Has Gilead Lost Its Way?
Since John Milligan took over as the CEO of Gilead Sciences (NASDAQ:GILD) roughly one year ago, the biotech's shares have steadily marched lower to the tune of a 24% decline. And one of the biggest reasons why is Milligan's decision to invest heavily in share repurchases and forgo a large acquisition -- or a series of smaller acquisitions -- to bring in some much-needed revenue.
The $13.5 billion spent on share repurchases in the past year, after all, could have netted a handful of modestly sized acquisitions. For example, Japan's Takeda Pharmaceutical bought Ariad Pharmaceuticals and its leukemia drug portfolio for only $5.2 billion, and Jazz Pharmaceuticals grabbed Celator's acute myeloid leukemia drug Vyxeos for a mere $1.5 billion -- casting doubt on Milligan's prior assertion that valuations were simply too high to warrant an acquisition frenzy.
The $13.5 billion spent on share repurchases in the past year, after all, could have netted a handful of modestly sized acquisitions. For example, Japan's Takeda Pharmaceutical bought Ariad Pharmaceuticals and its leukemia drug portfolio for only $5.2 billion, and Jazz Pharmaceuticals grabbed Celator's acute myeloid leukemia drug Vyxeos for a mere $1.5 billion -- casting doubt on Milligan's prior assertion that valuations were simply too high to warrant an acquisition frenzy.