Shire beats Big Pharma to $4.2B deal for orphan drugmaker ViroPharma

Shire CEO Flemming Ornskov

Shire ($SHPG) is one of those companies that's always rumored to be a buyer or a seller. Not so long ago, it was setting up poison-pill protections against an unwanted suitor. Now, it has beat out Big Pharma with a deal for ViroPharma ($VPHM), the maker of rare disease drugs.

Ireland-based Shire will pay $4.2 billion for ViroPharma, a U.S. company that's been on the block at least since June. ViroPharma's lead drug is Cinryze, a $350,000-a-year treatment for hereditary angioedema. That's a rare disease, with about 18,000 patients in the U.S. and Europe.

Shire already has a drug for hereditary angioedema, Firazyr, but the company sees the two as complementary. Firazyr treats acute attacks of swelling in patients with the disorder, while Cinryze is designed to prevent them. Buying ViroPharma fits right in with Shire's goal of beefing up its rare-disease business, CEO Flemming Ornskov said today on a call with reporters. "It's a deal that fits with our strategy of increased focus on high-growth specialty markets, particularly rare diseases," Ornskov said. "With Cinryze, we will add another growth engine to our portfolio."

Sanofi ($SNY), whose Genzyme unit sells a clutch of orphan drugs, was also said to be in the hunt for ViroPharma. Besides Cinryze, which brought in $428 million last year, the company is developing a treatment for cytomegalovirus, maribavir. That drug has been designated an orphan drug in both the U.S. and Europe.

Shire has been scouting around for deals to help it diversify away from its lucrative ADHD franchise. The company's top-selling drug, Vyvanse, now has backup for a new use in patients with binge eating disorder, but Shire needs more depth elsewhere to keep sales growing.

ViroPharma will add to Shire's bottom line immediately, the company said, and Shire expects to squeeze $150 million in cost savings out of the combined company by 2015, in addition to the cost cuts already underway. The company last week said it would discontinue some R&D programs outside of rare diseases and cut 180 jobs in the process.

"This is the big deal the market had been waiting for," Panmure Gordon analyst Savvas Neophytou said in a note to investors (as quoted by Bloomberg). The purchase is "clearly at an eye-watering multiple but strategically very sound."

- get the release from Shire
- read the Reuters news
- check out the Bloomberg story

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