Takeda buys Shire for $62 billion

Stock decline nearly 20 percent due to doubts about the deal

After five proposals and more than month of back-and-forth, it looks like this thing is happening. Takeda Pharmaceutical Co Ltd. agreed Tuesday to purchase rare-disease drugmaker Shire Plc for $62 billion. But this blockbuster deal comes with blockbuster risk. Takeda will be paying a steep premium and taking on big debt to acquire a company with uncertain prospects.
Takeda’s desire for geographic and drug diversification led it to overlook a lot of warts. Shire’s hemophilia business provides more than a quarter of its revenue. It faces near-term peril from Roche Holding AG’s recently launched Hemlibra, and long-term threats from potential one-time treatments being developed by companies such as BioMarin Pharmaceutial Inc. that could reduce demand for Shire’s older drugs.

Shire has an attractive pipeline of high-margin rare-disease drug candidates, but its research projects will have to over-deliver in order to compensate for competitive threats to current core business. The substantial research and development cuts that Takeda plans if the deal goes through won’t help.

 https://www.bloomberg.com/

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