Newspaper article The Evening Standard (London, England)

'Siege' Report Highlights Vulnerability of Shire

Newspaper article The Evening Standard (London, England)

'Siege' Report Highlights Vulnerability of Shire

Article excerpt


PHARMACEUTICALS giant Shire was being tipped for takeover by Cityspeculators this week and today broker JPMorgan highlighted just how vulnerablethe UK's third-largest drugs maker may be to an unwanted approach.

In a report just published, entitled Shire Under Siege, JPM pointed out thegroup's share price has slumped 17% this year due to poor sales of Vyvanse, itsnew treatment for attention deficit disorder.

JPM has downgraded its forecast for sales of Vyvanse in the US from $800million ([pounds sterling]406 million) to $660 million. This still leaves its 2010 forecast 15%below the most recently published consensus.

The broker says its embedded forecast would imply a target price for the sharesof just 1060p, down from 1345p.

That would suggest some scope for improvement on the current share price of 9571 2 p, down 2 1 2 p, but not enough to alter JPM's current neutral stance.

Earlier this week, Shire was being tipped as a potential takeover target forAstraZeneca, down 62p at 1966p, or the American drugs outfit Barr Laboratories.

Meanwhile, Credit Suisse has cut its target on AZ from 2210p to 2000p in thewake of last week's results to take into account the eroding market position ofits best-selling drug in the US, Nexium.

Sales of Nexium in the US reached more than $5.5 billion last year.

"Longer term, our calculations suggest the group may see a sharp drop in growthas hard patent expiries compound the pressure likely on the Nexium franchise",says the broker. There was only one way for shares to go when trading resumedin London this morningdown in the wake of yet another selloff on Wall Street overnight.

The vote by the Bank of England's monetary policy committee for a cut of only aquarter point in interest rates to 5.25% fell short of City expectations. Butthe MPC's warning about inflation saw earlier losses extended, leaving the FTSE100 off 111.2 at 5764.2. Just before the announcement at midday the index hadbeen nursing a loss of 37. …

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