The takeover rumour mill was in overdrive again yesterday after analysts at Swiss bank UBS speculated that AstraZeneca may put in an offer for Shire, sending the latter’s shares up more than 6% on the London Stock Exchange.
According to media reports, UBS analysts have calculated that AstraZeneca could bid up to up to 1,425 pence a share for Shire, marking a premium of more than 40%, and still bolster its earnings by 2%-9% in 2009 to 2011.
It’s easy to see why AstraZeneca, the world’s third largest drugmaker, might take a shine to Shire, particularly as upcoming patent losses on some of its key drugs could leave a sizable dent in its sales. Both the group’s schizophrenia drug Seroquel (quetiapine), which pulled in sales of $4 billion in 2007, and its $5-billion antiulcerant Nexium (esomeprazole) are about to lose their patent armour leaving the door open for a stream of cheaper copycats to enter the market, and AstraZeneca will be looking for ways to plug the gap.
Shire is widely considered to be a very successful UK pharma, offering a portfolio stocked with both established and new drugs, such as the attention-deficit hyperactivity disorder drug Adderall XR (mixed amphetamine salts), which pulled in fourth-quarter sales of $277.7 million, and the Hunter Syndrome therapy Elaprase (idursulfase), which made $57.4 million for the period, as well as plenty of promising research projects.
Skepticism over the move
Even so, not everyone is convinced that AstraZeneca will make a move on the group. For one, the drug giant has already recently taken on a sizeable chunk of debt to fund its $15.2 billion purchase of US biotech MedImmune last year, a price which many analysts thought was a little on the high side, and then there is question over whether the groups would actually strategically fit together anyway.
This is the second time in a week that Shire’s stock has been bolstered by market rumours, after it gained 5% on Friday following whispers of a potential takeover by US drug giant Pfizer, although neither suitors have officially confirmed their interest or commented on the speculation.
