Shire Plc had agreed to purchase ViroPharma Inc at the cost of USD4.2 billion to obtain the portfolio of treatments for rare diseases as well as ease dependence from its Vyvanse pill to manage attention deficit hyperactivity disorder.
Shire would be paying USD50 per share in cash, with a premium of 27% over the closing price of ViroPharma last November 8, according to a statement issued by the Dublin-based drugmaker.
This acquisition would give Shire access to Cinryze. This is a medical formulation that manages the inflammatory condition hereditary angioedema, complementing Shire's Firazyr for the same illness, according to the company. The said purchase would mark the company's third one this year under its CEO Flemming Ornskov since last April. This is Shire's largest purchase yet, topping the USD3.6 billion takeover of Biochem Pharma Inc back in 2001.
Using the USD4.2 billion purchase price, Shire would be paying around 58 times the current earnings before interest, tax, depreciation and amortization for ViroPharma. This was confirmed by data collated by Bloomberg. On the average for the past give years, purchasing companies had paid just 24 times EBITDA for biotechnology companies valued above USD100 million.
Medication for rare diseases, called orphan drugs, would receive exclusive marketing rights as an incentive for their development in the United States and in Europe. Small patient populations though would mean smaller numbers of participants needed for clinical trials. These drugs have received investor interest from large pharmaceutical firms, as they avoid a decline in sales as drug patents expire.
During a conference call, Ornskov said, "With Cinryze, we will add mother growth engine to our portfolio, It's a deal that fits our strategy of increased focus on high growth specialty markets, particularly rare diseases." He referred to the acquisition which would help boost it rare disease business into a USD2 billion annual sale cash cow.
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