Novo May Benefit From Possible Shire-Baxalta Disruption

Novo Nordisk A/S, the maker of the NovoSeven hemophilia treatment, will benefit initially if Shire Plc succeeds in its $30 billion takeover bid for Baxalta Inc., according to Chief Executive Officer Lars Rebien Soerensen.

Baxalta, a one-month-old U.S. drugmaker spun off by Baxter International Inc., would allow Shire Chief Executive Officer Flemming Ornskov to diversify his company into hemophilia, an inherited blood disorder caused by low levels or absence of a protein called clotting factor that’s essential for coagulation.

Hemophilia affects about 20,000 people in the U.S. and accounts for roughly 10 percent of Novo Nordisk sales. NovoSeven is the company’s biggest hemophilia product.

A combined Shire-Baxalta “may become a large and strong company, but that’s a long-term advantage,” Soerensen said in an interview at Novo’s headquarters in Bagsvaerd, Denmark. “Short-term it will be a cost game” and “benefit my business because of disruption.”

Novo Nordisk, the world’s biggest insulin maker, has for years kept away from the acquisition strategy of Sanofi, Pfizer Inc. and other drugmakers, preferring to focus on internal research and development. That tack has paid off for Novo, the best-performing stock in the 20-member Bloomberg Europe Pharmaceutical Index over the past 10 years.

Rivals may get bigger thanks to deal-making, but that won’t stop Novo Nordisk from remaining a leader in its dominant area, which is diabetes, said Soerensen, who’s been CEO for almost 15 years. Acquisitions often are a distraction for top managers and have a negative impact on morale, reducing productivity, he added.

“It’s one of the drawbacks of all this merger and acquisition frenzy,” he said. If Shire succeeds, “there will be some people in Baxalta that are going to get fired,” and employees “are not going to be terribly happy about it.”

Novo Nordisk shares rose 1.5 percent to 388.10 kroner as of 3:41 p.m. in Copenhagen trading.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE