Businessmodel of Gilead Sciences

Customer Segments

Gilead Sciences has a mass market business model, with no significant differentiation between customer groups. The company targets its offerings at anyone suffering from various life-threatening conditions.

Value Proposition

Gilead Sciences offers three primary value propositions: innovation, cost reduction, and brand/status.

The company creates accessibility by providing a wide variety of options. It maintains a portfolio of 22 marketed products and a pipeline of investigational drugs that treat a broad range of conditions: HIV/AIDS, liver diseases, cancer, inflammatory and respiratory diseases, and cardiovascular conditions.

The company has embraced innovation throughout its history. Its groundbreaking efforts include:

• The first complete treatment regimens for HIV infection and chronic hepatitis C infection available in once-daily single pills
• The first oral antiretroviral pill available to reduce the risk of acquiring HIV infection in certain high-risk adults The company reduces cost by providing discounts for certain customer groups. It operates various patience assistance programs, which help make its therapies more accessible and affordable for uninsured patients and those in need of financial assistance. These programs include:  U.S. Advancing Access, Truvada for PrEP Medication Assistance Program, GileadSolutions, Cayston Access Program, Ranexa Connect, SupportPath for Sovaldi and Harvoni, and Zydelig AccessConnect. Gilead Sciences also supports programs for individuals unable to afford the co-payments associated with health insurance programs. For example, it works with state AIDS Drug Assistance Programs (ADAPs) to offer lower pricing for its HIV medicines.

The company has established a strong brand due to its success. It is one of the largest biopharmaceutical firms in the world, with revenues of $32.6 billion in 2015. It maintains operations in over 30 countries and employs 8,000 individuals across six continents. Its research and development initiatives include over 400 planned and ongoing clinical studies assessing compounds with the potential to become effective medicines. Lastly, it has won a number of honors, including #2 placement on the Barron’s 500, recognition as one of the Most Innovative Companies of 2015 by Fast Company, and ranking as #1 on Business Insider’s list of the top companies to work for based on how meaningful employees find their work.

Channels

Gilead Sciences’ main channel is its commercial direct sales team. It also sells its products through third-party distributors, wholesalers (including McKesson, Cardinal Health, and Amerisource Bergen), and corporate partners. The company promotes its offering through its website and social media pages.

Customer Relationships

Gilead Sciences’ customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Gilead Sciences’ business model entails designing, developing, and marketing its medicines to its customers. It manufactures some of its products, though the majority is produced by third parties.

Key Partners

Gilead Sciences’ key partners are as follows:

• Manufacturers – The third-party manufacturers that it contracts with to produce the majority of its active pharmaceutical ingredients (API) and solid dose products. It also depends on its corporate partners to manufacture some of its products.
• Distributors – The third-party distributors, wholesalers, and corporate partners the company utilizes to sell its products in order to expand its reach.
• Research Partners – The academic institutions, biotechnology firms, and pharmaceutical firms the company collaborates with to develop new, innovative therapeutics. Specific partners include BMS, Janssen, and Japan Tobacco. Lastly, Gilead Sciences supports investigator-sponsored research carried out by third parties on its products or within therapeutic areas of interest to the company. It believes these studies can provide valuable information regarding the efficacy, safety, pharmacology, and tolerability of its offerings. Organizations interested in conducting the research can apply for a grant from the firm.

Key Resources

Gilead Sciences’ main resources are its human resources, namely the research scientists who design and develop its therapeutic products, and the sales personnel that market them. The company also depends on a handful of manufacturing facilities that it owns or leases in California, Canada, and Ireland for the production of certain products and active pharmaceutical ingredients.

Cost Structure

Gilead Sciences has a cost-driven structure, aiming to minimize expenses through low-price value propositions. Due to government regulation involving reimbursement, a significant portion of its products are subject to substantial discounts and rebate obligations.

Its major drivers are in the areas of research/development, sales/marketing, and administration, all fixed expenses.

Revenue Streams

Gilead Sciences has two revenue streams: product revenues and royalty/contract/other revenues.