From mid-cap to Big Pharma: the challenge for Shire (The Times)

John Rountree, Managing Partner of Novasecta, was recently quoted in The Times, a major UK newspaper. In an article discussing Shire, a highly successful mid-cap pharmaceutical company headquartered in Ireland with strong growth and a high share price rating, John offers a number of cautionary messages. He asserts that Shire is making the risky transition from mid-cap to Big Pharma, and that the complexity of the business and the research pipeline is now more of a concern than it was after Shire’s previous deals, such as the $6 billion purchase of Dyax last year. John states that “they can say they have done integration very well but those have been $4 billion to $6 billion deals: this is $32 billion. They have got to prove themselves. They’re talking about leverage, synergies and savings. This has become a new game.”

John goes on to comment on pricing pressure from governments, insurers and health service providers, another concern for Shire in the long run as it is becoming increasingly dependent on oncology and rare diseases after the Baxalta acquisition. “Rare diseases and oncology are almost by definition high-price markets. How long can it last in the US?” he was quoted as asking.