Shire ($SHPG) has maintained that it's better off alone, rejecting three recent merger bids from AbbVie ($ABBV) worth as much as $46.5 billion. Now, it's laying out its case. The Irish drugmaker outlined a plan to double sales by 2020--but that may not be enough to keep predators at bay.
|Shire CEO Flemming Ornskov|
Shire expects to bootstrap its top line to $10 billion from just under $5 billion within 6 years, CEO Flemming Ornskov said Monday in a statement. And thanks to the company's ongoing restructuring, which recenters development on rare-disease and other specialty drugs, Shire could hit that sales goal without M&A, he said.
At least some analysts think the drugmaker should have no trouble hitting that $10 billion target. "Shire's understandably robust defense has credibility given the company's current strong growth and improvement in operating margins," Edison Investment Research analyst Dr. Mick Cooper said in a statement. "The targets may appear a stretch, but Shire has dominant positions in very attractive niche markets and these should be achievable."
But that may not stop AbbVie--and possibly others--from trying to take over the company. The Illinois-based drugmaker needs to diversify beyond Humira, the world's best-selling drug, which brings in the majority of its sales.
As things begin to fall into place for AbbVie--Monday, it raised its full-year earnings guidance by 6 cents, without including the hotly anticipated hep C cocktail up for FDA approval this fall--it appears ready for its first buyout. Though AbbVie says talks with Shire are off, sources tell Bloomberg the company is considering raising its offer.
AbbVie could have some competition. Shire's Irish tax advantage--not to mention its focus on fast-growing rare-disease and specialty drugs--make it a hot takeover prospect. Analysts list companies like Bristol-Myers Squibb ($BMY), Merck ($MRK), Pfizer ($PFE) and the desperate-not-to-be-acquired-by-Valeant Allergan ($AGN) as potential counter-bidders. Shire could command as much as $260 a share, Susquehanna Group analysts told Bloomberg, 36% higher than its U.S. price before AbbVie's offer.
"Others who may be considering it are probably likely to take notice and maybe be more aggressive here," Credit Suisse analyst Vamil Divan told the news service. "There's certainly going to be a lot of people interested, so ultimately I would think that there's a price that allows for a deal to get done."
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