Shire Makes $10B Growth Pledge After Turning Down AbbVie Offers
By Lori Clapper
After refusing AbbVie's third multibillion dollar acquisition offer last week, Shire's board feels stronger than ever about its goals to more than double its 2013 annual product sales to $10 billion by 2020. To do this, the company stands behind its focused business strategy, high-performance management team, and a lean operating model.
However, AbbVie will not easily be refuted. The Money Observer reports the company “is understood to be prepared to raise its offer.”
Even with another possible proposal on the horizon, Shire gave a presentation on Monday about its continued progress in executing its strategy, which "centers on delivering innovative therapies for significant unmet need in Rare Diseases and other high-value specialty indications."
“We have a long range plan that envisages more than doubling product sales from just under US$5 billion in 2013 to US$10 billion by 2020 from the current portfolio, even without the impact of any additional M&A, licensing, and the pipeline development from certain recent transactions," Flemming Ornskov, Shire CEO, said. "Furthermore, we have stepped up the efficiency of the business, increasing Non GAAP EBITDA margins by eight percentage points year on year from Q1 2013 to Q1 2014."
Monday’s presentation highlighted:
- Promising shareholder information, including reinvestments of dividends, has been 99 percent, which compares to a median of 44 percent for biotechnology peers, 10 percent for the FTSE 100, and 26 percent for the S&P 500
- The company's progress during and after Q1 2014, which included the announcement of the planned resubmission of SHP465 and the acquisition of Lumena Pharmaceuticals, both announced in May 2014, as well as other ventures.
- Shire's new management platform to generate strong momentum for increased product sales, operational efficiency, and a scalable operating model
- Growth plans in rare diseases, neuroscience, GI, and other emerging areas
Shire forecasts some of the following sales figures for its pipeline:
- Double-digit compound annual product sales growth from the current portfolio through 2020
- Rare Diseases business unit sales of over US$3 billion by 2020
- Neuroscience business unit sales of over US$3 billion by 2020
- GI business unit sales of over US$1.3 billion by 2020
- Lifitegrast product sales in 2020 of in excess of US$1 billion (unrisked)
- SHP465 product sales in 2020 of approximately US$500 million (unrisked)
- SHP607 (PREMIPLEX) product sales in 2020 of in excess of US$500 million (unrisked)
- Peak sales potential (unrisked) for LUM001 and LUM002 of in excess of US$3 billion in total
- Peak sales potential (unrisked) for the innovative pipeline of over US$7 billion
In addition, Shire reports that under its new management, the company has "improved the efficiency of the business, increasing group Non GAAP EBITDA margins from 37 percent in Q1 2013 to 45 percent in Q1 2014."