Shire sells cancer drugs to Servier as Takeda circles

Shire sells cancer drugs to Servier as Takeda circles

Shire sells cancer drugs to Servier as Takeda circles

On Monday, Shire announced it had agreed to hand its oncology business to France's Servier for $2.4 billion, a move it said would sharpen its focus on rare diseases.

The deal comes as Takeda boss Christophe Weber is understood to be lining up meetings with its major holders ahead of making a potential £35bn offer for Shire. Under U.K. regulations governing mergers and acquisitions, Takeda has until April 25 to make a formal bid or pass on Shire. A pursuit of Shire would be one of the biggest attempts by a Japanese company to buy a Western rival. The market value of Shire is about $47 billion.

Its oncology business had sales of $262 million previous year, putting the divestment on a respectable revenue multiple of 9.2 times.

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Shire's oncology business includes products such as Oncaspar (pegaspargase), part of a multi-agent treatment for acute lymphoblastic leukemia (ALL) and ex-U.S. rights to Onivyde (irinotecan pegylated liposomal formulation), part of a multi-agent treatment for metastatic pancreatic cancer after gemcitabine-based therapy, and Calaspargase Pegol (Cal-PEG), which is now under review by the U.S. Food and Drug Administration (FDA) for the treatment of ALL and early stage immuno-oncology pipeline collaborations.

According to the company, its board of directors began scouting divestments for the oncology business in December 2017, identifying "multiple potential strategic buyers across the US, Europe and Japan" a month later. Last year Takeda acquired Ariad Pharmaceuticals for $4.7 billion.

Still, given the small contribution of the cancer business to Shire's overall profits, Deutsche Bank (IOB: 0H7D.IL - news) analysts said this was unlikely to be a deal breaker.

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"I$3 t is hard for us to believe that selling 2% of Shire's revenues - whether it was strategic to Takeda or not - would alter a contemplated transaction/approach by Takeda of this magnitude".

"We are confident that Servier will continue to invest in this business and our colleagues who are expected to transfer as part of the transaction in order to meet the needs of cancer patients globally".

Servier believes that the acquisition will help the firm to establish direct commercial presence in the U.S., in addition to expanding its oncology pipeline and portfolio of in-market drugs.

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Servier Group president Olivier Laureau said: "It is a major step in the transformation of the Group, allowing us to establish a direct commercial presence in the USA, as well as to strengthen our portfolio of marketed products in the ex-US territories where Servier is already present".

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