Shire plc to buy NPS for $5.2bn in sector’s latest deal

The takeover continues the breakneck pace of deal-making seen last year in the pharmaceuticals sector, as companies jockey for promising assets amid a wave of new drugs emerging from research laboratories, and Shire’s chief executive, Flemming Ornskov, said he would keep looking for more deals to grow the company into a biotech powerhouse.

Shire will pay $46 per NPS share, representing a premium of nearly 10 per cent to NPS’s Friday close, the two companies said.

The move will not come as a huge surprise, since Shire was first linked to NPS in May 2014. When plans for Shire to sell itself to AbbVie fell apart in October, Shire said it could take another look at previous deal prospects and reports of Shire’s interest resurfaced in mid-December.

“This is about growth and rare diseases, and it fits hand in glove with our strategy and our franchise,” Mr Ornskov said.

Shire expects the all-cash deal to add to its adjusted earnings from 2016 onward. It believes it can achieve cost savings of approximately 25 per cent to 35 per cent of consensus forecasts for NPS’s standalone future operating cost base from 2017.

The acquisition of New Jersey-based NPS will give Shire two significant new drugs.

Gattex, a treatment for short-bowel syndrome (SBS), is already on the market, while Natpara, for hypoparathyroidism, is awaiting approval from the US Food and Drug Administration.

The FDA is expected to decide on the Natpara application by January 24.

Francois Nader, CEO at NPS, called Shire’s decision to conclude a deal before a decision a calculated risk on their part that nevertheless “would provide the joint company the opportunity to deploy the most resources in supporting the launch”.

The consensus of analysts’ forecasts for the two NPS medicines point to annual sales of $509m and $534m respectively by 2019, although Mr Ornskov believes they may bring in more.

“Both have significant sales potential and some have mentioned the word ‘blockbuster’,” he said.