NEW YORK (TheStreet) -- Gilead Sciences (GILD) - Get Report stock is lower by 5.46% to $82.75 on heavy trading volume this afternoon, as Merck (MRK) receives FDA approval for a less expensive alternative to Gilead's hepatitis C drug.
Merck has priced its drug at more than a 30% discount to competing drugs from Gilead and AbbVie (ABBV).
Gilead currently dominates the market for hepatitis C treatments, and its Sovaldi and Harvoni hepatitis C drugs had combined sales of $14.2 billion for the first nine months of 2015, the Wall Street Journal reports.
Merck could serve about 11% of the market in 2017 with its new drug, which would total roughly $2.2 billion in sales, according to Bernstein analyst Tim Anderson, the Journal adds.
Citigroup contends that Merck's new product will drive competitors' prices lower, noting "While Merck's US label for their HCV agent is clearly inferior to incumbent competitors, we expect the launch of Zepatier to further drive net price reductions for the all market participants," Barron's reports.
Merck will now focus on a triple-drug combination to treat additional subtypes of hepatitis C to better compete with Gilead and AbbVie, the firm continued.
About 17.54 million shares of Gilead have been traded so far today, well above the company's average trading volume of roughly 10.83 million shares per day.
Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of A-.
Gilead's strengths such as its robust revenue growth, notable return on equity, attractive valuation levels, expanding profit margins and good cash flow from operations outweigh the fact that the company has had lackluster performance in the stock itself.
You can view the full analysis from the report here: GILD
heStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.