Shire Mulls Separation of Neurosciences
Ireland-domiciled drugmaker Shire is considering splitting off its neuroscience division into a separate, publicly listed company. The move, revealed during its second-quarter results presentation, is one of several strategic options Shire is currently assessing for its neuroscience franchise, which achieved sales of $2.49 billion in 2016, the vast majority from medicines to treat attention deficit hyperactivity disorder (ADHD).
Commenting on the reasons for the announcement, CEO Flemming Ornskov said: “We are at an exciting inflection point, with both our rare disease and neuroscience businesses performing strongly and each having significant growth potential over the coming years. The strength and scale of our business provides us with the opportunity to further optimize our franchise portfolio – one of our key priorities communicated earlier this year. By year end, we expect to complete a formal evaluation of the full range of strategic options for the neuroscience franchise, including the potential for its independent public listing.”
Analysts believe Shire’s ADHD franchise may be headed for a sales plateau, with low-lost generic alternatives now widely available. Its lead drug, Vyvanse, missed sales expectations in Q2, and revenue for the ADHD unit generally fell 3% year-on-year. A new, long-lasting ADHD drug is due to launch broadly next month, and the US patent on Vyvanse extends to 2023. But as the competitive environment will put pressure on prices, the Bloomberg op-ed franchise Gadfly mused that a spinoff would “finally complete the company's rebranding as a rare-disease-focused biotech.”
Shire’s second-quarter results were boosted by the purchase of Baxalta – the US biopharmaceutical spin-off of Baxter International – which was completed in June 2016, with sales jumping by 54% to $3.7 billion. The merger has achieved cost synergies of $400 million, much higher than the original target of $300 million, and Shire said it is firmly on track to hit $700 million of savings in year three.
As the second half of 2017 moves into gear, Ornskov said: “We are focused on generating strong organic growth while continuing to deliver on our key priorities – launching more than 80 products globally by leveraging our expanded commercial platform, progressing our late-stage pipeline, integrating Baxalta and paying down debt.”