Industry Trend Analysis - Neuroscience Divestment Remains A Distinct Possibility For Shire - MAR 2018


BMI View: Whilst Shire has decided to keep its neuroscience business for now, a future sale or spin-off of this newly created division i s a distinct possibility. The company will maintain its dominance in the ADHD drugs market, and with Shire to consider bolt-on opportunities to expand the portfolio, neuroscience sales will continue to rise.

In August 2017, Shire announced that it was conducting a strategic review of its neuroscience business. Following the first stage of this review, and some speculation over the future of Shire's neuroscience franchise, with potential for its independent public listing, the Board has concluded that the neuroscience business warrants additional focus and investment and that there is a strong business rationale for creating two distinct business divisions within Shire: a Rare Disease Division and a Neuroscience Division. According to Shire, each division will benefit from sharper management focus, greater strategic clarity, and an increased ability to deploy resources to key growth priorities. The Board believes this will be an important first step in enabling both divisions to maximise mid- to long-term product sales, cash generation, and innovation.

Shire expects to report the operational performance metrics of each division separately beginning with Q118. The second stage of the review will include continuing to evaluate all strategic alternatives, including the merits of an independent listing for each of the two divisions. The company will give an update on the second stage of the review in H218.

News Causes Investor Concern
Relative Share Price Performance Of Shire vs The FTSE 100
Source: Bloomberg, BMI

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