Morningstar

Takeda Considers Swallowing Shire

The rumored deal is somewhat of a surprise, but it could make strategic sense.

Japanese pharma firm Takeda said it is officially considering making an offer for diversified rare-disease-focused

While we see Takeda's shares as fairly valued, we’ve seen Shire’s shares as significantly undervalued in recent months, so the deal could be partly motivated by Shire’s current valuation, as well as the fact that both firms have a significant presence in Cambridge, Massachusetts. We think the market’s focus on competition to Shire’s established hemophilia portfolio could give Takeda (or another suitor) the opportunity to acquire a diversified rare-disease business and rapidly growing immunology business at a good price.

Takeda has a mixed record with acquisitions, however, which is part of reason for its low returns on invested capital and very low margins, and we do not award it an economic moat. While Shire’s business faces threats in the form of novel hemophilia drugs and patent cliffs on older specialty pharma products, we think its rare-disease portfolio warrants a narrow moat rating.

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About the Author

Karen Andersen, CFA

Strategist
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Karen Andersen, CFA, is a sector director, AM Healthcare, for Morningstar*. In addition to leading the sector team, she covers biopharma firms in the US and Europe, focusing mostly on large-cap firms with foundations in biologic or gene-based medicines.

Before joining Morningstar in 2005, Andersen received a master’s degree in business administration from the Jones Graduate School of Business at Rice University, where she served as senior healthcare analyst for the M.A. Wright Fund and earned the distinction of Jones Scholar. She also holds the Chartered Financial Analyst® designation.

She ranked first in the biotechnology industry, and had the highest score overall, in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

Andersen holds a bachelor’s degree in biochemistry from Rice University, where she graduated magna cum laude. She is also a member of Phi Beta Kappa. She has scientific research experience in academia at both Rice University and the University of Queensland in Australia. She also worked in the healthcare industry, both at genetic testing firm Integrated Genetics (now part of LabCorp) and as a research assistant at Lexicon Genetics (now Lexicon Pharmaceuticals).

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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