Shire: Proving the Specialty Model
As generics circle over Adderall XR, Shire's management must prove that the firm's original "search & development" model can still work.
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As biotech and Big Pharma invade spec pharma's traditional in-licensing ground, Shire's challenge is to bring investors along with its necessary strategic evolution. They've succeeded so far. Other spec pharma firms should take note of how.
Cephalon's 2005 dealmaking flurry illustrates the growing influence of in-house R&D on a firm whose success to date has come from in-licensing. Its challenge will be selling investors pipeline potential, as well as earnings growth.
Shire's proposed $1.6 billion cash takeover of TKT answers investors' call for some deal-making action and pipeline diversification. But critics say Shire has paid over the odds for some risky programs in unfamiliar territory--rather like it did with BioChem.