Shire may employ AstraZeneca tactic against AbbVie bid

Jun 24 2014, 02:59 IST
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SummaryShares in Shire, which hit a all-time high on Friday, were trading 1.4% lower by 08.45 GMT.

Shire is to take a leaf out of AstraZeneca's playbook by giving long-range forecasts for its drugs as it seeks to convince shareholders that AbbVie's $46 billion offer undervalues the business.

Flemming Ornskov, Shire's chief executive, will update investors on prospects for key medicines on Monday afternoon,

mirroring the approach of disclosing long-range

internal forecasts used by fellow London-listed drugmaker AstraZeneca in its successful defence against Pfizer.

The market is already looking for AbbVie to sweeten its offer to win its prize, with analysts at Jefferies estimating it could make the deal pay at a price of up to 55 pounds a share, or $55 billion, against AbbVie's most recent rejected cash-and-shares offer on May 30 of just over 46 pounds. The two companies confirmed a series of approaches after Reuters revealed the talks last week.

However, there is no bid on offer at the moment, putting pressure on Shire to either squeeze a better deal out of AbbVie or prove to shareholders it can drive growth faster than already upbeat consensus forecasts suggest.

Shares in Shire, which hit a all-time high on Friday, were trading 1.4% lower by 08.45 GMT.

After declaring last week that annual product sales were set to more than double by 2020 to $10 billion, Ornskov will flesh out this forecast with details on specific drugs, according to people familiar with the matter.

These include its best-selling hyperactivity medicine Vyvanse, which is now also being tested as a treatment for binge eating, as well as therapies for various rare diseases and eye disorders. Shire’s strategy copies AstraZeneca's in another way, too, by highlighting the execution risks associated with AbbVie’s plan to cut its tax bill through redomiciling in Britain for tax

purposes.

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