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Hep-C treatment has been revolutionized over the past year thanks to a wave of new therapies that work better, can be taken orally, and require a far shorter treatment period. These next-generation hep-C-busting drugs are resulting in thousands of patients who are receiving treatment, and given that 150 million people or more are infected globally, investors are right to want exposure to hep-C drugmakers in their portfolios. Read on to learn which hep-C stocks are worth watching.

No. 1: Gilead Sciences Inc. (NASDAQ:GILD)Gilead Sciences is the newly minted Goliath in hep-C treatment. The company won FDA approval for Sovaldi in December 2013, and sales of Sovaldi, which delivers cure rates north of 90% and can be taken as a once-daily pill, eclipsed $10 billion last year. In October, Gilead Sciences followed up the launch of Sovaldi by rolling out Harvoni, a genotype 1 hep-C drug that can be taken over as few as eight weeks.

In the first quarter, sales of Harvoni soared to more than $3.5 billion, and revenue from Sovaldi totaled nearly $1 billion, giving the company an annualized hep-C drug-sales run rate of $18 billion. That's an eye-popping number, but hep-C drug sales could slip as new competitors make their way to market. To offset that risk, Gilead Sciences is studying other hep-C drugs that could shorten treatment duration and offer increasingly better cure rates to non-genotype 1 patients. For those reasons, Gilead Sciences is a must-watch hep-C drug stock.

Source: AbbVie

No. 2: AbbVie (NYSE:ABBV)In December, AbbVie won FDA approval for its hep-C drug therapy Viekira Pak, a multi-drug combination regimen for use in genotype 1 patients.

Viekira Pak's approval kicked off a pricing war between it and Gilead Sciences that led to exclusivity deals and deep discounts. In AbbVie's case, negotiations led to its becoming the go-to for patients covered by Express Scripts, the nation's largest pharmacy benefit manager.

That relationship led to AbbVie's reporting Viekira Pak sales of $231 million in the first quarter, and although Viekira Pak's revenue is a fraction of Harvoni's, AbbVie estimates that sales will build to a $3 billion annualized run rate by year end.

AbbVie could deliver on that forecast, but I have some doubts. Viekira Pak has a far more onerous dosing regimen than Harvoni that includes multiple pills daily for 12 weeks. It also requires co-administration of ribavirin, a drug that's associated with flu-like side effects and isn't required with Harvoni.

No. 3: Bristol Myers Squibb (NYSE:BMY)Bristol-Myers Squibb took a novel approach to the HCV market by focusing its hep-C drugs Daklinza and Sunvepra initially on Japan, rather than America. In addition to Japan, Bristol-Myers has also won approval for use of Daklinza in Europe.

Last quarter, Bristol-Myers reported that sales of Daklinza and Sunvepra reached $264 million, and while that's a solid revenue run rate, sales could be heading higher.

That's because Bristol-Myers filed for FDA approval of Daklinza in March for use alongside Sovaldi in genotype 3 patients. The FDA is expected to issue a decision on Daklinza in September, and if trials pan out, the agency could eventually end up approving Daklinza for use in tough-to-treat cases of hep-C, too, including cirrhosis patients and HIV patients. As a result, Bristol-Myers could end up carving itself out a profitable niche in the hep-C drug market that's worth billions of dollars annually.

Source: Merck & Co.

No. 4: Merck & Co. (NYSE:MRK)Merck & Co. doesn't have a hep-C drug on the market, but it could soon.

The company filed for FDA approval of its two-drug, one-pill combination therapy in May, and if the FDA approves it, that Merck & Co. regimen could be used instead of Sovaldi in patients with genotypes 1, 4, and 6.

In clinical trials, Merck & Co.'s therapy delivered a functional cure rate of 95%, which is in line with Harvoni, and because Merck & Co.'s hep-C drug regimen doesn't include ribavirin and requires fewer pills than Viekira Pak, it could end up posing a big threat to Gilead Sciences and relegating Viekira Pak to third-tier status.

Further down in Merck & Co.'s research department are additional hep-C drugs that could capture market share, too. Last summer, Merck & Co. acquired Idenix Pharmaceuticals for $3.85 billion to bulk up its hep-C drug program, and those drugs could lead to future hep-C regimens.

No. 5: Johnson & Johnson (NYSE:JNJ) and Achillion Pharmaceuticals (NASDAQ:ACHN)Johnson & Johnson won approval for its hep-C drug Olysio just before Gilead Sciences' Sovaldi got the FDA OK, but because Olysio didn't work as well as Sovaldi in a large subset of genotype 1 patients with the Q80K gene mutation, it ended up being used primarily alongside Sovaldi, rather than instead of it.

The launch of Harvoni further reduced demand for Olysio, causing its sales to drop significantly to $234 million in the first quarter. For comparison, before Harvoni's approval, Olysio's sales were $796 million in the third quarter of last year.

Although Olysio use is waning, Johnson & Johnson recently licensed additional hep-C drugs from Achillion Pharmaceuticals that may provide it with a future competing therapy.

In midstage clinical trials, pairing up Achillion Pharmaceuticals' ACH-3102 with Sovaldi produced 100% functional cure rates over just a six-week treatment cycle. Johnson & Johnson also got its hands on ACH-3422, a similar drug to Sovaldi that Achillion Pharmaceuticals planned to use instead of Sovaldi in future trials.

If Johnson & Johnson can pair up Achillion Pharmaceuticals drugs with Olysio, with prior-generation drugs it owns (including Incivek), or with hep-C drugs it acquired when it bought Alios last year, then it could end up back in the market-share hunt.

Tying it together
The global population of hep-C patients is significant, and there remains an unmet need for new, shorter treatments that improve adherence rates and that target tough-to-treat patients. Which company will come out on top in addressing that unmet need is unclear, but given this is a multibillion-dollar-per-year market, Gilead Sciences, AbbVie, Bristol-Myers Squibb, Merck & Co., and Johnson & Johnson/Achillion Pharmaceuticals hope it will be them.