Pharmaceutical companies are some of the most innovative businesses around, spending billions of dollars each year to develop new drugs and treatments for the diseases that afflict people around the globe.
That’s one reason you may want to pay attention to drug company Gilead Sciences, which announced on Monday that it will purchase Kite Pharma, in a deal worth nearly $12 billion.
Kite, based in Santa Monica, California, produces an immunotherapy drug that reportedly stimulates the body to fight cancer with its own cells.
Why is this a big deal?
- Gilead is one of the largest pharmaceutical drug makers in the world. And by focusing on a biotech company that has pioneered novel therapies for cancer treatment, it’s taking a bet on a new market with a huge potential for growth.
- The biotech market has shown a lot of strength this year, with major indexes that include pharmaceutical stocks increasing in the double-digits. One reason for the gains, financial experts say, is the potentially favorable environment for drug companies created by the Trump administration, which continues to roll back business regulations, and a Food and Drug Administration chief who has promised to speed the approval process for new drugs.
- Gilead hasn’t made a major acquisition of another business since 2011, and this is the company’s largest purchase to date.
- Gilead has reportedly amassed billions of dollars in recent years from top-selling antiviral drugs that help fight HIV, hepatitis B and C, and the influenza.
“The acquisition of Kite establishes Gilead as a leader in cellular therapy and provides a foundation from which to drive continued innovation for people with advanced cancers,” Gilead chief executive officer John Milligan said in press release on Monday.
Key Takeaways: Gilead is one of the largest drug manufacturers in the world, and it’s developed critical drugs to fight HIV, hepatitis B and C, and influenza. Its multi-billion dollar purchase of Kite is a significant bet on new advances in fighting cancer, as well as a further demonstration of the strength of the pharmaceutical industry in recent months.
Want to learn more about investing in healthcare?
Check out the Modern Meds and Live Long and Prosper ETFs on Stash.
Jeremy Quittner is the financial writer for Stash.
This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.
Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented.
Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures