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Shire takeover may take months to finish

Drugs were packed at a Takeda pharmaceutical company facility in Oranienburg, Germany.BERND SETTNIK/European Pressphoto Agency/File 2014

For Shire PLC’s more than 3,000 employees in Massachusetts, now comes the waiting.

The Irish-based drug maker, whose products include Adderall for ADHD and medicines for rare diseases, may take up to two weeks to officially approve the takeover offer from Takeda Pharmaceutical Co. of Japan that is currently valued at around $64 billion. And if, as expected, the company approves it, it will likely take months more for the two to combine operations and for local Shire employees, based mostly in Lexington and Cambridge, to learn if they will keep their jobs.

But analysts and business professors predict the takeover will almost certainly result in layoffs of several hundred Shire employees over the next couple of years — mostly among administrative employees whose duties could be filled by workers for Osaka-based Takeda.


The new company “will try to calm nerves by saying it’s business as usual, but eventually, yeah, there will be employees that need to be reassigned to other roles, and there will be employees who can’t be matched to existing roles and will probably be let go,” said Jason Schloetzer, a professor at Georgetown University’s business school.

After multiple attempts, Takeda on Tuesday sweetened its offer for Shire. Directors of Shire, which is based in Dublin but run out of the Lexington campus, said they would recommend by May 8 that shareholders accept the deal. Shire has declined to comment further.

The stock prices of both companies fell Wednesday after the tentative deal was announced, Shire about 3.4 percent, and Takeda around 6 percent.

It would be by far the biggest-ever biotech deal in state history — about three times the size of Sanofi SA’s purchase of Genzyme in 2011 for $20.1 billion — and one of the largest corporate takeovers of any kind in Massachusetts. The combined firm would be the eighth-biggest drug maker in the world.


The two companies right now have more than 50,000 employees between them worldwide. Schloetzer said he wouldn’t be surprised if 10 percent of Shires’s 3,000 Massachusetts workers are laid off within 24 months of a deal closing.

He expects employees in research and development to be spared because Takeda is buying Shire for its pipeline, which focuses mostly on drugs for rare diseases.

Takeda has previously acquired two other Massachusetts biotechs, Ariad Pharmaceuticals in 2017 for $5.2 billion and Millennium Pharmaceuticals Inc. in 2008 for $8.8 billion.

Deborah Dunsire was chief executive of Millennium at the time and said that Takeda’s then-president Yasuchika Hasegawa gave her a mandate: keep everyone. Millennium, which was based in Cambridge, has since been renamed Takeda Oncology.

But Dunsire, who became head of global oncology for Takeda, said that by the time she left five years later, Takeda had begun to consolidate and shed workers in Cambridge. And because Millennium had a much smaller workforce than Shire does in Massachusetts — about 1,200 employees when Takeda bought it — Shire probably has more positions that will be considered superfluous, she said.

She was surprised Takeda pursued Shire so assiduously because the Japanese company hadn’t shown much interest in medicines for rare diseases. In the United States, the federal government gives drug makers financial incentives to develop medicines for disorders that afflict 200,000 or fewer patients.

On the other hand, she said Takeda is determined to increase its global footprint. So expanding in the Boston area, the nation’s leading biotechnology hub, makes sense.


“If there’s one thing I can say about Takeda, it has always had a vision, and it pursues that vision relentlessly,’’ said Dunsire, who now serves on the boards of Ultragenyx Pharmaceutical and Alexion Pharmaceuticals Inc. “The Japanese companies take a very long-term view.”

The acquisition of Cambridge-based Ariad, which has a blood cancer drug on the market, brought Takeda’s head count in Massachusetts to about 2,000 employees, according to the Massachusetts Biotechnology Council.

Japanese drug makers have pursued growth abroad as sales slow at home. Their drug pipelines are running dry, and their portfolios of patent-protected medicines shrinking. In addition, the Japanese government is increasingly pressuring drug companies to limit or cut prices of blockbuster medicines.

Shire has faced pressures of its own. The company was saddled with debt from its $32 billion acquisition of Baxalta in 2016, a widely criticized deal, while generic drug makers have stepped up competition. Earlier this month it announced a sale of its oncology business to French drug maker Servier for $2.4 billion.

Schloetzer, the Georgetown business professor, said he expects that Shire’s chief executive, Flemming Ornskov, would probably stay for a year or two after the takeover. Ornskov, a Danish doctor-turned-businessman who took over in 2013, has institutional knowledge that would be valuable to Takeda. But after that, Schloetzer said, he would likely go.

“There would be some employees beholden to him, and you don’t necessarily want there to be two distinct cultures — the old culture and the new culture,” Schloetzer said.


No one has said, if the deal goes through, what the new company would be called. But Dunsire was confident that Takeda, which was founded in 1781, will still be prominently featured in the name.

“This is a very proud Japanese company,” she said. “It’s an institution in Japan.”

Jonathan Saltzman can be reached at jsaltzman@globe.com