Shire's Ornskov plans to beat Baxalta cost synergy targets

Shire chief executive Flemming Ornskov has revealed that the drug developer's internal plans for the merger with Baxalta are much more positive than it set out publicly.

Speaking at JP Morgan's healthcare conference in San Francisco, Ornskov stated that Shire’s “internal synergy goals are much higher” than the $500m target set out in the merger announcement earlier this week.

Analysts at Shore Capital noted that the $500m target is $100m lower than analysts’ estimates and "there has been scepticism as to whether that figure can be achieved".

Analyst scepticism has been fired by comments from Baxalta last year when the US company rebuffed the FTSE 100 company's initial approaches, citing minimal overlap between the companies.

Baxter's CEO Ludqig Hantson said in August that: "we do not believe that a combination of our two companies would be strategically complementary, or that our respective product portfolios would benefit from such a combination".

Despite various concerns around the deal, including the potential for competition to Baxalta’s haematology pipeline, Ornskov continued to view the deal as a “growth play” rather than an opportunity to cut costs and lower taxes.