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Morningstar | Takeda's Acquisition Is Still Pending, but Shire Maintains a Stand-Alone Narrow Moat

Through several acquisitions, Shire has transformed from a neurology-focused specialty pharma to a more diversified firm with increasing exposure to biologics manufacturing and rare diseases. Shire relies on acquisitions to supplement its portfolio, and while we remain skeptical of the Baxalta acquisition due to serious competitive threats in hemophilia, other recent deals (ViroPharma/Cinryze, SARcode/Xiidra, Dyax/Takhzyro) have been beneficial to the firm's growth and competitive advantages. Following the Baxalta acquisition, 16% of Shire's top line stems from the ADHD market, with Vyvanse benefiting from strong U.S. market growth and broad indications. Vyvanse was approved in binge-eating disorder in 2015, and while this is a new market for pharmaceutical treatment, we think Vyvanse will be successful in this indication. ADHD products could also see sales growth in Europe (the Vyvanse launch began in 2013) and Japan (Vyvanse and Intuniv launched in 2018), but we caution that these markets are much smaller and reimbursement may not be as favorable. Shire's acquisition of Transkaryotic Therapies in 2005 was the foundation for its human genetic therapies, and both Elaprase and Replagal are core products in Shire's portfolio. Shire was able to capitalize on Genzyme's (now Sanofi's) manufacturing woes, gaining approval for Gaucher disease drug Vpriv in early 2010 and expanding Replagal's international share. The company continues to build critical mass in the attractive rare-disease space with the synergistic addition of Takhzyro (via Dyax) and Cinryze (via ViroPharma) to its Firazyr franchise and internal medicine products Gattex and Natpara (via NPS Pharma). Baxalta's dominant hemophilia franchise and plasma-derived proteins--particularly immunoglobulins for rare immunological and neurological disorders--also build on Shire's rare-disease portfolio, and while Shire is realizing more synergies from the deal than we had anticipated, we remain concerned about hemophilia competition from Roche's Hemlibra and future gene therapies from firms such as BioMarin and Spark.