CEO calls being in Mass. crucial for Shire to innovate

“It’s all about innovation,” said CEO Flemming Ornskov. “There are 7,000 to 8,000 diseases you can characterize as rare, and only a few of them are being worked on now.”


“It’s all about innovation,” said CEO Flemming Ornskov. “There are 7,000 to 8,000 diseases you can characterize as rare, and only a few of them are being worked on now.”

LEXINGTON — Danish doctor-turned-businessman Flemming Ornskov’s first decision after taking over as chief executive of Shire PLC April 30 was to move himself to Massachusetts, about 3,000 miles and an ocean away from the Irish drug company’s headquarters.

Ornskov, 55, brought a message for the Boston area’s biotechnology entrepreneurs.


“My door is wide open,” he said during a recent interview at the campus of Shire’s rare diseases division off of Route 128. He cited Shire’s venture capital fund of $50 million for investing in early-stage companies.

“We’re absolutely open to collaborating, talking to start-up companies, being part of the local community,” Ornskov said. “If we find something we like, we have no problem acquiring it.”

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Shire is one of more than a dozen global biopharmaceutical giants — many of the from Europe —that have set up shop in the region, hoping to sprinkle stardust from the area’s famed research and development laboratories on their own drug-discovery efforts.

By taking up residence here, Ornskov aims to use a more hands-on approach than his competitors while establishing the Lexington campus, which has 1,400 employees, more than a quarter of Shire’s global workforce, as the $18 billion company’s research heart.

“When I got the job, I said to the board that as Shire develops and grows I’d like to sit in Lexington,” Ornskov recounted. “Because the Boston area is a fantastic environment for the science that is incredibly important to the future of this industry. In addition to being the CEO, I find I’m the chief innovation driver, and this is where I want to be driving it from.”


In his first months at the helm, Ornskov, recruited from Germany’s Bayer AG, is pursuing an inside-outside strategy. Internally, he quickly put his imprint on Shire by revamping its worldwide operations, forming five divisions organized around categories (rare diseases, neuroscience, gastrointestinal, regenerative medicine, and internal medicine) and a single research and development unit.

Just as important, Ornskov has been trying to raise the company’s profile in the Boston area, where it gained a foothold in 2005 by spending $1.6 billion to buy Cambridge-based Transkaryotic Therapies Inc.

Shire, which competes with Genzyme Corp. in Cambridge in treating enzyme deficiencies such as Gaucher and Fabry diseases, purchased its four-building Lexington campus — once the headquarters of Raytheon Co. — for $165 million in 2010. It has since spent $500 million on new construction and renovation.

Ornskov has wasted no time in huddling with the region’s biotechnology leaders, from Vertex Pharmaceuticals Inc. chief executive Jeffrey Leiden to Massachusetts Institute of Technology professor Robert Langer.

“I feel like a young kid in a toy store,” Ornskov said. “I can pop down to MIT. I just met with someone from the Massachusetts Eye and Ear.”

Even as he pushes to boost Shire’s sales — first-quarter revenue of $1.1 billion was down 1 percent from last year — the company is seeking to dampen speculation it may be a takeover target. Bristol-Myers Squibb Co., of New York, and London-based AstraZeneca PLC have been named by analysts as potential acquirers.

“We don’t comment on rumors,” a Shire representative said in a statement last week. “We’re focused on achieving our goal of growing our business through innovation.”

‘In addition to being the CEO, I find I’m the chief innovation driver, and this is where I want to be driving it from.’

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Shire’s best-selling drug is Vyvanse, which treats attention deficit hyperactivity disorder. Last year, it generated sales of about $1 billion. But the company’s best-known treatment is probably Adderall, an earlier ADHD treatment whose sales fell to $430 million last year.

The rare diseases division’s products include Vpriv, for Gaucher disease, and Replagal, a treatment for Fabry disease.

Even as it pursues research alliances with local institutions, including MIT and Boston Children’s Hospital, Shire is testing more than a dozen experimental drugs in fields ranging from dry-eye diseases to gastrointestinal disorders . That “underappreciated pipeline” of drug candidates could increase its revenue and profits, said specialty pharmaceutical analyst Jason Gerberry, director at the Boston health care investment bank Leerink Swann.

Gerberry, who wrote in a research report last month that Shire was “a feasible [acquisition] target,” said the company has underperformed, compared with peer specialty pharmaceutical companies such as Allergan Inc., Valeant Pharmaceuticals International Inc., and Forest Laboratories Inc.

“Until they can get some new products into the mix, Shire is going to have some up and down quarters,” Gerberry said.

“A lot of the legacy products Flemming inherited have disappointed investor expectations. But most investors know that they’re focused on the pipeline and where the business could go.”

Ornskov said he is confident Shire’s proprietary science and its research and development prowess will help to differentiate its products from competitors over the long term.

“It’s all about innovation,” he said. “There are 7,000 to 8,000 diseases you can characterize as rare, and only a few of them are being worked on now. I want Shire to be involved in as many disease programs as we can afford.

“What’s our secret sauce? We are very patient-focused, and everybody loves to work with a company that is focused on patients.”

Robert Weisman can be reached at Follow him on Twitter @GlobeRobW.
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