2017. The company is expecting between $22.5 billion and $24.5 billion, a big decline from 2016's $30 billion-plus.

Needless to say, the numbers have taken a toll on Gilead's stock price. Not surprisingly, investors have grown very restless. They are pressuring CEO John Milligan to do something big to inject new innovation into the pipeline and sales into the top line. But Milligan so far has been unable to find near-term relief, and Gilead's efforts to expand in oncology have faltered.

As Milligan told investors in February, “We don't have a lot of things launching over the next few years"—and this at a time when Gilead also faces patent losses on several products, including Letairis to treat pulmonary arterial hypertension and angina drug Ranexa. He conceded, “that makes it challenging for us to grow without some sort of acquisition."

Going into 2016, it looked as if Gilead’s efforts in oncology might be the key to open the door to bigger sales. Then Gilead began dribbling out a stream of troubling news, like the departure of Philippe Bishop as head of its hematology and oncology unit 15 months after he arrived from Genentech.

Next came serious safety concerns that led Gilead to stop six studies of cancer drug Zydelig, a first-in-class PI3K inhibitor that had produced some impressive data for its 2014 launch in CLL, indolent B-cell non-Hodgkin's lymphoma and small lymphocytic lymphoma. That was followed by less-than-stellar phase 3 data on momelotinib for myelofibrosis, a rare bone cancer.

Longer term, Gilead is betting it can be a major player in the hot market for drugs to treat nonalcoholic liver disease (NASH). The company bolstered its presence in the NASH market last year with two acquisitions and a $1.2 billion licensing deal.

But that doesn’t help the drugmaker in the here and now, and Milligan so far has been unwilling to do a deal for a portfolio that can give a quick payoff. He has said Gilead will only pursue deals that would boost its pipeline, not to drive cash flow.

That said, recent investments and agitation at Bristol-Myers Squibb have made it look like a takeover target, and Gilead Sciences is among those that have come up as possible buyers

8. Gilead Sciences