London-listed Shire is to buy ViroPharma for $4.2 billion, attracted by a pipeline of potentially lucrative drugs to treat rare diseases, a growing trend as drugs companies lose revenues from patent expiries on conventional treatments.
Several fims including Sanofi were interested in ViroPharma, which makes Cinryze for the treatment of immune disorder hereditary angioedema.
Treatments for such rare disorders can command huge prices, running into hundreds of thousands of dollars a year per patient.
Shire said today it had agreed to pay $50 a share incash for US biopharmaceutical ViroPharma, a 27% premium on Friday's closing price. Shares in the group spiked nearly 30% in September on bid speculation.
Though some investors have raised concerns about the sustainability of the business model for rare disease drugs, healthcare providers have so far generally accepted the high costs, given the transforming effects of the medicines and the very small number of patients who need them.
The value of biological drugs to treat rare disease wa scrystallised in 2011 when Sanofi paid over $20 billion to buy Genzyme.
Rare diseases are already an important part of Shire's portfolio, including drugs to treat Gaucher's disease and Fabry disease, and it said buying ViroPharma would create a $2 billion a year unit, accounting for 40% of Shire's total revenue.
Shire Chief Executive Flemming Ornskov said the deal was"entirely consistent with our clear strategic objective ofstrengthening our rare disease portfolio".
Shire, whose biggest selling drug is hyperactivity blockbuster Vyvanse, has largely grown by buying up promising companies and licensing drugs rather than building its portfolio from first-stage research.
ViroPharma is forecast to have annual revenues this year of$445-465m, up from $428m in 2012. Most of its revenues this year, some $395-405m, is expected to come from Cinryze sales in the US. Shire said it hoped to grow international sales of the medicine.
