Gilead Sciences 2025 Annual Report: HIV Growth Drives Revenue Gains Despite Record Impairments

What happened

Gilead reported total revenues of $29.4 billion for 2025, up 2% from $28.8 billion in 2024. The increase was driven primarily by HIV product sales growth of 6% to $20.8 billion, with Biktarvy reaching $14.3 billion (up 7%) and Descovy reaching $2.8 billion (up 31%). Liver Disease product sales also grew 6% to $3.2 billion. These gains were partially offset by Veklury's 49% decline to $911 million due to lower COVID-19 hospitalizations, and Cell Therapy's 7% decline to $1.8 billion reflecting competitive headwinds. Royalty, contract and other revenues increased to $527 million, primarily due to $400 million in previously constrained revenues from sale of certain intellectual property. Gross-to-net deductions as a percentage of gross product sales increased to 41% from 38%, primarily due to U.S. Medicare Part D program redesign impact. Product gross margin was 78.4%, up 29 basis points. Operating expenses declined with R&D expenses down 2% to $5.8 billion and SG&A down 5% to $5.8 billion. Acquired IPR&D expenses totaled $1.0 billion in 2025 (primarily Interius acquisition, LEO Pharma collaboration, and Pregene collaboration) versus $4.7 billion in 2024 (primarily the $3.8 billion CymaBay acquisition). IPR&D impairment charges were $590 million in 2025 related to bulevirtide versus $4.2 billion in 2024 related to NSCLC programs. Net income attributable to Gilead was $8.5 billion ($6.78 per diluted share) compared to $480 million ($0.38 per diluted share) in 2024. The effective tax rate decreased to 13.1% from 30.5%, primarily due to non-deductible acquired IPR&D expense in 2024 not repeating, a settlement with a tax authority related to a prior year legal entity restructuring, and favorable changes in fair value of equity securities.

Why it matters for investors

The results demonstrate Gilead's ability to generate organic growth in its core HIV franchise despite pricing pressures from the Medicare Part D redesign, while substantially improving reported profitability by avoiding the major non-recurring charges that depressed 2024 results. The 6% HIV sales growth, driven by both Biktarvy's continued market share gains and Descovy's 31% expansion, validates the franchise's resilience and suggests the company has successfully navigated competitive and policy headwinds. However, the business mix is shifting as COVID-related revenue declines and oncology faces challenges, with Cell Therapy sales down 7% due to competition and Trodelvy's ASCENT-07 Phase 3 trial failing to meet its primary endpoint in HR+/HER2- metastatic breast cancer. The 250 basis point increase in gross-to-net deductions reflects the structural impact of Medicare Part D program changes, which could pressure future margins. On the cost side, operating expense discipline improved with R&D down 2% and SG&A down 5%, suggesting the company is balancing pipeline investment with profitability. The $590 million impairment on bulevirtide IPR&D following competitive clinical data indicates ongoing portfolio risk, though significantly smaller than 2024's $4.2 billion NSCLC writedown. Cash flow from operations remained strong at $10.0 billion despite declining 7% year-over-year, supporting $4.0 billion in dividends and $1.9 billion in share repurchases. The 13.1% effective tax rate benefited from one-time items and may not be sustainable. Looking forward, the company faces both opportunities (HIV franchise momentum, pipeline advancement) and headwinds (Veklury decline, Cell Therapy competition, policy uncertainty from Medicare negotiations and potential tariffs).

Key highlights

Gilead's 2025 results were shaped by strong HIV franchise performance offset by oncology headwinds and the unwinding of prior year's extraordinary charges. HIV product sales of $20.8 billion grew 6%, with Biktarvy ($14.3 billion, up 7%) benefiting from continued market share gains as patients switched from Genvoya and other products, while Descovy ($2.8 billion, up 31%) saw significant demand growth in both treatment and prevention. Settlement agreements extended Biktarvy's U.S. exclusivity to April 2036, adding over two years of patent protection. The December 2025 FDA approval of Yeztugo as the first twice-yearly injectable HIV PrEP represents a potentially significant new revenue driver. However, pricing pressures intensified as gross-to-net deductions reached 41% of gross sales (up from 38%), driven by the structural impact of Medicare Part D program redesign which increased manufacturer discount obligations. Liver Disease sales grew 6% to $3.2 billion despite lower average realized prices, while Veklury collapsed 49% to $911 million as COVID-19 hospitalizations declined. In oncology, Cell Therapy sales fell 7% to $1.8 billion as Yescarta and Tecartus faced competition, while Trodelvy grew 6% to $1.4 billion in existing breast cancer indications but suffered a setback when the ASCENT-07 trial missed its primary endpoint in HR+/HER2- metastatic breast cancer. The company recognized $590 million in impairment charges on bulevirtide IPR&D after competitive clinical data emerged, though this was substantially lower than 2024's $4.2 billion NSCLC impairment. Operating expenses declined as R&D fell 2% to $5.8 billion and SG&A dropped 5% to $5.8 billion, aided by not repeating 2024's CymaBay integration costs. Acquired IPR&D expenses of $1.0 billion included the $311 million Interius acquisition and upfront payments for LEO Pharma and Pregene collaborations, compared to $4.7 billion in 2024 which included the $3.8 billion CymaBay acquisition. Net income surged to $8.5 billion from $480 million, with the increase primarily attributable to non-recurring charges not repeating: the $3.8 billion CymaBay acquisition expense and $4.2 billion NSCLC impairment from 2024. The effective tax rate fell to 13.1% from 30.5%, benefiting from a $450 million income tax benefit related to a settlement with a tax authority over a prior year legal entity restructuring and favorable equity securities fair value changes.

Management commentary

Management stated strategic ambitions to bring 10+ transformative therapies to patients by 2030, be a biotech employer and partner of choice, and deliver shareholder value in a sustainable manner. Refreshed strategic priorities include maximizing impact of long-acting HIV therapies, accelerating pipeline build in oncology and inflammation, adopting and scaling artificial intelligence, prioritizing investments for highest impact, and strengthening collaboration to accelerate innovation. For 2026, management expects continued growth for product sales overall, bolstered by increased demand in HIV business, but anticipates this will be partially offset by the impact of various policy-related developments in the U.S., an expected decrease in Veklury product sales due to lower COVID-19 hospitalizations, and an expected decrease in Cell Therapy product sales reflecting ongoing competitive headwinds. The company announced an agreement with the U.S. government to lower the cost of medicines for Americans, including implementing most favored nation (MFN) prices in Medicaid for select products, setting a new direct-to-patient price for Epclusa, and pausing Section 232 tariffs on Gilead for three years. Management disclosed a partnership with the U.S. State Department and PEPFAR to deliver lenacapavir for HIV PrEP for up to two million people over three years in PEPFAR and Global Fund supported countries. The company announced ground-breaking on a new Pharmaceutical Development and Manufacturing Technical Development Center in Foster City, California as part of a planned $32 billion investment in the U.S. through 2030. Management entered into a definitive agreement to acquire all outstanding common stock of Arcellx, providing full control of anitocabtagene autoleucel, an investigational BCMA-directed CAR-T cell therapy for relapsed/refractory multiple myeloma, with closing anticipated in Q2 2026. On February 10, 2026, the Board declared a quarterly dividend of $0.82 per share payable March 30, 2026. The Board authorized a $6.0 billion stock repurchase program in Q3 2025, which will commence upon completion of the existing $5.0 billion 2020 program.

What to watch next

Investors should monitor:

• Impact of Medicare negotiation program on Biktarvy pricing beginning in 2028, following January 2026 selection for negotiation by the Department of Health and Human Services, with negotiated price expected to be substantially lower than current Medicare price

• FDA decisions expected in 2026 on two first-line breast cancer therapies and an additional HIV treatment option, as well as updates on various clinical trials across the R&D portfolio of over 50 clinical-stage programs

• Clinical hold status on HIV treatment trials of GS-1720 and/or GS-4182, including WONDERS-1 and WONDERS-2 trials, and potential path to resolution with FDA

• Uptake and commercial performance of Yeztugo following December 2025 FDA approval as first twice-yearly injectable HIV PrEP, including payer coverage decisions and market adoption

• Trend in Cell Therapy sales as competitive headwinds continue, with Yescarta and Tecartus facing market share pressure from competing CAR-T therapies

This summary is based solely on excerpts from the company's Form 10-K filing.