As if the merger-happy pharmaceutical industry didn't have enough to worry about, what with the federal government threatening to crack down on companies that flee overseas to lower their taxes, now there's another set of stakeholders protesting these so-called tax inversions: pension funds.
Repeated regulatory woes for SCM Pharma have left the U.K. contract manufacturer unable to afford its necessary upgrades, forcing Shire, its largest customer, to step in and take over.
After the MHRA hammered another SCM Pharma site for failing standards, the small CDMO came up short of cash to fix the problems and went into administration. Now Ireland's Shire, its largest customer, has taken over some operations to prevent interruption of production of an epilepsy drug it picked up with its acquisition of ViroPharma.
U.S. drugmakers have embraced the tax inversion strategy with open arms as of late, buying up foreign companies right and left and hauling overseas to take advantage of their lower rates. But U.S. officials are looking to stop them in their tracks--an intent that has some pharma investors worried.
For months, AbbVie mounted a dogged pursuit of Shire, learning from the mistakes of the now-thwarted Pfizer and maintaining its patients without letting lines go cold, largely avoiding major missteps as it closed in on its target.
When AbbVie buys out Shire for nearly $55 billion in a deal the two companies agreed on last week, there will be no golden parachute awaiting Shire chief Flemming Ornskov. Instead, there's a signing bonus in order: The helmsman will pocket just under $10 million for staying on with the combined company in a new role.
Shire has signed a $225 million agreement to brighten its future in rare diseases, bolstering a major selling point for AbbVie as the two prepare for a $54.7 billion merger.
Now that AbbVie has hammered out its $55 billion takeover deal for Shire, analysts are looking for the next big biopharma tax inversion deal.
With a bid reaching nearly $55 billion and some goodies for the top execs, AbbVie was finally able to get Ireland-based Shire to surrender its independence, a portfolio of attention deficit hyperactivity disorder and rare disease drugs, and its low Irish tax base.
After months of semi-clandestine courtship, AbbVie and Shire have settled on a price: For $54.7 billion in cash and stock, the U.S. drugmaker will absorb its Irish target, securing a pipeline of promising rare disease treatments and a new address that should slash its tax rate.