15% Revenue Growth Is Good for Pfizer, but Not Gilead

If Gilead Sciences (Nasdaq: GILD) wants to get some love from investors, the drugmaker needs to show them it has some fuel in the spare tank. The current growth tanks look like they're running out of gas.

Product sales were up 15% in the second quarter, which would be acceptable -- downright ecstatic -- coming from a large pharmaceutical company like Pfizer (NYSE: PFE) or Merck (NYSE: MRK), which haven't seen organic growth numbers like that in years. But this is Gilead, where investors are used to seeing growth in the 30%-plus range; 15% increases aren't going to cut it.

Sales of Atripla, its No. 1 selling product, were up 26%, but it has to share revenue with Bristol-Myers Squibb (NYSE: BMY), which developed one of the components of the drug. Gilead's heart drugs, Letairis and Ranexa, also saw outstanding growth, 37% and 68% respectfully, but don't fall in love with those numbers; combined, they only make up 6.7% of the company's product sales.

So where's the next boost going to come from? The key products to watch in Gilead's pipeline are a four-in-one pill referred to as the quad pill and a three-in-one pill that combines Gilead's Truvada with Johnson & Johnson's (NYSE: JNJ) experimental drug TMC278. Investors will get to see data from the triple formulation -- nicknamed Btripla, as in, it comes after Atripla -- at an HIV conference scheduled for the end of this week.

There's also the potential for Gilead to buy its way into future growth. The cash-producing machine used some of its stash to buy back shares last quarter, but there's still plenty left to expand externally.

Gilead is fairly cheap, as are many of the midsized biotechs, and maybe that's the reason its shares seem to be holding up OK today despite the disappointing quarter. But in order to return to the highs seen in 2008, the company needs to show investors that it can reaccelerate its growth.

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