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 Now, though, some investors wonder if it is running out of steam.
A year after completing its biggest ever deal, the $32 billion
acquisition of Baxalta, investors are fretting over weakened margins
and big challenges in the hemophilia business it inherited with the
U.S.-based group.
Chief Executive Flemming Ornskov recognizes the risk, but told
Reuters an overnight slump in the company's share of the $11
billion-a-year hemophilia market was highly unlikely.
The threat will be crystallized next week when Roche reports
detailed results for its new drug ACE910, which tackles the
inherited bleeding disorder in an innovative way and could displace
conventional hemophilia therapies.
Early generic competition to flagship gastrointestinal drug Lialda
has added to Shire's problems, offsetting positive news on
treatments against rare diseases and attention deficit disorder.
Another worry is Shire's debt pile in the wake of Baxalta, which has
put on hold the Dublin-based firm's past business model of regular
bolt-on deals of up to a few billion dollars.
Daniel Mahony, a fund manager at Polar Capital, who has sold his
Shire shares in recent months, says that leaves sales and profit
growth unclear.
"Historically, Shire has derived more growth from M&A than
organically, but they've got to a point now where they seem to be
running out of deal runway," he said.
With the one-time stock market darling underperforming the European
drugs sector by around 20 percent this year, Ornskov admits he
doesn't get many compliments from investors - but he insists Shire
is on track with Baxalta.
"This is a totally different scale and you need a bit more patience,
you need a bit more time. In the end we will deliver the same
outcome: we will pay off the debt and we will improve margins," he
said.
"The Street is wanting to see quarter-by-quarter that we can
actually integrate this business, that we haven't over-stretched and
can pay down debt."
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With analysts not expecting Shire to repay all its debt from the
Baxalta acquisition before the end of the decade, Ornskov said
large-scale M&A was not on the agenda for now, although he would
continue to shop for individual products.
Margins would return from today's high 30s percent to pre-Baxalta
levels in the mid 40s, he added.
SANGUINE ON ROCHE DRUG
Ornskov is sanguine about the threat from Roche, pointing out that
ACE910 is likely to take time to win widespread adoption, especially
outside the United States, where many contracts are based on
long-term supply tenders.
The notion that a new drug, which still faced questions about safety
and tolerability, could damage Shire's hemophilia franchise
overnight was not "super realistic", he added.
"The proof will be in the pudding. What I am most focused on is to
build out the business, because outside the U.S. there's significant
growth ... in just getting more patients treated."
Similarly, Shire's $800 million-a-year gut drug Lialda will still
retain "significant" market share because other generic
manufacturers are unlikely to follow Zydus Cadila's lead in winning
approval for copies any time soon.
Ornskov said many companies had tried to copy the formulation, and
Zydus had only won approval by conducting its own clinical trials.
"To make a comparison from Zydus to all the other ones, is I think a
stretch of the imagination," he said.
(Editing by Mark Potter)
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