Deal of the Year: Takeda buys Shire
The takeout price for Shire makes the deal pharma's largest since Teva bought Actavis.
Big pharma status:
Together, Takeda and Shire would be the 9th largest drug company in the world.
Takeda's buy gives it more clout on the world stage, but also straps the company with billions in debt and high expectations. More broadly, the deal could spur M&A among Japanese pharmas.
At $62 billion, Takeda Pharmaceutical's purchase of Shire wasn't only the largest biopharma deal of the year, it was also the largest acquisition of a foreign company in Japan's history. Yet price alone isn't what makes this takeout noteworthy.
Rather, the deal reflected a larger trend of global expansion among Japanese drugmakers — and could very well prompt M&A from other companies located on the island nation.
"There is no precedent for this type of deal, especially coming from Japanese companies," said Maura Musciacco, director of ophthalmology and neurology at market research firm Global Data, in an interview with BioPharma Dive. "Certainly the other competitors will be looking to this as a benchmark and to see how they can replicate something similar if it goes well."
Combined, the two companies would become the world's ninth largest pharma, according to Global Data's estimates. The new company's therapeutic interests are also wide ranging, from rare disease and gastrointestinal drugs to neuroscience and cancer therapies.
By snagging Shire, Takeda takes a stronger position in the fields of hematology and immunology, as well as gains the blockbuster attention deficit hyperactivity disorder medication Vyvanse. Those businesses accounted for about half of the $3.8 billion in product sales Shire recorded for the third quarter.
More important than the products themselves, however, is that Shire has a solid foothold in the U.S., a market responsible for about two-thirds of its revenue and which Takeda has been trying to break further into.
Spearheading the move is Christophe Weber, the GSK veteran and first ever non-Japanese CEO of Takeda. It's a big leap for any company — but particularly one entrenched in Japanese culture.
"Japan doesn't change fast, but change is definitely happening. And I think a lot of those changes are being generated by the need to change just for demographics and, frankly, pricing," said Steve Engen, co-founder of Loncar China Biopharma Index and former vice president at Shire Japan, in an interview with BioPharma Dive.
Should Takeda accomplish its globalism goals, it might encourage rivals to use M&A to expand their worldwide reach.
"Mergers and mega-mergers come in waves," Musciacco said. "If you're looking specifically at taking on competition, this could definitely trigger its other domestic players in Japan to start thinking, 'Well, how can I rapidly expand in the U.S. market?'"
Conversely, there's also a chance the Shire acquisition serves as a warning against large-scale deals.
"If Takeda-Shire is not in the top five of global pharmas in the next 10 years, I think that will be a disappointment for Christophe and Takeda," Engen explained, adding that he thinks the merger's success will largely be graded on "how global is Takeda? And how are they competing with Pfizer, how are they competing with the Roches of the world?"
Another tradeoff for Takeda is that it must now tackle all the financing and logistical hurdles of a mega-merger. The company has entered a bridge loan agreement totaling almost $31 billion to support the deal; reflecting the largest borrowing ever for a Japanese acquisition.
What's more, it has to figure out what to do with Shire's more than 20,000 employees. While many will get integrated into the larger company, that "will not be as easy as some people think," Musciacco said, and "some layoffs could definitely be expected in next year."
Finally, Takeda-Shire's larger size doesn't eliminate the problems either company already faces. In blood disorders, Shire's portfolio remains threatened by Roche's hemophilia drug Hemlibra. And in hereditary angioedema, a manufacturing snag for Cinryze offered an opening for a rival therapy from CSL Behring to gain traction on the market.
Still, by buying Shire, Takeda's made its ambitions clear: the 237-year-old pharma isn't content with leading in just Japan, but aims to vie for the industry's top ranks.
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