It wasn't long ago that the pharmaceutical industry viewed HIV drugs as more of a public service than possible bestsellers.
Unlike in the case of cancer or heart disease, where drugs for patients in richer markets such as the United States and Europe can be instantly and startlingly profitable, two-thirds of people infected with HIV are in impoverished regions in Africa.
But something unexpected is happening: As treatment of HIV patients in the U.S. and abroad continues to improve, it has turned into a growing profit center for the drug industry.
No company is gaining more from the boom than once little-known Gilead Sciences Inc., a Northern California biotech that now sells medications to more than half of the HIV patients around the nation.
The rise in HIV profits is happening for several reasons: Many of those on HIV drugs today are expected to stay on them for years -- if not decades -- and the trend is to treat the disease earlier. A new generation of once-a-day pills has made the disease easier to treat.
At the same time, hopes for an HIV vaccine have faded and rates of new infections in some communities are climbing after years of stabilizing.
Although some of those developments might be bad news for public health, they're benefiting companies such as Foster City-based Gilead, whose name refers to a medicinal balm in the Bible. The firm saw revenue reach $4.3 billion last year, up a third from 2006. HIV product sales in 2007 were $3.14 billion, an increase of 48% compared with a year earlier.
Last year, Gilead's stock price rose by more than a third, and recently its market value climbed above $42 billion, making it the third-largest biotechnology company by market value in the world.
Should its growth continue apace, the company could soon be worth more than Thousand Oaks-based biotech giant Amgen Inc., analysts predict.
"They are a rare bright spot in biotechnology right now," Bear, Stearns & Co. biotech analyst Mark Schoenebaum said. "They saw a big market in HIV and have capitalized on it better than anyone."
Much of Gilead's success has come from its foresight in making HIV drugs easier to take. Just a few years ago, people with HIV took dozens of pills a day to remain healthy. But living with the disease has become significantly more manageable as a new generation of once-a-day drugs has arrived on the market.
Gilead is the leader in the field. Truvada, one of its first single-pill blockbusters, was launched in 2004 and combined two medications used in a common HIV regimen, Viread and Emtriva.
Two years ago, the company introduced an even simpler pill, Atripla, that combined those two drugs with Sustiva, made by Bristol-Myers Squibb Co. The collaboration is a rare example of two drug companies jointly selling their combined medications, and the strategy has paid off handsomely.
Atripla is now the most prescribed treatment for patients starting HIV therapy in the U.S., according to the company, and it is expected to bring in more than $1 billion in sales this year. A regimen of Truvada costs about $850 a month; Atripla costs about $1,300. The drugs typically are covered by insurance, and the uninsured can get free HIV medications through state programs, although waits have grown.
"These drugs are a milestone because of how easy they are to use," said Dr. Homayoon Khanlou, a Los Angeles HIV specialist who estimates that the majority of his patients now take one pill a day as their HIV regimen. "People take it after dinner and they are done with their treatment."
Few drug companies saw HIV as a large and viable market a few years ago. Public pressure to keep HIV drug prices low and a trend of foreign countries' ignoring HIV drug patents and making cheaper versions on their own seemed like surefire profit killers.
"A lot of companies were scared off because of all the political and assumed financial pressure" around HIV drugs, Gilead Chief Executive John Martin said.
Martin said Gilead believed differently. In the 1990s, the company sold several HIV treatments, including one to treat a common eye problem in AIDS patients, and it acquired smaller companies with promising HIV drugs.
It also elected a high-profile chairman to its board: Donald Rumsfeld, who remained in the role until he left to join the Bush administration in 2001.
As its business has grown, Gilead has taken the thunder away from former HIV heavyweight GlaxoSmithKline, whose HIV sales have flattened over the last year.
"We recognized there was a significant unmet medical need in helping add ease to people's lives," Martin said.
Recently, Gilead has expanded into other areas. It won approval last summer for a drug to treat pulmonary arterial hypertension, which affects about 100,000 in the U.S.
For the time being, however, HIV is likely to remain the company's bread and butter.
The HIV drug market is expected to nearly double from $6 billion last year to as much as $11 billion by 2015, according to market analysis firm Datamonitor.
Some doctors are worried that easier-to-take HIV drugs might be partially responsible for the recent uptick in infections as more people view the disease as a manageable chronic illness.
Khanlou said public health experts and drug companies should continue to warn people that AIDS remains a deadly disease and that the public should remain vigilant.
"We've made too much progress to start going back," he said.