China rejects Gilead patent for its Hepatitis drug ‘Sovaldi’

China’s government has outright rejected Gilead Sciences patent application for its controversial hepatitis C drug Sovaldi. It came to light on Friday that China’s State Intellectual Property Office rejected Gilead’s GILD, – 0.87% application, though the agency’s website has yet to confirm that. At least one challenger to the patent, the Initiative for Medicines, Access & Knowledge, which filed its objections last fall, says it was the first-ever patent challenge filed by a civil society group in China.

Wall Street analysts didn’t put much stock in the application, saying that the country would have broken tradition by allowing the biotechnology company to exclusively sell Sovaldi, which goes for as much as $1,000 per pill in the U.S.

“If the patent was upheld and Gilead was actually able to sell a drug there, at a premium, the market would be huge. It could cover Gilead’s market cap alone,” said Brian Skorney, analyst for Robert W. Baird & Co. “However no one actually expected China to change their long-standing policy of not recognizing innovation and upholding patents.”

Gilead has been charging up to $84,000 for a 12-week course of Sovaldi, or roughly $1,000 a day, in the U.S., but the cure rate has been well over 90%. That has generated outrage among insurers, government officials and various patient groups. Since then, it has started marketing another hepatitis C drug, Harvoni, and changes even more–up to $94,500 for 12 weeks.

I-MAK says Gilead was looking to charge anywhere between $2,000 and $15,000 per patient in China for the 12-week regimen. Given that the hepatitis C affects roughly 29 million people in that nation, that translates to anywhere between $58 billion and $435 billion in revenue.

Gilead won approval for Sovaldi from the U.S. Food and Drug Administration in late 2013 and its revenue more than doubled, to nearly $25 billion, for fiscal 2014. Net income nearly quadrupled, to $12.1 billion, boosting Gilead’s net margin to 48.6% from 27.4%.

So what exactly is Sovaldi?

Sovaldi (sofosbuvir) is an antiviral medication that prevents hepatitis C virus (HCV) cells from multiplying in your body. It’s used in combination with other medications to treat hepatitis C in adults. Sovaldi is sometimes used in people who also have HIV, or people who have liver cancer and are going to have a liver transplant. This medicine is not a treatment for HIV or AIDS.


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