Shire to sell oncology unit to Servier for $2.4 billion

Shire announced an agreement on Monday to divest its oncology business to Servier for $2.4 billion in cash, having initiated a sale process for the unit at the start of the year. Shire CEO Flemming Ornskov remarked "while the oncology business has delivered high growth and profitability, we have concluded that it is not core to Shire's longer-term strategy."

According to Shire, the sale process identified multiple potential strategic buyers across the US, Europe and Japan. Ornskov said "we will continue to evaluate our portfolio for opportunities to unlock further value and sharpen our focus on rare disease leadership with selective disposals of non-strategic assets." The executive added "Shire's board will consider returning the proceeds of the sale to shareholders through a shareholder-approved share buyback after the current offer period regarding Takeda's possible offer for Shire concludes."

Earlier this year, Takeda disclosed that it is considering making an offer to acquire Shire, with the Japanese drugmaker having until April 25 to either announce a firm offer or decide against pursuing a purchase. Although Takeda highlighted oncology as one of its key therapeutic areas that would be strengthened by an acquisition of Shire, Deutsche Bank analysts said the sale of the unit to Servier was unlikely to be a deal breaker for the Japanese drugmaker. Meanwhile, Jefferies analysts suggested that the sale of the oncology business "should boost Shire's negotiating position on asking price in the current offer period with Takeda."

Shire's oncology unit includes Oncaspar (pegaspargase), a component of multi-agent treatment for acute lymphoblastic leukaemia (ALL), and ex-US rights to Onivyde (irinotecan pegylated liposomal formulation), which is a component of multi-agent treatment for metastatic pancreatic cancer post gemcitabine-based therapy. The portfolio also includes calaspargase pegol, which is under FDA review for the treatment of ALL, and early-stage immuno-oncology assets.

Last year, Shire's oncology business generated sales of $262 million, with the Servier transaction set to close in the second or third quarter.

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