Shire is splitting into two separate internal business units, Rare Disease Division and Neuroscience Division.
Shire announced that it is splitting into two separate internal business units, Rare Disease Division and Neuroscience Division. At this time they will operate as separate business units, but the company will evaluate in the future on whether they will be listed as separate companies.
Shire announced in August 2017 that it was conducting a strategic review of its neuroscience business. The results were that the Board decided the neuroscience business needed more attention and investment separate from its rare disease areas. The company indicates it believes that by separating the two areas, it will allow both divisions to maximize “mid- to long-term product sales, cash generation, and innovation.”
A secondary review will be announced in the second half of this year. Part of that review will include the pros and cons of an independent listing for the two divisions.
“Shire has undergone a significant transformation over the last five years creating two market-leading businesses with distinct profiles and future needs,” Flemming Ornskov, the company’s chief executive officer, said in a statement. “Simultaneously, Shire has established a strong track record of growth and execution. Our new Rare Disease and Neuroscience Divisions will be well positioned for growth, profitability, innovation, and serving the needs of patients.”
This also followed a downgrading of the company’s revenue target. It had projected it would hit $20 billion by 2020, but has now revised that to $17 to $18 billion by 2020. The original goal had been announced when Shire acquired Baxalta two years ago.
Ornskov indicated that although company revenue had tripled to $15 billion in five years, the $20 billion target was optimistic, and the industry analyst consensus was around $17 billion. “There’s been a change in the rate that genericisation takes place across the industry (and) we’re facing some additional competition (in) hematology,” Ornskov said, reported Reuters.
Analysts with HSBC had made the downgrade suggestion in November after Roche released positive clinical data for its Hemlibra, for hemophilia, which would be a strong competitor to several of Shire’s products. In addition, in June, the U.S. Food and Drug Administration (FDA) approved a generic version of Shire’s Lialda for ulcerative colitis.
Ornskov, however, said those issues had to be balanced with the company’s growth in immunology. “The prospects for Shire mid-to-long term have not changed,” he said in a statement.
The split into two divisions would have one focused on treating diseases like attention deficit hyperactivity disorder (ADHD), while the other will focus on complex biologics for rare diseases.
Shire’s neuroscience franchise has been dependent on Adderall, for ADHD. But that area’s growth has been overshadowed by its rare diseases franchise. Last year, the company brought in about $11 billion in revenue, with less than a quarter of it coming from the neurosciences. The new neuroscience division will build on its Adderall, and newer products like Intuniv, Vyvanse and Mydayis. Mydayis recently launched in the U.S. for ADHD in patients 13 years and older.
The company also says it has a promising late-stage pipeline that currently has 15 programs in Phase III trials.
