Think Small Grow Big

After Adderall, what's next for Shire? CEO Matthew Emmens thinks the answer lies in a simple strategy.
Jul 01, 2004

Late in May, Matthew Emmens took the stage with Pennsylvania Governor Edward Rendell to announce to a roomful of reporters that his company, Shire Pharmaceuticals Group was moving its US headquarters to Wayne, Pennsylvania, outside of Philadelphia. The debonair, silver-haired CEO worked the crowd with an easy smile, ticking off a long list of benefits Shire expected to gain-from the skilled workers to pizza and cheesesteaks. "For me," said Emmens, "it's coming home."

Loaded in Late Stage
On a personal level, that's certainly true. Emmens is American by birth and spent almost 30 years in the industry, including stints at Merck, Astra Merck, and Merck KGaA, before joining Shire. Although the company's official headquarters is still in Basingstoke, England, the centralization of many US operating divisions in Pennsylvania means that Emmens will be spending more time close to home. Astra Merck was once housed at the Wayne site-so Emmens is now literally back in a building where he used to work.

On a business level, though, Emmens is exploring new territory. Shire, in the past few years, has started to look more and more like a "big" pharma. Its revenues last year were just under $1.25 billion, driven mainly by the $475.5 million sales of Adderall XR (mixed combination, 4 amphetamine salts), a treatment for attention deficit/hyperactivity disorder (ADHD). But Em-mens isn't just bringing Shire across the pond-he wants to change its strategy. Instead of being a small "big" company, he plans to grow Shire big using a small-company strategy. But with the clock ticking on Adderall XR's patent, even Emmens admits, "We think we have the right strategy-but no one can see into the future."

Fast and Furious Growth
Shire Takes Its Own Medicine Shire was founded in 1986 by Harry and Caroline Stratford, a husband and wife team who developed a chewable calcium supplement called Calcichew. Annual sales hit about $3 million, but the startup never turned a profit.

In 1994, Shire hired a new CEO: Wellcome's Rolf Stahel. Finally, the company began to change course, growing from a tiny shop with 70 employees to a $1 billion global enterprise with 2,000 employees, listed on both the United Kingdom's esteemed FTSE 100 and the Nasdaq.

Stahel's favorite tool was acquisition. Shire executives are fond of noting that he completed six purchases in just six years using venture capital and a 1996 stock offering. The strategy grew revenues. But more than that, it gave Shire strategic assets:

  • Adderall, an ADHD drug that became the company's leading product
  • royalties from HIV drug 3TC and Zeffix (lamivudine), which together account for the company's second biggest source of revenue
  • marketing presence in the United States and Europe
  • Pharmavene, a US-based drug delivery outfit that is key to Shire's reformulation strategy.

ADHD Shakedown
By 2001, Shire was flying high. The company increased its revenue by 31 percent to $877.6 million. Most exciting was the FDA approval and launch of Adderall XR. Already, the drug seemed promising: In just 16 weeks, the Adderall franchise commanded 37 percent of the US market.

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