Please login to the form below

Not currently logged in

Shire faces $650m loss on Dermagraft sale

Sells struggling foot ulcer treatment to Organogenesis

Shire PharmaceuticalsShire has sold off its foot ulcer treatment Dermagraft to US-based Organogenesis in a loss-making deal that will see the company take a $650m hit in its next financial report.

Shire acquired rights to Dermagraft three years ago in a $750m deal with its creators Advanced BioHealing, banking on the bio-engineered drug's potential to lift its regenerative medicines business.

However, despite being approved to treat diabetic foot ulcers in the US and Canada, Dermagraft's fortunes took a turn when it failed to be approved to treat leg ulcers just months after the deal was completed.

Organogenesis now owns the rights to all Dermagraft assets, including patents, product inventory and certain manufacturing equipment.

Shire will receive no upfront payment from Organogenesis, although it is entitled to receive up to $300m in milestones if certain sales targets are met by 2018.

The $650m loss relates to impairment charges, although these will be classified as an exceptional item in Shire's fourth quarter results.

Shire CEO Flemming Ornskov explained that the divestment was part of a revised company strategy, which aims to prioritise the company's most valuable assets.

Dermagraft has been falling down the pecking order at Shire for some time, with revenues for the first half of 2013 dropping to $40.8m – down 60 per cent from revenues of $101.2m for the same period in 2012.

At the time, Shire said the downturn was due to the “impact of restructuring of the sales and marketing organisation and the implementation of a new commercial model”.

Analysts at Societe Generale were positive about Shire's decision, considering the drug had an operating loss of $324m for the first nine months f 2013.

"Any price for the divestment is better than Shire retaining a non-core, loss-making product," they said. "As such, we view the divestment as a positive move that should allow Shire to focus on its higher-growth profitable products elsewhere in its portfolio."

Article by
Thomas Meek

17th January 2014

From: Sales



Featured jobs

Subscribe to our email news alerts


Add my company

Welcome to HAVAS LYNX, a leading global healthcare communications group....

Latest intelligence

How to get rep buy-in for multi-channel
How do you manage a team who may be resistant to change?...
Blog: Digital therapeutics: within our reach?
Digital therapeutics is a hot topic right now. By using digital technology to manage, treat or even prevent chronic conditions, digital therapeutics is promising to revolutionise healthcare. But is this...
figure 1
The valuable brand
Creating value beyond the pill is both possible and increasingly necessary...