Shire splits in two, holds back from ADHD division spin-off

Shire is going to split itself into two, with one arm focused on rare diseases and the other on neuroscience, with separate reporting to begin from the first quarter of 2018 and a decision on a possible spin-off later this year.

Announcing the changes at a healthcare conference in New York, chief executive Flemming Ornskov said the neuroscience unit, which makes drugs to control attention deficit hyperactivity disorder (ADHD), was not ready for a spin-out of the right now, with the split setting the foundation for the next stage.

Analysts have calculated that a spun-out ADHD division could be worth as much as $8.5bn.

Ornskov also said he expected total revenues would reach $17-18bn by 2020, down from the target of $20bn given when looking to acquire Baxalta in 2016, though the company's late-stage pipeline is still bulging with fifteen programs currently in the final clinical phase.

A new target was announced for a ratio of net debt to EBITDA to fall below 2.5x by the end of 2018, excluding the effect of any bolt-on acquisitions or licensing transactions.

Ornskov said the split of the group into two divisions would allow both parts to benefit from "sharper management focus, greater strategic clarity, and an increased ability to deploy resources to key growth priorities" and that it "will be an important first step in enabling both divisions to maximize mid- to long-term product sales, cash generation, and innovation".

Ornskov added: "Shire has undergone a significant transformation over the last five years creating two market-leading businesses with distinct profiles and future needs.

"Simultaneously, Shire has established a strong track record of growth and execution. Our new rare disease and neuroscience divisions will be well positioned for growth, profitability, innovation, and serving the needs of patients."