Takeda Considers Swallowing Shire

Japanese pharma firm Takeda said it is officially considering making an offer for diversified rare-disease-focused

While we see Takeda's shares as fairly valued, we’ve seen Shire’s shares as significantly undervalued in recent months, so the deal could be partly motivated by Shire’s current valuation, as well as the fact that both firms have a significant presence in Cambridge, Massachusetts. We think the market’s focus on competition to Shire’s established hemophilia portfolio could give Takeda (or another suitor) the opportunity to acquire a diversified rare-disease business and rapidly growing immunology business at a good price.

Takeda has a mixed record with acquisitions, however, which is part of reason for its low returns on invested capital and very low margins, and we do not award it an economic moat. While Shire’s business faces threats in the form of novel hemophilia drugs and patent cliffs on older specialty pharma products, we think its rare-disease portfolio warrants a narrow moat rating.

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