Attention deficit and hyperactivity disorder (ADHD) drug-maker Shire (SHP) cheapens 27p to £47.14 after agreeing to buy US rare disease-focused biotech NPS Pharma (NPSP:NDQ) for $5.2 billion. Shire is paying $46 a share for NPS, a punchy 51% premium to the target's December 16 closing price.
Scheduled to complete by the end of March, the acquisition comes some three months after US firm AbbVie (ABBV:NYSE) pulled its £32 million takeover offer for the Basingstoke-based company. AbbVie backed out of the deal when the US government closed certain tax loopholes, then handed Shire a £1 billion break-up fee. Alongside debt, some of this cash is being used by Shire to fund the NPS deal.
Shire has been expected to expand through acquisitions of its own ever since AbbVie walked away from a deal. The company is targeting $10 billion of annual sales by 2020, yet only $3 billion of this figure is expected to be generated from Shire's existing pipeline, implying deals will need to be done to make up the shortfall.
NPS’ drugs target sufferers of short bowel syndrome and also hypoparathyroidism, a rare hormone disorder. The US company is hoping to launch these in Europe in the coming months, if the regulator approves the treatments. Shire will be able to sell these drugs through its own distribution channels.
Stockbroker Panmure Gordon welcomes Shire’s growth strategy. The drug-maker will generate compound annual sales growth of 12% between 2012 and 2016, according to Panmure’s forecasts, which is four times higher than the 4% average for the large-cap European pharmaceutical sector. 'With limited exposure to soft European markets, we believe Shire is well positioned to execute its growth strategy,’ Panmure enthuses.