Earlier today on twitter there was a robust debate about the weakness seen in GILD and how this is related to fears on the upcoming competition from ABBV/ENTA. It seemed clear that there was a debate over the ultimate discount that ABBV was going to offer when compared to the GILD regime. While everyone had their own views it was not clear what generalized “expectations” were and so I ran a quick survey to see if we could get a grasp of expectations.
The results were interesting in that there was not a clear normal distribution of responses when looking at the predicted discount. In fact, the distribution was really flat with the following:
17% predicting 0%-5%
19% predicting 6%-10%
19% predicting 11%-15%
and 20% predicting 16%-20%.
After that there was a drop off with 12% predicting 21%-25% and then 5% saying 26%-30% (and there was even 3% saying over 40%).

There are two interesting points here. First, the flat distribution is an indication of no real consensus. While you could probably get to a median expectation, there is a larger than expected variance (and it is not likely driven by a small sample as almost 100 answered the survey). Second, a lot seem to expect a very minor discount, which is probably too low. I suspect that ABBV would want to price their regime close to the 8-week cost of GILD which is around $63K and that would be over a 20% discount, which is on the high end of the flat distribution.
Despite the variance in terms of the discount, there was actually nice normal distribution in terms of market share expectations with the mode being 16%-20% (around 25% of respondents). This is interesting in in that despite sharp disagreements over the discount, there seems to be a consensus around market share. I am not exactly sure why there would be that disconnect but I suspect that investors have thought more about market share than discount but that is only a rough speculation.
Overall, this is still a relatively small sample but one that I think reflects the variance in expectations on the discount. It also seems to show that there is room for many investors to be surprised by the discount either to the high side or low side, which likely means increased volatility for GILD going forward.
Regardless, thanks to everyone who responded.