Rare disease drug specialist Shire ($SHPG) has been on a buying streak lately, culminating with its $32 billion deal for Baxalta ($BXLT). Now the company says it is time to build something.
The Dublin-based company intends to invest $400 million to erect a biologics plant in Ireland, its first manufacturing facility in its adopted home country. Shire’s only other manufacturing is in the U.S.
Construction is expected to begin this summer in Piercetown, about 20 kilometers from Dublin, according to an announcement from the Ireland Development Agency. The company says it will add 400 jobs when the project is completed in 2019.
“Increasing our biologics manufacturing capability is fundamental to achieving our ambition of becoming the world’s leading Biotechnology Company focused on rare diseases and other speciality conditions,” Shire CEO Flemming Ornskov said in a statement.
Ornskov pointed out that Ireland is strategically important to the drugmaker, which is putting it mildly. Shire moved its corporate domicile to Ireland in 2008 to avoid higher taxes in England, where it was based at the time. Its low tax base was one of the benefits it pointed to when it was enticing Baxalta to the negotiating table.
When the tax-cutting merger between Pfizer ($PFE) and Allergan ($AGN) was cut off recently because of U.S. tax rule changes, some raised questions about whether Shire’s deal for Baxalta would also be soured. A deal between Shire and AbbVie ($ABBV) had been derailed by earlier tweaks to the tax code that made inversions less beneficial. Yet, Ornskov has insisted the deal with Baxalta is still a go.
Shire says it needs the new plant to meet growing demand for its products. It saw good growth last year, underpinned by its ADHD and binge eating treatment Vyvanse, as well as strong sales from hereditary angioedema products, Cinryze and Firazyr. With Baxalta, Shire gets products for treating hemophilia. Some analysts are unsure why Shire is so hot for Baxalta, given the competitive hemophilia market where new drugs could decimate the business going forward, but Ornskov has assured investors it is worth the money.
by Eric Palmer | Apr 15, 2016