When UK specialty pharmaceutical company Shire Pharmaceuticals Group PLC announced its $4 billion all-share acquisition of Canada's BioChem Pharma Inc. in December, the markets punished it with a 16% drop in share price to £10.35. The price tag—a 40% premium to BioChem's closing price at the time—was seen as too high for a company which has been out of favor for the last few years, and whose leading drug grew slowly during the first nine months of 2000. Moreover, Shire looked like it was taking a step backwards—into the far riskier realm of early stage R&D—and paying a pretty penny for doing so.
But Shire's problem is that it is getting too big to acquire merely niche product opportunities: driving above-average growth through...
