Better Than Recession-Proof

With Celgene (Nasdaq: CELG  ) reporting that first-quarter sales of its very necessary cancer treatments would be less than stellar, it was reasonable that Gilead Sciences' (Nasdaq: GILD  ) investors would be a bit nervous about how the first quarter would look for the HIV specialist.

Turns out there was nothing to worry about. Gilead killed it. Killed it!

Revenue was up 22% year over year. Excluding royalty revenue, which was hurt by lower Tamiflu sales by Roche, product sales were up 27%. HIV-infected patients have to take their medicine, and Gilead has shown that its products can compete ably against well-established players like GlaxoSmithKline (NYSE: GSK  ) and fend off newcomers like Merck's (NYSE: MRK  ) Isentress and Johnson & Johnson's (NYSE: JNJ  ) Intelence.

Sales of Atripla -- Gilead's combination of its Truvada and Bristol-Myers Squibb's (NYSE: BMY  ) Sustiva -- were up 57%. Atripla is rapidly approaching Truvada for the top spot on the roster, but it's not poaching sales of Truvada too badly; those were up 23% year over year.

The bottom line looked just as healthy, with earnings per share growing over 23% from the year-ago quarter. Ideally, Fools would love to see operating margins expand as the company increases revenue, but with royalties becoming a smaller portion of the revenue stream, investors and the company will have to look elsewhere.

The big issue for Gilead now is how to keep the momentum going long term. Eventually scientists will find a way to prevent HIV, and even if they don't, Gilead's drugs will ultimately go off patent. The company is hedging its bets by continuing to develop HIV drugs, but it's also moving into the cardiovascular arena with the acquisition of CV Therapeutics and development of a pulmonary arterial hypertension drug.

The whole health-care industry may not be recession-proof, but Gilead has shown that the right combination of drugs can lead to stellar returns -- even in a down economy.