How GILD (Gilead Sciences) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a biopharmaceutical company like Gilead Sciences makes money is essential for investors and anyone interested in the business of healthcare and drug development. In this post, we break down Gilead's quarterly income statement (Q4 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.[1][2]

Quick Gilead Sciences Overview

Gilead Sciences operates as a research-based biopharmaceutical company focused on developing and commercializing medicines for serious diseases including HIV, viral hepatitis, cancer, and inflammatory conditions. Revenue comes primarily from product sales of branded pharmaceutical drugs, with a smaller contribution from royalties and contract revenues. The company's portfolio includes both established franchises and newer therapeutic areas, positioning it as a diversified player in the global pharmaceutical market.

Revenue Breakdown

• Total Revenue (Q4 2025): $7,925M (+4.7% YoY)
  • Product Sales Revenue: $7,903M (99.7% of total, +4.9% YoY)
  • Royalty, Contract and Other Revenue: $22M (0.3% of total, -33.3% YoY)
  • Growth is powered by steady demand for Gilead's core pharmaceutical products, with product sales driving nearly all revenue despite modest year-over-year expansion.

Gross Profit and Margins

• Gross Profit: $6,882M (86.8% gross margin)
  • Cost of Revenue: $1,043M (-34.0% YoY)
  • Gilead maintains robust margins due to the high-margin nature of pharmaceutical products and improved manufacturing efficiency. The significant year-over-year decline in cost of revenue reflects operational improvements and favorable product mix dynamics.
• Most costs come from manufacturing, distribution, and supply chain expenses for pharmaceutical products.

Operating Income and Expenses

• Operating Income: $2,964M (+20.9% YoY, 37.4% margin)
• Operating Expenses: $3,918M (+10.5% YoY)
  • R&D Expenses: $1,565M (-4.6% YoY, 19.7% of revenue) — Gilead continues to invest in pipeline development and clinical trials across oncology, virology, and inflammatory disease areas, though R&D spending declined modestly as the company optimizes research productivity.
  • SG&A Expenses: $1,777M (-6.8% YoY, 22.4% of revenue) — Sales, general, and administrative costs decreased year-over-year, reflecting improved operational efficiency and cost management initiatives.
  • Gilead continues to prioritize innovation while maintaining efficiency, balancing substantial R&D investments with disciplined cost control in administrative functions.

Net Income

• Pre-Tax Income: $2,078M (-4.2% YoY, 26.2% margin)
• Net Interest Expense: $255M
• Other Income: $631M
• Net Income: $2,183M (+22.4% YoY, 27.5% net margin)
• Gilead converts a significant portion of sales into profit due to the scalability of its pharmaceutical business model and operational leverage. Despite a slight decline in pre-tax income, net income grew substantially year-over-year, driven by favorable non-operating items and the company's strong underlying profitability.

What Drives Gilead's Money Machine?

• Pharmaceutical Product Sales: 99.7% of revenue, representing the core earnings engine of the business
• High Gross Margins: 86.8% gross margin reflects the inherent profitability of branded drug sales with limited direct manufacturing costs relative to revenue
• R&D Investment: 19.7% of revenue directed toward pipeline development, ensuring future growth and competitive positioning in oncology and virology
• Operating Leverage: Operating income grew 20.9% year-over-year despite only 4.7% revenue growth, demonstrating the company's ability to expand profits through cost management and operational efficiency

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Visualizing Gilead's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.[1][2]

• Most revenue flows into gross profit, with operating expenses (especially SG&A at 22.4% of revenue and R&D at 19.7% of revenue) taking the largest chunks.
• Even after substantial investments in research and development and sales infrastructure, 27.5% of revenue drops to the bottom line as net income, illustrating the powerful economics of the pharmaceutical business.

Key Takeaways

• Gilead's money comes overwhelmingly from product sales of branded pharmaceutical drugs, which represent 99.7% of total revenue
• High gross and net margins (86.8% and 27.5%, respectively) illustrate the power of Gilead's patent-protected drug portfolio and pricing power
• Heavy investment in R&D (19.7% of revenue), balanced by disciplined cost management in SG&A expenses
• Operating leverage is evident: operating income grew 20.9% year-over-year while revenue grew only 4.7%, demonstrating the scalability of the business model
• Net income growth of 22.4% outpaced revenue growth, driven by cost efficiencies and favorable non-operating items

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FAQ About Gilead's Income Statement

1. What is the main source of Gilead's revenue in 2025?

Gilead generates over 99.7% of its revenue from product sales of branded pharmaceutical drugs. The remaining 0.3% comes from royalties, contract revenues, and other sources. This concentration in product sales reflects Gilead's core business model as a research-based pharmaceutical company.

2. How profitable is Gilead in Q4 2025?

Gilead reported net income of $2,183M in Q4 2025, with a net margin of approximately 27.5%, reflecting strong profitability driven by high gross margins on pharmaceutical products, operational efficiency, and favorable non-operating items including $631M in other income.

3. What are the largest expense categories for Gilead?

The biggest expenses on Gilead's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs at $1,777M (22.4% of revenue) and Research & Development (R&D) at $1,565M (19.7% of revenue). Together, these two categories represent 42.1% of revenue, as Gilead prioritizes both market access and pipeline innovation.

4. Why did Gilead's cost of revenue decline 34% year-over-year?

The significant 34% decline in cost of revenue reflects improved manufacturing efficiency, favorable product mix dynamics (shift toward higher-margin products), and operational improvements in Gilead's supply chain. This improvement contributed substantially to the 20.9% growth in operating income despite only 4.7% revenue growth.

5. How does Gilead's operating leverage manifest in its financials?

Gilead demonstrates strong operating leverage: operating income grew 20.9% year-over-year while revenue grew only 4.7%. This 4.4x multiplier effect shows that as Gilead scales, it can expand profits faster than revenue through cost management and operational efficiency. Operating margin expanded to 37.4%, up from approximately 31% in the prior year.