AbbVie can argue for a Shire buy, but price is the thing--and $51B might do it

AbbVie CEO Richard Gonzalez

Monday, Shire ($SHPG) laid out its justification for staying independent, eager to ward off circling suitors. Now, AbbVie ($ABBV), which has already made three passes at the Irish drugmaker, has laid out its own case for a takeover.

Wednesday, the Abbott Laboratories ($ABT) spinoff cited accelerated growth, broadened global infrastructure and a deeper pipeline as benefits of a merger with Shire. Not to mention a host of reasons it would make a good merger partner.

The deal would give Shire's rare disease and neuroscience franchises a boost, what with AbbVie's global reach, CEO Richard Gonzalez figures. The company operates in more than 170 countries, and it has the R&D, commercial and manufacturing infrastructure to herd Shire's products along, he said in a statement.

But Shire is touting those same franchises as keys to its independence. CEO Flemming Ornskov has promised to more than double the company's top line within 6 years to $10 billion. A lofty goal, but analysts have said it's achievable, thanks to Shire's "dominant positions in very attractive niche markets," as Edison Investment Research analyst Dr. Mick Cooper put it in a statement earlier this week. Those include its foothold in rare diseases such as hereditary angioedema, which it strengthened last year with its own $4.2 billion deal for ViroPharma.

That's not to leave out Shire's flagship ADHD meds, which still bring in the bulk of its sales. Lead drug Vyvanse, a blockbuster with $1.2 billion in 2013 sales, boasts patent protection until 2023, and just Wednesday a district court judge backed up the drug's IP shield.

And though the company is in the middle of a restructuring with an eye on diversification, Vyvanse still has room for growth: Shire recently agreed to test the drug in preschoolers in exchange for a 6-month pediatric exclusivity extension on its patents.

All of that taken into account, AbbVie will have to raise its latest bid--which totaled about $46.5 billion--to $51 billion if it wants to win Shire over, according to analyst estimates compiled by Bloomberg.

"It's all about a price," Panmure Gordon analyst Savvas Neophytou told the news service. "I personally think this deal will get done."

- read AbbVie's release
- read Shire's release
- get more from Bloomberg

Special Reports: The 10 best-selling drugs of 2013 - Humira | Pharma's top 10 M&A deals of 2013 - Shire/ViroPharma | 15 Highest-Paid Biopharma CEOs of 2013 - Richard Gonzalez - AbbVie

Suggested Articles

Turns out Procter & Gamble didn’t want Pfizer’s consumer health unit after all. But it did want Merck KGaA’s.

Private equity firm, in exclusive talks with Sanofi, says it'll invest to pump up Zentiva into an "independent European generics leader."

With suitor Takeda circling Shire, the Dublin-based target has pulled off a deal of its own.