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Shire snaps up Viropharma to build $2bn rare disease unit

Gains access to Cinryze in expensive but 'strategically sound' deal

ShireShire has signed a deal to buy US company ViroPharma for around $4.2bn as it continues to build its portfolio of rare disease therapies.

The $50-per-share cash offer has been approved by both companies' board of directors and represents a 27 per cent premium to ViroPharma's closing share price on Friday.

The merger would provide Shire with an already-marketed product - Cinryze (C1 esterase inhibitor [human]) for the prophylactic treatment of hereditary angioedema (HAE) - that generated sales of $321m last year and accounted for the bulk of Viropharma's $428m in revenues.

Shire has been building its rare disease business as it faces increasing competition in attention-deficit hyperactivity disorder (ADHD) drugs, which have been the engine of growth at the company for many years.

It recently added to its rare disease pipeline via an expanded agreement with Danish biopharma company Santarus, and just last week announced plans to cut some UK jobs in order to focus more on rare diseases.

Cinryze will sit well alongside Shire's own HAE treatment Firazyr (icatibant), which grew 88 per cent in the first nine months of 2013 to reach $154m, while Viropharma also has a pipeline of rare disease and speciality drug candidates.

Along with Shire's other rare disease brands - Replagal (agalsidase alfa) for Fabry disease, Hunter's syndrome treatment Elaprase (idursulfase) and Vpriv (velaglucerase alfa) for Gaucher disease - the combined portfolio will have sales approaching $2bn a year.  

Analyst Savvas Neophytou of Panmure Gordon described the price of the deal as "eye-watering" at around 7.6 times revenues, but added that it was "strategically very sound".

"This is the big deal the market had been waiting for and chief executive Fleming Ornskov telegraphed 18 months ago," he added, noting that it was likely to be as transformative as Shire's earlier acquisitions of BioChem Pharma, Transkaryotic Therapies (TKT) and New River Pharmaceuticals.

Ornskov said the deal "will immediately benefit Shire and is entirely consistent with our clear strategic objective of strengthening our rare disease portfolio".

He added that Shire expects the purchase of ViroPharma, which is set to close before the end of the year, to be immediately accretive to earnings and generate annual cost savings of around $150m by 2015.

Meanwhile, Viropharma's chief executive Vincent Milano said: "By joining with Shire, ViroPharma will become part of a larger, more diverse biopharmaceutical company and will benefit from Shire's innovation, scale and global reach."

Article by
Phil Taylor

11th November 2013

From: Research, Sales

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