Having predicted revenues of $10 billion by 2020 as it rejected AbbVie’s $27 billion bid last week, Shire has being telling analysts how it intends to hit that ambitious target.
In an echo of AstraZeneca’s presentation to fend off Pfizer earlier this year, Shire chief executive Flemming Ornskov said that current products would bring in at least $7 billion by 2020, with $3 billion from drugs in the pipeline. In the medium-term, it is predicting sales of $6.5 billion by 2016.
Specifically, Shire is forecasting sales of over $3 billion from its rare diseases business unit of over $3 billion by 2020 and is particularly excited about the prospects for its dry eye drug lifitegrast, forecasting revenues in excess of $1 billion. This figure is not risk-adjusted, the company noted, nor are any of the pipeline predictions.
Mr Ornskov added that the estimates do not the impact of any additional M&A, licensing and the pipeline development from certain recent transactions, namely the purchases of Australia’s Fibrotech and US rare disease specialist Lumena Pharmaceuticals.
Now observers are wondering whether AbbVie is prepared to test Shire with a fourth offer and analysts at Jeffries believe the US firm could raise its bid to £55 per share from around £46. The broker says that “there appears to be no dispute amongst the investment community that AbbVie's interest in Shire looks to be primarily driven by financial engineering (i.e. tax inversion)”.
Jeffries adds that “we see limited synergies between the two companies and limited cost saving potential. However, it would reduce AbbVie’s reliance on the anti-inflammatory mega-blockbuster Humira (adalimumab) and prevent itself from “eventually becoming prey to industry consolidation”
Brokers at William Blair issued a note saying that Shire “remains an attractive target for acquisition by one of the large pharmaceutical companies facing increased generic erosion of core franchises”. They argue that many potential acquirers hold significant cash offshore, and a deal could be attractive for a company interested in entering the rare genetic disease space.
Furthermore, “Shire’s ADHD franchise would also be highly accretive to a company with a large psychiatric presence,” they add.