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A Product Margin Near Eighty PercentWide moat

Gilead Sciences (GILD) — moat facet

Gilead's product gross margin was 78.4% in 2025 and 86.4% excluding acquisition amortisation; its drugs are cheap to make and hard to replace.

Rebates take a lot, but what is left is highly profitable. Gilead's product gross margin was 78.4% in 2025 and 78.2% in 20241; on a non-GAAP basis, which excludes the amortisation of acquired intangibles, it was 86.4%2. In the second quarter of 2026 it was 79.3%3.

Gilead product gross margin (%)78.2202478.4202586.42025 non-GAAP78.7Q2 202579.3Q2 2026Gilead Form 10-K FY2025; Q4 2025 and Q2 2026 results releases
Rebates rose; the margin barely moved.

The cost of goods sold was $6,234 million in 2025 against $6,251 million in 20244. Part of that is not manufacturing at all: Janssen's share of revenue on products containing its rilpivirine was $369 million in 20255, and much of the rest is amortisation of acquired products.

That margin is the evidence of the moat on price. Keeping 86 cents of every net dollar after production is what medicines that are cheap to make and hard to replace look like.

It also explains why Gilead can absorb rebate growth. A 3-point rise in gross-to-net6 takes revenue, but on a product that costs little to make, the margin on what remains barely moves.

Operating costs show the same efficiency. Research and development was $5,799 million in 2025 and selling, general and administrative expenses $5,774 million7, against total revenues of $29,443 million8. Before acquired research and impairments, Gilead spends roughly a fifth of revenue on each, and keeps the rest as operating profit.

This is the sturdiest number Gilead reports. If the product gross margin falls below 75% in a year with no new impairment or acquired amortisation, pricing will have started to reach the margin, not just the revenue line.

Moat trajectory: Holding steady

Product gross margin 79.3% in Q2 2026 against 78.7%.

The number that tests this moat
Reported
Product gross margin, latest quarter
79.3% (Q2 2026), from 78.7% a year earlier; 78.4% for 2025

Pricing power left after deductions; below 75% without a new impairment would mean price pressure has reached the margin.

Source: Gilead Sciences Q2 2026 results release ↗
⚠ Threats to the moat
⚠ THREAT 01
Amortisation Is the Hidden Cost of Buying
About eight points of Gilead's product margin go to amortising what it bought; intangible assets fell from $26.5 billion to $14.0 billion in two and a…
References
  1. ReportedGilead's product gross margin was 78.4% in 2025 and 78.2% in 2024; on a non-GAAP basis, which excludes the amortisation of acquired intangibles, it was 86.4%.
    Gilead Sciences Form 10-K for 2025 - financial statements, MD&A and notes: income, margins, impairments, acquired IPR&D, cash flow, capital returns and debt. — FY2025 · publ. 24 February 2026 · source ↗
  2. ReportedGilead's product gross margin was 78.4% in 2025 and 78.2% in 2024; on a non-GAAP basis, which excludes the amortisation of acquired intangibles, it was 86.4%.
    Gilead Sciences fourth-quarter and full-year 2025 results release, Form 8-K exhibit 99.1 - non-GAAP measures, free cash flow, cash and 2026 guidance. — FY2025 · publ. 10 February 2026 · source ↗
  3. ReportedIn the second quarter of 2026 it was 79.3%.
    Gilead Sciences second-quarter 2026 results release, Form 8-K exhibit 99.1 - revenue by product, income statement, cash flow, balance sheet, pipeline updates and 2026 guidance - revenue by product and product group and the drivers of each. — Q2 2026 · publ. 4 August 2026 · source ↗
  4. ReportedThe cost of goods sold was $6,234 million in 2025 against $6,251 million in 2024.
    Gilead Sciences Form 10-K for 2025 - financial statements, MD&A and notes: income, margins, impairments, acquired IPR&D, cash flow, capital returns and debt. — FY2025 · publ. 24 February 2026 · source ↗
  5. ReportedPart of that is not manufacturing at all: Janssen's share of revenue on products containing its rilpivirine was $369 million in 2025, and much of the rest is amortisation of acquired products.
    Gilead Sciences Form 10-K for 2025 - revenue by product, product group and region (Note 2) and the MD&A discussion of product sales. — FY2025 · publ. 24 February 2026 · source ↗
  6. ReportedA 3-point rise in gross-to-net takes revenue, but on a product that costs little to make, the margin on what remains barely moves.
    Gilead Sciences Form 10-K for 2025 - customers, wholesalers, distribution and gross-to-net deductions. — FY2025 · publ. 24 February 2026 · source ↗
  7. ReportedResearch and development was $5,799 million in 2025 and selling, general and administrative expenses $5,774 million, against total revenues of $29,443 million.
    Gilead Sciences Form 10-K for 2025 - financial statements, MD&A and notes: income, margins, impairments, acquired IPR&D, cash flow, capital returns and debt. — FY2025 · publ. 24 February 2026 · source ↗
  8. ReportedResearch and development was $5,799 million in 2025 and selling, general and administrative expenses $5,774 million, against total revenues of $29,443 million.
    Gilead Sciences Form 10-K for 2025 - financial statements, MD&A and notes: income, margins, impairments, acquired IPR&D, cash flow, capital returns and debt. — FY2025 · publ. 24 February 2026 · source ↗
Sources
Generated October 4, 2026