Shares in Shire (LON:SHP) tumbled yesterday, as the rare disease specialist trimmed its revenue target and unveiled plans to split its rare disease and hyperactivity treatments businesses. The move came after the company initiated a strategic review of its neuroscience division last year with a view to a potential spinoff of the unit.
Shire’s share price lost 5.43 percent to close at 3,664.50p yesterday, underperforming the broader UK market, with the benchmark FTSE 100 index ending the session 0.71 percent lower at 7,696.51 points. The group’s shares have lost just under a quarter of their value over the past year, as compared with a near seven-percent rise in the Footsie.
Shire trims outlook
Shire said in a statement yesterday that it expects its total revenue to come in between $17 billion and $18 billion by the end of the decade, below a goal set two years ago when the company acquired haemophilia specialist Baxalta.
“There’s been a change in the rate that genericisation takes place across the industry (and) we’re facing some additional competition (in) haematology,” Chief Executive Flemming Ornskov commented, as quoted by Reuters, pointing out that the group’s revenue had tripled to $15 billion in five years and that $20 billion had been a ‘stretch target’.
Shire, which initiated a review of its attention deficit hyperactivity disorder treatments last year, noted that following the first stage of the review, it had concluded that its neuroscience business warranted additional focus and investment and that there was a strong business rationale for creating two separate divisions within the group, namely a Rare Disease Division and a Neuroscience Division.
“The second stage of the review will include continuing to evaluate all strategic alternatives, including the merits of an independent listing for each of the two divisions,” Shire pointed out, saying that it will give an update on the second stage of the review in the second half of the current year.