Last week, Gilead Sciences (NASDAQ:GILD) revealed first quarter results that took analysts by surprise. Earnings per share of $1.33 came in almost 50% above the average estimate of $0.89. Total revenue of $5 billion was 27.6% above the average estimate of $3.92 billion. These positive results were largely driven by the launch of Gilead's recently approved hepatitis C drug, Sovaldi. However, despite strong sales, the stock has been under-performing the broader market so far this year. Let's take a closer look at the Sovaldi launch and another commercial stage gem to see where Gilead stands today.

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Just the beginning
Let's start with last quarter's numbers; Gilead more than tripled net income year-over-year from $722 million to $2.23 billion. This jump largely came from Sovaldi's sales, which totalled $2.27 billion. First quarter total product sales more than doubled year over year from $2.4 billion to $4.9 billion. Broken down by region, it's clear that sales growth for the first quarter was heavily lopsided toward the US. Sales from Europe increased a healthy 25% from $818.3 million to $1.02 billion. US sales, on the other hand, exploded from $1.4 billion to $3.63 billion.

An additional highlight from last quarter was Sovaldi's marketing authorization in the EU. Sales in the region should increase, but at a much slower rate than in the US. European roll-outs are typically much slower as reimbursement terms are negotiated in each country, but this will add to the top line in the coming quarters.

Sales in both the US and EU should rise further if Gilead's oral, once-daily combination of ledipasvir and Sovaldi wins approval. The company submitted applications for the combination therapy to both regions in the first quarter. Gilead expects an announcement from the FDA in October.

Incoming competition
The launch of Sovaldi has been incredible so far, but Gilead could soon see competition. The most immediate threat is AbbVie's (NYSE:ABBV) three drug regimen; this therapy has not yet been approved, but AbbVie recently submitted its application to the FDA and expects to submit an application to the EU's regulatory agency early next month..

AbbVie's three pill regimen is less convenient than Gilead's single pill combination, but private and government payers are far more concerned with pricing. The largest pharmacy benefit manager in the US, Express Scripts, has threatened to shift market share away from Gilead the moment a lower priced option becomes available. Results from AbbVie's late-stage studies suggest its regimen is capable of competing with Sovaldi in terms of safety and efficacy, and that is probably all the payers need. The FDA could make an announcement before the end of the year. Investors should carefully watch the whether AbbVie's drug is approved, and how the company's pricing strategy unfolds.

Sovaldi is clearly Gilead's biggest growth driver, but other drugs in the company's portfolio are also growing. First quarter sales of Stribild -- Gilead's once-a-day, four-drug, single-pill HIV treatment -- more than doubled to $215 million. Analysts estimate peak annual sales of over $3.5 billion.

Competition for the single-pill HIV market could be on the way from Bristol-Myers Squibb. However, cobicistat, the boosting agent Bristol-Myers uses in its HIV combo, is Gilead's drug and is also a component of Stribild. Earlier this month the companies announced submission of the HIV combination to the FDA. They expect a response in October.

Foolish takeaways
It's strange to see that Gilead's year-to-date stock performance has been lackluster, while the company reported that Sovaldi had one of the fastest drug launches in pharmaceutical history. Gilead investors know that concerns over drug pricing have been part of the stock's recent decline, but robust sales and a broad virology-focused portfolio supporting the company's growth prospects are still attractive over the long term. However, despite a solid first quarter report, there are risks with this big biotech stock that investors shouldn't ignore; a pricing war with AbbVie's HCV therapy could emerge if that therapy gets the green light from the FDA. It remains to be seen how this will play out in the coming months.

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Cory Renauer has no position in any stocks mentioned. The Motley Fool recommends Express Scripts and Gilead Sciences. The Motley Fool owns shares of Citigroup and Express Scripts. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.