Gilead - plenty to cheer There is one technology that global pharma companies depend on before all others. It is known as the chequebook. As profitable products are challenged by newer, better treatments or approach patent expiration, the urge to do a major, growth-protecting acquisition becomes irresistible. There are two standard approaches. The first is to drop a huge amount of money on another big diversified company, to broaden the product portfolio and rip out redundant costs (see Pfizer/Wyeth). The alternative is to write smaller cheques to buy startups with a few highly promising drugs (see GlaxoSmithKline's purchase of Human Genome Sciences this year). Gilead appeared to combine the worst of both worlds when it bought Pharmasset last year. It got all the risk of a bet on a single, unproven product and a staggering, $11bn price tag. Critics alleged that Gilead, facing patent expirations on its HIV drugs, was getting desperate. It may have been a mad gamble, but it seems to have worked. The primary drug purchased with Pharmasset, now known as sofosbuvir, used in a combination with other drugs, has achieved remarkable results in hepatitis C patients as part of a drug cocktail. In one arm of the study, every patient saw their virus reduced to undetectable levels. The news drove Gilead's stock up a tenth on Monday, and it is now up more than 80 per cent since the Pharmasset deal. Victory is not assured. While Gilead now has a compelling lead in hepatitis C, Abbott, Johnson & Johnson, Bristol-Myers, and Vertex are all in hot pursuit, intent upon a slice of a market ISI Group values at a cumulative $150bn worldwide. But for now, Gilead investors are in the situation of fans who have just watched their team attempt a wildly overambitious play and absolutely nail it. All one can do is cheer.