Gilead Shares Drop As It Agrees To 'Royalty-Free' Coronavirus Drug Licence With Generic Drugmakers In 127 Countries

Gilead Sciences, Inc. GILD shares dropped on Tuesday as the company announced it had signed a voluntary licensing agreement with five generic drugmakers to manufacture and supply its drug Remdesivir in 127 countries.

What Happened

The pharmaceutical company said it signed agreements with India-based Cipla Ltd., Hetero Labs Ltd., Jubilant Lifesciences, Pakistan-based Ferozsons Laboratories, and Netherlands-based Myla to manufacture the drug, which has been found useful for novel coronavirus (COVID-19) patients, for distribution in 127 countries.

The list of countries posted by Gilead consists of a majority of low to middle-income countries in the world. It doesn't include any North American or Western European country.Japan, China, and South Korea are also excluded.

The licensing agreement will allow the generic drugmakers to "scale up production more quickly," Gilead said, and make it accessible in countries where people face "significant obstacles to healthcare access." The companies will also get to set the prices for their own versions of the drug.

Gilead said the licenses will remain "royalty-free" until the World Health Organization has declared an end to the pandemic or until another medicine or vaccine is approved to treat or prevent the coronavirus.

The company had received an emergency use authorization from the Food and Drug Administration earlier this month for Remdesivir after a study at the National Institute of Allergy and Infectious Diseases found that the drug reduced hospitalization time for patients who fall critically ill from the virus by up to 31%.

Gilead earlier said it was looking to manufacture 1 million courses of the drug by the end of the year.

Price Action

Gilead shares closed 3.53% lower at $77.95 on Tuesday and traded slightly higher at $78.35 in the after-hours session. The stock is up nearly 20% year-till-date.