R&A as M&A
Because acquisitions are central to Shire's productivity, its Business Development has tendrils companywide. Headed by Barbara
Deptula, the division holds regular "quick fit" meetings at which everyone from the sales reps to the scientists report on
eye-catching potential assets. "Business development is on everyone's radar all the time because we don't have the 'R' in
R&D," Deptula says. "I like to think we're lean and mean and can size up at an opportunity faster than our larger competitors."
Indeed, Shire craves momentum, whether in business or drug development. Says president of specialty pharmaceuticals Mike Cola:
"We didn't sit around waiting for a pipeline to pop out new products. In the midst of our most vulnerable period, when we
were settling one Adderall patent dispute after another, we did two huge deals worth a total of $4 billion."
Sylvie Gregoire, Shire Human Genetic Therapies
In 2005, Shire spent all its cash to buy Transkaryotic Therapies (TKT), a Boston biotech, for $1.6 billion. News of the deal
was not well received, to put it mildly. Analysts slammed Shire for overpaying for a sketchy platform of enzyme-replacement
therapies (ERT) in which the company had no expertise. Worse yet, TKT had failed to win FDA approval for either of its lead
drugs. "The week after the deal was announced, one of our shareholders was quoted by the Times of London under the glorious headline 'Major Shire Shareholder Slams Bad Deal,'" recalls Russell. Lawsuits by shareholders from both
companies kept Shire's lawyers busy for several years.
The productivity of Shire's Human Genetic Therapies (TKT's new name) has since proved the naysayers wrong. "We were very good
at taking dented and scratched products and polishing them up," says Deptula. "We saw TKT as a very promising platform, even
if other people were saying there was nothing there."
Shire's second major acquisition was driven by the imperative to expand its ADHD franchise in advance of Adderall XR's 2009
patent loss. In order to minimize the damage to its 25 percent market share, the company honed in on Vyvanse, partnering in
2005 with Virginia biotech New River to take the drug through Phase III trials and beyond. By 2007, after Vyvanse had won
conditional FDA approval, Shire struck, paying $2.3 billion to buy New River and take full control of Vyvanse (and two noncore
New River turned out to be more than a one-hit wonder. It had developed a Carrierwave technology to produce so-called bioreversible
derivatives of amphetamines and opioids, with the goal of rendering a final drug cleaner, smoother, and less vulnerable to
abuse. This is done by attaching an adjuvant to the chemical precursor of its active ingredient, which restricts metabolism
to the GI tract. "We did a lot of work to understand Carrierwave's process of metabolism, and we found things that surprised
us. It's unique," Says Mike Cola. Shire is currently giving a half-dozen compounds the Carrierwave treatment, including its
newest ADHD drug and a New River experimental painkiller.