This Quarterly Report on Form 10-Q contains forward-looking statements regarding
future events and our future results that are subject to the safe harbors
created under the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended. The forward-looking statements are contained
principally in this section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Risk Factors." Words such as
"expect," "anticipate," "target," "goal," "project," "hope," "intend," "plan,"
"believe," "seek," "estimate," "continue," "may," "could," "should," "might,"
and variations of such words and similar expressions are intended to identify
such forward-looking statements. In addition, any statements other than
statements of historical fact are forward-looking statements, including
statements regarding overall trends, operating cost and revenue trends,
liquidity and capital needs, collaboration and licensing arrangements, ongoing
litigation and investigation matters, statements regarding the anticipated
future impact on our business of the ongoing coronavirus disease 2019
("COVID-19") and related public health measures, statements regarding the
development, manufacturing and distribution of Veklury as a treatment for
COVID-19 and other statements of expectations, beliefs, future plans and
strategies, anticipated events or trends and similar expressions. We have based
these forward-looking statements on our current expectations about future
events. These statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that are difficult to predict. Our actual
results may differ materially from those suggested by these forward-looking
statements for various reasons, including those identified below under Risk
Factors. Given these risks and uncertainties, you are cautioned not to place
undue reliance on forward-looking statements. The forward-looking statements
included in this report are made only as of the date hereof unless otherwise
specified. Except as required under federal securities laws and the rules and
regulations of the Securities and Exchange Commission, we do not undertake and
specifically decline any obligation to update any of these statements or to
publicly announce the results of any revisions to any forward-looking statements
after the distribution of this report, whether as a result of new information,
future events, changes in assumptions or otherwise. In evaluating our business,
you should carefully consider the risks described in the section entitled Risk
Factors under Part I, Item 1A of our Annual Report on Form 10-K for the year
ended December 31, 2020 and this Quarterly Report on Form 10-Q Part II, Item 1A
in addition to the other information in this Quarterly Report on Form 10-Q. Any
of the risks contained herein could materially and adversely affect our
business, results of operations and financial condition.
You should read the following management's discussion and analysis of our
financial condition and results of operations in conjunction with our audited
Consolidated Financial Statements and related notes thereto included as part of
our   Annual Report on Form 10-K   for the year ended December 31, 2020 and our
unaudited Condensed Consolidated Financial Statements for the three months ended
March 31, 2021 and other disclosures (including the disclosures under Part II,
Item 1A, "Risk Factors") included in this Quarterly Report on Form 10-Q. Our
Condensed Consolidated Financial Statements have been prepared in accordance
with U.S. generally accepted accounting principles and are presented in U.S.
dollars.
MANAGEMENT OVERVIEW
Gilead Sciences, Inc. ("Gilead", "we", "our" or "us") is a biopharmaceutical
company that has pursued and achieved breakthroughs in medicine for more than
three decades, with the goal of creating a healthier world for all people. We
are committed to advancing innovative medicines to prevent and treat
life-threatening diseases, including HIV, viral hepatitis and cancer. We operate
in more than 35 countries worldwide, with headquarters in Foster City,
California.
Our portfolio of marketed products includes AmBisome®, Atripla®, Biktarvy®,
Cayston®, Complera®/Eviplera®, Descovy®, Descovy for PrEP®, Emtriva®, Epclusa®,
Genvoya®, Harvoni®, Hepcludex® (Bulevirtide), Hepsera®, Jyseleca®, Letairis®,
Odefsey®, Ranexa®, Sovaldi®, Stribild®, Tecartus®, Trodelvy®, Truvada®, Truvada
for PrEP®, Tybost®, Veklury®, Vemlidy®, Viread®, Vosevi®, Yescarta® and
Zydelig®. The approval status of Hepcludex and Jyseleca vary worldwide, and
Hepcludex and Jyseleca are not approved in the United States. We also sell and
distribute authorized generic versions of Epclusa and Harvoni in the United
States through our separate subsidiary, Asegua Therapeutics, LLC. In addition,
we sell and distribute certain products through our corporate partners under
collaborative agreements.
Business Highlights(1)
Oncology
•In March 2021, European Medicines Agency ("EMA") validated the Marketing
Authorization Application for sacituzumab govitecan-hziy for the treatment of
metastatic triple-negative breast cancer ("mTNBC").
•In April 2021, U.S. Food and Drug Administration ("FDA") granted full approval
of Trodelvy (sacituzumab govitecan-hziy) for adult patients with unresectable
locally advanced or mTNBC.
•In April 2021, FDA granted accelerated approval of Trodelvy for use in adult
patients with locally advanced or metastatic urothelial cancer, a new
indication.
                                       29
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•In March 2021, FDA granted accelerated approval of Yescarta for the treatment
of adult patients with relapsed or refractory follicular lymphoma.
Viral Diseases
•In March 2021, we completed the acquisition of MYR GmbH ("MYR"). The
acquisition provides us with Hepcludex, which is conditionally approved by EMA
for the treatment of chronic hepatitis delta virus ("HDV") in adults with
compensated liver disease.
•In March 2021, we entered into an agreement with Merck Sharp & Dohme Corp
("Merck"), a subsidiary of Merck & Co., Inc. to jointly develop and
commercialize long-acting treatments in HIV that combine Gilead's
investigational capsid inhibitor, lenacapavir, and Merck's investigational
nucleoside reverse transcriptase translocation inhibitor, islatravir.
COVID-19
•In April 2021, we announced we will provide assistance and support for
expansion of local manufacturing capacity of remdesivir in India and donation of
active pharmaceutical ingredient. In addition, we will donate a minimum of
450,000 vials of Veklury (remdesivir) to the government of India.
______________________________________________________
(1)  We announced and discussed these updates, subsequent to the issuance of our
2020 Annual Report on Form 10-K, in further detail in press releases available
on our website at
https://www.gilead.com/news-and-press/press-room/press-releases. Readers are
also encouraged to review all other press releases available on our website
mentioned above. Website references are provided throughout this document for
convenience. The content on the referenced websites does not constitute a part
of and is not incorporated by reference into this Quarterly Report on Form 10-Q.
Financial Highlights
                                                                         Three Months Ended
                                                                              March 31,
(in millions, except percentages and per share amounts)                 2021                2020             Change
Total revenues                                                    $    6,423             $ 5,548                  16  %
Net income attributable to Gilead                                 $    1,729             $ 1,551                  11  %
Diluted earnings per share                                        $     1.37             $  1.22                  12  %



Total revenues increased by 16% to $6.4 billion for the first quarter of 2021,
compared to $5.5 billion for the same period in 2020, primarily due to Veklury
sales.
Net income attributable to Gilead increased by 11% to $1.7 billion for the first
quarter of 2021, compared to $1.6 billion for the same period in 2020. Diluted
earnings per share increased 12% to $1.37 for the first quarter of 2021,
compared to $1.22 for the same period in 2020. The increases from 2020 to 2021
were primarily due to revenue growth, partially offset by unfavorable changes in
the fair value of our equity investments primarily in Galapagos NV ("Galapagos")
and lower interest income.
                                       30
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RESULTS OF OPERATIONS
Total Revenues
The following table summarizes the period-over-period changes in our revenues:
                                                       Three Months Ended
                                                            March 31,
        (in millions, except percentages)               2021            2020        Change
        Product sales:
        HIV                                       $    3,650          $ 4,134       (12)%
        Veklury                                        1,456                -         NM
        HCV                                              510              729       (30)%
        HBV/HDV                                          220              186        18%
        Cell Therapy                                     191              140        36%
        Trodelvy                                          72                -         NM
        Other                                            241              278       (13)%
        Total product sales                            6,340            5,467        16%
        Royalty, contract and other revenues              83               81         2%
        Total revenues                            $    6,423          $ 5,548        16%

________________________________


NM - Not Meaningful
For the first quarter of 2021 compared to the first quarter of 2020
Total Product Sales
Total product sales increased by 16% to $6.3 billion for the first quarter of
2021, compared to $5.5 billion for the same period in 2020, primarily due to
sales of Veklury, our FDA-approved treatment for hospitalized patients with
COVID-19. The first quarter of 2021 reflects growth in Cell Therapy, Trodelvy
and hepatitis B virus ("HBV")/hepatitis delta virus ("HDV"). We obtained
Trodelvy through the acquisition of Immunomedics, Inc. ("Immunomedics") in the
fourth quarter of 2020. The increases were partially offset by lower HIV product
sales primarily due to the continued generic competition following the October
2020 loss of exclusivity of Truvada and Atripla in the United States, in
addition to higher channel inventory purchases in the first quarter of 2020 due
to the COVID-19 pandemic. The decline in HCV sales was mainly driven by lower
patient starts due to the continued impact of the pandemic.
HIV
HIV product sales decreased by 12% to $3.7 billion for the first quarter of
2021, compared to $4.1 billion for the same period in 2020. The decline was
primarily due to the anticipated decline in sales volume of our Truvada
(emtricitabine ("FTC") and tenofovir disoproxil fumarate ("TDF"))-based products
driven by the continued generic competition following the October 2020 loss of
exclusivity of Truvada and Atripla in the United States, as well as the pull
forward of channel inventory purchases in the first quarter of 2020 due to the
COVID-19 pandemic. The decline was partially offset by market share increase and
continued patient uptake of Biktarvy. We expect Truvada sales to continue to
decline in 2021 and beyond as multiple generics are expected to enter the market
starting in the second quarter of 2021.
Descovy (FTC/TAF)-based product sales decreased in the first quarter of 2021,
primarily driven by COVID-19 related channel inventory purchases in the first
quarter of 2020, in addition to the impact of ongoing pandemic-related effects
on the pre-exposure prophylaxis ("PrEP") market, offset by Biktarvy growth.
HCV
HCV product sales decreased by 30% to $510 million for the first quarter of
2021, compared to $729 million for the same period in 2020, primarily due to
lower volume driven by lower patient starts, which continued to be impacted by
the COVID-19 pandemic.
HBV/HDV
HBV and HDV product sales increased by 18% to $220 million for the first quarter
of 2021, compared to $186 million for the same period in 2020, primarily due to
higher Vemlidy sales volume in certain international locations. The first
quarter of 2021 also reflects $6 million of Hepcludex sales following the
completion of our acquisition of MYR on March 4, 2021.
                                       31
--------------------------------------------------------------------------------

Veklury


Veklury generated $1.5 billion in sales in the first quarter of 2021. There were
no Veklury sales in the first quarter of 2020. Sales of Veklury generally are
affected by COVID-19 related rates of infections, hospitalizations and
vaccinations, and will continue to be subject to significant volatility and
uncertainty.
Cell Therapy
Cell Therapy product sales, which include Tecartus and Yescarta, increased by
36% to $191 million for the first quarter of 2021, compared to $140 million for
the same period in 2020. The growth was primarily due to the July 2020 launch of
Tecartus in the United States and the continued uptake and geographic expansion
of Yescarta in Europe.
Trodelvy
Trodelvy generated $72 million in sales in the United States for the first
quarter of 2021 following the completion of our acquisition of Immunomedics on
October 23, 2020.
Other Product Sales
Other product sales, which include AmBisome, Cayston, Jyseleca, Letairis, Ranexa
and Zydelig, decreased by 13% to $241 million in the first quarter of 2021,
compared to $278 million for the same period in 2020. Letairis and Ranexa sales
were lower in the first quarter of 2021, as anticipated, due to continued
generic competition, following the losses of exclusivity in 2019.
Product Sales by Geographic Area
Of our total product sales, 33% and 27% were generated outside the United States
for the first quarter of 2021 and 2020, respectively. We generally face exposure
to movements in foreign currency exchange rates, primarily in the Euro. We use
foreign currency exchange contracts to hedge a portion of our foreign currency
exposures. Foreign currency exchange, net of hedges, had a favorable impact on
our product sales of $80 million for the first quarter of 2021, based on a
comparison using foreign currency exchange rates from the first quarter of 2020.
Product sales in the United States increased by 6% to $4.2 billion in the first
quarter of 2021, compared to $4.0 billion for the same period in 2020, primarily
due to sales of Veklury as well as sales of Trodelvy and the launch of Tecartus
in the third quarter of 2020. The increases were partially offset by continued
generic competition from the loss of exclusivity of Truvada and Atripla, lower
HCV sales and the anticipated decline in sales volume of Letairis and Ranexa
following the losses of exclusivity in 2019.
Product sales in Europe increased by 38% to $1.3 billion for the first quarter
of 2021, compared to $927 million for the same period in 2020, primarily due to
sales of Veklury, the continued patient uptake of Biktarvy, and the continued
patient uptake and geographic expansion of Yescarta. The increase was partially
offset by lower HCV sales driven by lower patient starts due to the continued
impact from the COVID-19 pandemic. The lower HCV sales were partially offset by
higher average net selling price due to a favorable government rebate
adjustment. Foreign currency exchange, net of hedges, had a favorable impact on
our Europe product sales of $52 million for the first quarter of 2021, based on
a comparison using foreign currency exchange rates from the first quarter of
2020.
Product sales in other locations increased by 50% to $825 million for the first
quarter of 2021, compared to $551 million for the same period in 2020, primarily
due to higher sales volumes of Veklury, Biktarvy and Vemlidy.
The following table summarizes the period-over-period changes in our product
sales:
                                            Three Months Ended
                                                 March 31,
(in millions, except percentages)            2021            2020        

Change


HIV Products
Descovy (FTC/TAF) Based Products
Biktarvy - U.S.                        $    1,465          $ 1,412          4  %
Biktarvy - Europe                             216              181         19  %
Biktarvy - Other International                143              100         43  %
                                            1,824            1,693          8  %

Descovy - U.S.                                282              363        (22) %
Descovy - Europe                               42               61        (31) %
Descovy - Other International                  35               34          3  %
                                              359              458        (22) %


                                       32

--------------------------------------------------------------------------------


Genvoya - U.S.                                                         506         612       (17) %
Genvoya - Europe                                                       106         151       (30) %
Genvoya - Other International                                           61          61         -  %
                                                                       673         824       (18) %

Odefsey - U.S.                                                         240         269       (11) %
Odefsey - Europe                                                       113         127       (11) %
Odefsey - Other International                                           14          13         8  %
                                                                       367         409       (10) %

Revenue share - Symtuza(1) - U.S.                                       89          72        24  %
Revenue share - Symtuza(1) - Europe                                     44          38        16  %
Revenue share - Symtuza(1) - Other International                         2  

2 - %


                                                                       135  

112 21 %



Total Descovy (FTC/TAF) Based Products - U.S.                        2,582       2,728        (5) %
Total Descovy (FTC/TAF) Based Products - Europe                        521         558        (7) %
Total Descovy (FTC/TAF) Based Products - Other International           255  

210 21 %


                                                                     3,358       3,496        (4) %
Truvada (FTC/TDF) Based Products
Atripla - U.S.                                                          23          81       (72) %
Atripla - Europe                                                         4           7       (43) %
Atripla - Other International                                            4           7       (43) %
                                                                        31          95       (67) %

Complera / Eviplera - U.S.                                              25          24         4  %
Complera / Eviplera - Europe                                            34          47       (28) %
Complera / Eviplera - Other International                                4           5       (20) %
                                                                        63          76       (17) %

Stribild - U.S.                                                         31          34        (9) %
Stribild - Europe                                                       11          17       (35) %
Stribild - Other International                                           4           2       100  %
                                                                        46          53       (13) %

Truvada - U.S.                                                         119         383       (69) %
Truvada - Europe                                                         7           8       (13) %
Truvada - Other International                                            9  

15 (40) %


                                                                       135  

406 (67) %



Total Truvada (FTC/TDF) Based Products - U.S.                          198         522       (62) %
Total Truvada (FTC/TDF) Based Products - Europe                         56          79       (29) %
Total Truvada (FTC/TDF) Based Products - Other International            21          29       (28) %
                                                                       275         630       (56) %

Other HIV(2) - U.S.                                                      6           3       100  %
Other HIV(2) - Europe                                                    1           2       (50) %
Other HIV(2) - Other International                                      10           3           NM
                                                                        17           8           NM

Total HIV - U.S.                                                     2,786       3,253       (14) %
Total HIV - Europe                                                     578         639       (10) %
Total HIV - Other International                                        286  

242 18 %


                                                                     3,650       4,134       (12) %
HCV Products
Ledipasvir / Sofosbuvir(3) - U.S.                                       19          53       (64) %
Ledipasvir / Sofosbuvir(3) - Europe                                     16          11        45  %
Ledipasvir / Sofosbuvir(3) - Other International                        21          48       (56) %
                                                                        56         112       (50) %


                                       33

--------------------------------------------------------------------------------

Sofosbuvir / Velpatasvir(4) - U.S.                          214       311       (31) %
Sofosbuvir / Velpatasvir(4) - Europe                         75       122       (39) %
Sofosbuvir / Velpatasvir(4) - Other International            92       131       (30) %
                                                            381       564       (32) %

Other HCV(5) - U.S.                                          25        34       (26) %
Other HCV(5) - Europe                                        44        15           NM
Other HCV(5) - Other International                            4         4         -  %
                                                             73        53        38  %

Total HCV - U.S.                                            258       398       (35) %
Total HCV - Europe                                          135       148        (9) %
Total HCV - Other International                             117       183       (36) %
                                                            510       729       (30) %
HBV/HDV Products
Vemlidy - U.S.                                               77        73         5  %
Vemlidy - Europe                                              8         7        14  %
Vemlidy - Other International                                96        56        71  %
                                                            181       136        33  %

Viread - U.S.                                                 4         4         -  %
Viread - Europe                                               7        11       (36) %
Viread - Other International                                 20        25       (20) %
                                                             31        40       (23) %

Other HBV/HDV(6) - U.S.                                       -         8           NM
Other HBV/HDV(6) - Europe                                     8         2           NM
Other HBV/HDV(6) - Other International                        -         -           NM
                                                              8        10       (20) %

Total HBV/HDV - U.S.                                         81        85        (5) %
Total HBV/HDV - Europe                                       23        20        15  %
Total HBV/HDV - Other International                         116        81        43  %
                                                            220       186        18  %
Veklury
Veklury - U.S.                                              820         -           NM
Veklury - Europe                                            388         -           NM
Veklury - Other International                               248         -           NM
                                                          1,456         -           NM
Cell Therapy Products
Tecartus - U.S.                                              27         -           NM
Tecartus - Europe                                             4         -           NM
Tecartus - Other International                                -         -           NM
                                                             31         -           NM

Yescarta - U.S.                                              92       103       (11) %
Yescarta - Europe                                            61        37        65  %
Yescarta - Other International                                7         -           NM
                                                            160       140        14  %

Total Cell Therapy - U.S.                                   119       103        16  %
Total Cell Therapy - Europe                                  65        37        76  %
Total Cell Therapy - Other International                      7         -           NM
                                                            191       140        36  %

Trodelvy - U.S.                                              72         -           NM
Other Products
AmBisome - U.S.                                              12        18       (33) %
AmBisome - Europe                                            66        59        12  %
AmBisome - Other International                               43        42         2  %
                                                            121       119         2  %


                                       34

--------------------------------------------------------------------------------


Letairis - U.S.                                      54           83       (35) %

Ranexa - U.S.                                         3            8       (63) %

Zydelig - U.S.                                        8            8         -  %
Zydelig - Europe                                      7           12       (42) %
Zydelig - Other International                         -            -           NM
                                                     15           20       (25) %

Other(7) - U.S.                                      27           33       (18) %
Other(7) - Europe                                    13           12         8  %
Other(7) - Other International                        8            3           NM
                                                     48           48         -  %

Total Other - U.S.                                  104          150       (31) %
Total Other - Europe                                 86           83         4  %
Total Other - Other International                    51           45        13  %
                                                    241          278       (13) %

Total product sales - U.S.                        4,240        3,989         6  %
Total product sales - Europe                      1,275          927        38  %
Total product sales - Other International           825          551        50  %
                                                $ 6,340      $ 5,467        16  %

_______________________________


NM - Not Meaningful
(1)   Represents our revenue from cobicistat (C), emtricitabine (FTC) and
tenofovir alafenamide (TAF) in Symtuza (darunavir/C/FTC/TAF), a fixed dose
combination product commercialized by Janssen Sciences Ireland Unlimited
Company.
(2)   Includes Emtriva and Tybost.
(3)   Amounts consist of sales of Harvoni and the authorized generic version of
Harvoni sold by our separate subsidiary, Asegua Therapeutics LLC.
(4)   Amounts consist of sales of Epclusa and the authorized generic version of
Epclusa sold by our separate subsidiary, Asegua Therapeutics LLC.
(5)   Includes Vosevi and Sovaldi.
(6)   Includes Hepcludex and Hepsera. The first quarter of 2021 includes $6
million Hepcludex sales, following the completion of our acquisition of MYR on
March 4, 2021.
(7)   Includes Cayston and Jyseleca.
Costs and Expenses
The following table summarizes the period-over-period changes in our costs and
expenses:
                                                                        Three Months Ended
                                                                             March 31,
(in millions, except percentages)                                      2021              2020              Change
Cost of goods sold                                                 $   1,361          $   969                    40  %
Product gross margin                                                    78.5  %          82.3  %              -380 bps
Research and development ("R&D") expenses                          $   1,055          $ 1,004                     5  %
Acquired IPR&D expenses                                            $      62          $    97                   (36) %
Selling, general and administrative ("SG&A") expenses              $   1,055          $ 1,076                    (2) %


Cost of Goods Sold and Product Gross Margin
Cost of goods sold for the first quarter of 2021 increased by $392 million, or
40%, compared to the same period in 2020, primarily due to higher
acquisition-related expenses from amortization of finite-lived intangible assets
and inventory step-up charges of $506 million driven by our fourth quarter 2020
acquisition of Immunomedics, as well as increased product sales. The increase
was partially offset by a decline in royalty expenses primarily due to lower
sales of products containing emtricitabine and elvitegravir.
Product gross margin for the first quarter of 2021 decreased primarily due to
factors mentioned above and unfavorable product sales mix and an inventory
reserve adjustment.
Research and Development Expenses
R&D expenses consist primarily of clinical studies performed by contract
research organizations, materials and supplies, payments under collaborative and
other arrangements including milestone payments, licenses and fees, expense
reimbursements to the collaboration partners, personnel costs including
salaries, benefits and stock-based compensation expense, and overhead
allocations including various support and infrastructure costs.
                                       35
--------------------------------------------------------------------------------

We do not track total R&D expenses by product candidate, therapeutic area or
development phase. However, we manage our R&D expenses by identifying the R&D
activities we anticipate will be performed during a given period and then
prioritizing efforts based on scientific data, probability of technical and
regulatory successful development, market potential, available human and capital
resources and other considerations. We continually review our R&D projects based
on unmet medical need and, as necessary, reallocate resources among our internal
R&D portfolio and external opportunities that we believe will best support the
long-term growth of our business.
The following table provides a breakout of our R&D expenses by major cost type:
                                                         Three Months Ended
                                                              March 31,
   (in millions, except percentages)                      2021            

2020 Change


   Clinical studies and outside services            $      338          $   

421 (20) %


   Personnel, infrastructure and other expenses            654              

519 26 %


   Stock-based compensation expenses                        63               64         (2) %
   Total                                            $    1,055          $ 1,004          5  %


R&D expenses for the first quarter of 2021 increased by 5%, compared to the same
period in 2020, primarily due to higher expenses driven by headcount growth due
to the fourth quarter 2020 acquisition of Immunomedics and higher investments in
oncology programs including magrolimab and Trodelvy. Partly offsetting these
increases, we incurred lower expenses on other programs, including cancellations
of certain filgotinib programs in connection with the December 2020 amended
agreement with Galapagos. The first quarter 2020 R&D expenses also reflected
investments in remdesivir due to the manufacturing ramp-up and clinical trial
costs prior to the commercialization of Veklury.
Acquired In-Process Research and Development Expenses
Acquired IPR&D expenses reflect IPR&D impairments as well as the initial costs
of externally developed IPR&D projects, acquired directly in a transaction other
than a business combination, that do not have an alternative future use,
including upfront payments related to various collaborations and the initial
costs of rights to IPR&D projects. Beginning in the second quarter of 2020,
acquired IPR&D expenses were reported separately from Research and development
expenses on our Condensed Consolidated Statements of Income. IPR&D assets
capitalized are tested for impairment in the fourth quarter of each year, or
earlier if impairment indicators exist. No IPR&D impairment charges were
recorded during the three months ended March 31, 2021 and 2020.
Acquired IPR&D expenses of $62 million and $97 million for the first quarter of
2021 and 2020, were related to licensing, collaboration, investment and other
arrangements we entered into during the periods.
Selling, General and Administrative Expenses
SG&A expenses relate to sales and marketing, finance, human resources, legal and
other administrative activities, including information technology investments.
Expenses consist primarily of personnel costs, facilities and overhead costs,
outside marketing, advertising and legal expenses and other general and
administrative costs. SG&A expenses also include the branded prescription drug
fee.
SG&A expenses for the first quarter of 2021 decreased by $21 million or 2%,
compared to the same period in 2020. The decrease was primarily due to lower
corporate grants and lower promotional expenses in HIV and HCV, partially offset
by higher costs associated with the commercialization efforts for Veklury,
Trodelvy and Cell Therapy.
Other Income (Expense), Net and Interest Expense
The following table summarizes the period-over-period changes in our Other
income (expense), net and Interest expense:
                                             Three Months Ended
                                                 March 31,
(in millions, except percentages)             2021             2020       Change
Other income (expense), net            $     (369)           $ (158)           NM
Interest expense                       $     (257)           $ (241)         7  %

________________________________


NM - Not Meaningful
The change in Other income (expense), net for the first quarter of 2021,
compared to the same period in 2020, was primarily due to unfavorable changes in
the fair value of investments in equity securities driven by our equity
investment in Galapagos.
                                       36
--------------------------------------------------------------------------------

Interest expense for the first quarter of 2021 increased by $16 million or 7%,
compared to the same period in 2020, primarily due to an increase in borrowing
driven by the fourth quarter 2020 acquisition of Immunomedics, partially offset
by favorable effects from debt maturities and repayments.
Income Taxes
The following table summarizes the period-over-period changes in our Income tax
expense:
                                           Three Months Ended
                                               March 31,
(in millions, except percentages)          2021           2020        Change
Income before income taxes             $   2,264       $ 2,003       $ 261
Income tax expense                     $     542       $   465       $  77
Effective tax rate                          23.9  %       23.2  %      0.7  %


Our effective tax rate and provision increased for the first quarter of 2021,
compared to the same period in 2020, primarily due to unfavorable changes in the
fair value of our equity investments primarily in Galapagos that are
non-deductible for income tax purposes, partially offset by net discrete tax
benefits related to favorable settlements with taxing authorities.
LIQUIDITY AND CAPITAL RESOURCES
We believe that our existing capital resources, supplemented by our cash flows
generated from operating activities, will be adequate to satisfy our capital
needs for the foreseeable future.
The following table summarizes our cash, cash equivalents and marketable debt
securities and working capital:
(in millions)                                                    March 31, 2021           December 31, 2020
Cash, cash equivalents and marketable debt securities           $        6,245          $            7,910
Working capital                                                 $        3,573          $            4,599


Cash, Cash Equivalents and Marketable Debt Securities
Cash, cash equivalents and marketable debt securities as of March 31, 2021
decreased by $1.7 billion, or 21%, compared to December 31, 2020. During the
first quarter of 2021, we generated $2.6 billion in operating cash flow, made
early debt repayments of $1.25 billion, which included $1.0 billion principal
amount of senior unsecured notes due in April 2021 and $250 million principal
amount under our $1.0 billion three-year senior unsecured term loan facility. In
addition, we utilized $1.2 billion on the MYR acquisition, including IPR&D, net
of cash acquired, paid cash dividends of $917 million and utilized $309 million
on repurchases of our common stock.
Working Capital
Working capital, which is current assets less current liabilities, decreased by
$1.0 billion, or 22%, compared to December 31, 2020, primarily due to the
utilization of cash, cash equivalents and marketable debt securities for our
acquisition of MYR as noted above.
Accounts receivable decreased by $1.0 billion, compared to December 31, 2020,
primarily due to collections of Veklury receivables during the first quarter of
2021.
Other accrued liabilities decreased by $829 million compared to December 31,
2020, primarily due to certain tax payments made to taxing authorities during
the first quarter of 2021.
Cash Flows
The following table summarizes our cash flow activities:
                                     Three Months Ended
                                         March 31,
(in millions)                        2021           2020
Cash provided by (used in):
Operating activities             $    2,610      $  1,436
Investing activities             $   (2,042)     $   (344)
Financing activities             $   (2,477)     $ (2,611)


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Operating Activities
Cash provided by operating activities represents the cash receipts and
disbursements related to all activities other than investing and financing
activities. Operating cash flow is derived by adjusting our net income for
non-cash items and changes in operating assets and liabilities. Cash provided by
operating activities increased by $1.2 billion to $2.6 billion for the first
quarter of 2021, compared to the same period in 2020. The increase was primarily
the result of changes in working capital reflecting collections of Veklury
receivables during the first quarter of 2021.
Investing Activities
Cash used in investing activities primarily consists of purchases, sales and
maturities of our marketable debt securities, capital expenditures,
acquisitions, including IPR&D, net of cash acquired, purchases of equity
securities and other investments. Cash used in investing activities increased by
$1.7 billion to $2.0 billion for the first quarter of 2021, compared to the same
period in 2020, primarily due to our acquisition of MYR.
Financing Activities
The change in cash used in financing activities for the first quarter of 2021,
compared to the same period in 2020, was primarily due to $1.0 billion lower
repurchases of our common stock, partially offset by $750 million higher
repayments of debt during the first quarter of 2021.
Debt and Credit Facilities
A summary of our borrowings under various financing arrangements is included in
Note 10. Debt and Credit Facilities of the Notes to Condensed Consolidated
Financial Statements included in Part I, Item I of this Quarterly Report on Form
10-Q. We may choose to repay certain of our long-term debt obligations prior to
maturity dates based on our assessment of current and long-term liquidity and
capital requirements.
During the three months ended March 31, 2021, we repaid $1.25 billion of debt.
In January 2021, we repaid $1.0 billion of senior unsecured notes prior to the
April 2021 maturity, by exercising a 3-month par call. In March 2021, we repaid
$250 million principal amount under our $1.0 billion three-year senior unsecured
term loan facility, leaving $750 million principal amount outstanding as of
March 31, 2021. As of March 31, 2021 and December 31, 2020, there were no
amounts outstanding under our $2.5 billion revolving credit facility maturing in
June 2025. We are required to comply with certain covenants under our note
indentures governing our senior unsecured notes. As of March 31, 2021, we were
in compliance with all covenants.
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS
The preparation of our Condensed Consolidated Financial Statements in accordance
with U.S. GAAP requires management to make estimates and judgments that affect
the reported amounts in the financial statements and related disclosures. On an
ongoing basis, we evaluate our significant accounting policies and estimates. We
base our estimates on historical experience and on various market-specific and
other relevant assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Estimates are assessed each period and updated to reflect current
information, such as the economic considerations related to the impact that the
recent COVID-19 pandemic could have on our significant accounting estimates.
Actual results may differ significantly from these estimates. A summary of our
critical accounting policies and estimates is presented in Part II, Item 7 of
our   Annual Report on Form 10-K   for the year ended December 31, 2020. There
were no material changes to our critical accounting policies and estimates
during the three months ended March 31, 2021.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements as defined in Item
303(a)(4)(ii) of Regulation S-K.
RECENT ACCOUNTING PRONOUNCEMENTS
There have been no new accounting pronouncements issued nor adopted during the
three months ended March 31, 2021 that are of significance to us.
ACQUISITIONS, COLLABORATIONS AND OTHER ARRANGEMENTS
See Note 6. Acquisitions and Note 9. Collaborations and Other Arrangements of
the Notes to Condensed Consolidated Financial Statements included in Part I,
Item I of this Quarterly Report on Form 10-Q for additional information.

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