Shire to Operate as Two Business Units Focused on Neuroscience, Rare Diseases

Source: FirstWord

Shire said that following the first stage of its strategic review, it will separate its operations into two divisions, namely neuroscience and rare diseases. CEO Flemming Ornskov stated "our new rare disease and neuroscience divisions will be well positioned for growth, profitability, innovation and serving the needs of patients."

Shire stated that following the first stage of the strategic review, which began in August last year, its board determined that its neuroscience business warrants additional focus and investment, adding that a strong business rationale exists for separating its operations into two divisions. The company expressed its belief that each division will benefit from "sharper management focus, greater strategic clarity and an increased ability to deploy resources to key growth priorities."

Shire previously noted that it could move to divest its neuroscience franchise, including the attention deficit hyperactivity disorder Vyvanse (lisdexamfetamine), pending the result of the strategic review. Analysts estimated that the standalone unit could have a value of as much as $8.5 billion. Meanwhile, Shire noted that its rare disease division generated around 70 percent of the company's revenue in the 12 months ended September 30, 2017.

According to Shire, it plans to report the operational performance metrics of each division separately beginning with the current quarter. An update on the second stage of the review, which will comprise a continued evaluation of all strategic alternatives, including a possible separate listing for the two units, will be provided in the second half of 2018.

Shire also announced Monday that it anticipates total revenue of $17 billion to $18 billion by 2020, down from a goal of $20 billion announced during the drugmaker's acquisition of Baxalta. Ornskov explained that the drugmaker had to revise its sales forecast due to increased competition, including in medicines for blood conditions.

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