Shire Plc agreed to sell its cancer unit to France's Servier SAS for $2.4 billion, tightening the US -based drugmaker's focus on rare diseases and potentially making it more attractive to Takeda Pharmaceutical Co. as it considers a bid.
Drugmaker Shire has agreed to sell its oncology business to a French rival, putting into question whether a bid for the FTSE 100 firm from Japanese suitor Takeda will emerge.
The deal suggests there is value locked up within Shire's portfolio - despite a dismal share price performance in the past two years - as its management braces for a possible $50-billion bid battle with Japan's biggest drugmaker.
Takeda clearly stated that strengthening its core therapeutic area of oncology (alongside gastrointestinal and neuroscience) was a key reason it wanted to gobble up Shire.
Still, given the small contribution of the cancer business to Shire's overall profits, Deutsche Bank analysts said this was unlikely to be a deal breaker. Takeda declined to comment further on Monday. Shire also had debt of around $19-billion as of the end of 2017.
Proceeds from the sale is expected to go towards increasing optionality and Shire will consider returning the proceeds to shareholders through a share buyback.
"While the oncology business has delivered high growth and profitability, we have concluded that it is not core to Shire's longer-term strategy", said CEO Flemming Ornskov, the key narrator in Shire's makeover story, in a statement. In 2017, the oncology business generated $262 million in revenue.
For privately held Servier, acquiring Shire's oncology operation allows it to establish a direct commercial presence in the United States and boosts its presence in cancer. The Irish-headquartered pharma, which has increasingly turned its focus to rare disease in recent years, had rights to chemotherapy agent Oncaspar and pancreatic cancer treatment Onivyde, both of which are on the market.
The portfolio also includes Calaspargase Pegol (Cal-PEG), which is under USA review for the treatment of ALL and early stage immuno-oncology pipeline collaborations, the firm noted.