With new rivals, Baxalta faces a hemophilia smackdown. So why is Shire bidding?

Shire CEO Flemming Ornskov

Shire ($SHPG) has made it no secret that it's still interested in buying Baxalta ($BXLT), the hemophilia specialist that shot down its $30 billion bid over the summer. But with the latter's position in the hemophilia market being threatened by a score of up-and-coming therapies, some analysts can't quite understand why.

As Bernstein analysts Ronny Gal laid out in a recent note to shareholders, new approaches to treating the disease are on the horizon for several companies. Five drugmakers--including Alnylam ($ALNY), which boasts an RNAi therapeutic, and Roche ($RHHBY), which is working on its own first-in-class antibody--have advanced to the clinic with programs that are administered subcutaneously and less frequently and bear a reduced risk of forming inhibitors.

"There is significant unmet need in hemophilia for products … with this kind of profile," Gal wrote.

The way he sees it, players Novo Nordisk ($NVO), Bayer and Baxalta would suffer if the crop of newcomers gain traction. About 11% of Novo's revenue comes from its hemophilia products, and about half of that could be lost to competition. And Bayer's exposure to hemophilia rivals is about €1.2 billion.

Thing is, both of those companies are working on novel approaches of their own--and in the case of Bayer, the German company's risk is mitigated by its size, Gal points out.

But Baxalta? The Illinois pharma, spun off from parent company Baxter ($BAX) earlier this year, is "heavily reliant" on the hemophilia market for its operating profits, with about 70% coming from its products in the field. And that means "success of alternative approaches could devastate its business," Gal wrote, predicting that 40% or so could take a direct hit.

With that in mind, Gal and his fellow Bernstein analysts are perplexed by Shire's ambitions. As Reuters reported last week, CEO Flemming Ornskov has been doggedly pursuing a Baxalta tie-up for the past 6 months, despite its target's refusal to engage in talks. And the news service's sources say a new buyout proposal could soon be on the way.

"Shire has been dismissive of the risk and we are still puzzled by their approach (as is the market) given the progress of alternative programs," he wrote.

Baxalta CEO Ludwig Hantson

They're not the only ones confused by Shire's interest in hemophilia. Baxalta CEO Ludwig Hantson, for one, told investors in August that combining Baxalta's core business with other rare-disease businesses won't spell simple cost cuts for the Dublin drugmaker.

"An acquirer like Shire isn't just going to find easy savings from a combination with dissimilar assets," he said.

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