Human hands working with documents at desk and signing contrac
Shire pledged that its Baxalta buyout would make it a rare-disease behemoth. (Getty/scyther5)

Deal size: $32 billion
Date announced: January 11, 2016

Flemming Ornskov, M.D., then the CEO of Shire, kicked off 2016’s J.P. Morgan Healthcare Conference with a celebration, pinning down a company he’d been chasing for months with buyout offers: Baxalta.

The Dublin drugmaker and the Baxter spinoff agreed to a $32 billion deal that Shire promised would help it reach a $20-billion-by-2020 sales target and turn it into a rare-disease behemoth.

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But some industry watchers weren’t so impressed with Ornskov’s conquest. Aside from a fledgling oncology business that Shire would later sell off for just $2.4 billion before getting swallowed by Takeda, what Baxalta brought to the table was hemophilia treatments—and not the cutting-edge treatments expected to disrupt the industry in the near future.

“Success of alternative approaches” to hemophilia treatment “could devastate its business," Bernstein analyst Ronny Gal wrote of Baxalta later in 2016, predicting that 40% or so could take a direct hit from up-and-coming therapies, including RNAi products, gene therapies and Roche’s first-in-class antibody that would soon win FDA approval under the name Hemlibra.

Ornskov was the first to admit Baxalta was behind in the next-gen treatment department, telling FiercePharma in late 2017 that prebuyout, the drugmaker “had been a bit starved for resources and innovation.” But he maintained that Shire was a company that could “catch up and sometimes overtake some of our competitors.”

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Investors, though, weren’t so sure. In the first quarter postintegration, hematology product sales sank by 6%, dragging total sales down to 3% below consensus. And shares continued to trend downward—so much so that by October 2017 an activist hedge fund was calling for a company-wide breakup.

Plans for a full-scale split never materialized, thanks to a Shire buyout offer from Takeda that followed the biotech’s underwhelming 2018 guidance. But Shire’s Baxalta deal continued to haunt it throughout the ultimately successful sale process, with Takeda investors balking at the prospect over hemophilia competition worries.