Having posted a strong set of second-quarter results earlier this month, Shire Pharmaceuticals continues to develop a balance sheet that would impress any potential acquirer, according to analysts at Matrix Group.
In a research note, the analysts say the firm "remains a highly attractive M&A target", as Shire "is now a diversified specialty pharmaceutical company with three strong growth engines". These are its attention-deficit hyperactivity disorder franchise, Shire HGT (the business unit focused on genetic diseases) and now regenerative medicine, following the acquisition of the USA's Advanced BioHealing for $750 million in cash.
Shire is one of the first pharmaceutical companies to enter the latter field "in a meaningful way", says Navid Malik of Matrix as it is "tapping into the vast potential within the diabetic wound care market" with the aforementioned acquisition. He believes the deal "is currently underappreciated by the market", given the range of "potentially value-enhancing new indications based on the Dermagraft technology".
Dermagraft is a regenerative bio-engineered skin substitute already used for diabetic foot ulcers. It is also being evaluated in trials for the treatment of venous leg ulcers.
Mr Malik says Shire’s ability to generate cash "leaves it well placed to steadily develop a strong balance sheet that would be attractive to a potential acquirer". The company could be hit by factors such as a slowdown in the ADHD market and generic competition to Adderall XR (mixed amphetamine salts) but the analyst said that "Shire continues to be our top pick in the sector".