The Lexington-based head of Shire PLC, scrambling to fend off a $46 billion takeover offer from drug giant AbbVie Inc., said Shire is more valuable as an independent business and is growing into a leading global biotechnology company.
“Shire is a jewel and a unique company,” Flemming Ornskov said in an interview Thursday. “It has excellent growth, it has very strong profitability. The company has a strong [drug] pipeline, and the company has a very clear strategy of being a leading biotech in the rare diseases space.”
Ornskov was named Shire’s chief executive last year, and his first move was to set up his office in the Boston area rather than at the company’s Dublin headquarters. Massachusetts remains key to the success of the company, he said. More than 1,500 of Shire’s 5,000 employees are in Lexington, home to its large rare diseases drug division.
But even as Ornskov has been making the case for Shire to remain a standalone company — expanding its portfolio of drugs to treat disorders such as Fabry disease, Gaucher disease, and Hunter syndrome — AbbVie has signaled it will press forward with its buyout bid.
Under European laws, a would-be buyer is given a 28-day “offer period” once an overture has been made public, enabling it to make a better offer or mount a hostile bid by going directly to shareholders. The 28-day period expires July 18 for AbbVie.
Shire’s board formally rejected the AbbVie offer last week, saying it undervalued the company.
Ornskov, a Danish doctor-turned-businessman, admitted the AbbVie takeover offer “has been a clear distraction.” But he said “business is humming along very well.”
He noted that Cambridge-based Biogen Idec Inc., the largest Massachusetts-based biotech, was once considered vulnerable to a takeover but rebounded to become one of the strongest companies in the industry. Ornskov said he envisions Shire joining companies like Biogen Idec, Gilead Sciences, and Celgene Corp. in the top ranks of biotechs.
“I think there is a very strong future for Shire as an independent company,” Ornskov said. “Biogen Idec is an excellent inspiration for Shire.”
In a conference call with stock analysts earlier this week, Ornskov said Shire planned to double its annual revenue from $5 billion last year to $10 billion in 2020. About $7 billion would come from sales growth of existing drugs and $3 billion from projected sales of experimental drugs in its late-stage pipeline.
Analysts have reacted positively to Shire’s long-term plan. “Shire makes [a] very solid case for standalone value creation,” wrote biopharma analysts David Steinberg and Peter Welford of investment bank Jefferies & Co. in a note to investors.
Ornskov’s estimated sales growth does not include acquisitions. Shire has acquired a half dozen companies over the past year, including ViroPharma Inc., which makes drugs to treat a rare genetic autoimmune disease called hereditary angioedema. Ornskov said Shire intends to move ViroPharma’s research and commercial operations from Exton, Pa., to Lexington, where it plans to expand.
“Massachusetts is essential to Shire,” said Ornskov, noting that Lexington is the site of its largest research and development labs. “Massachusetts and Lexington are at the heart of our biotech strategy, and that’s what’s generating a significant part of our growth.”