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Baked-In Goodness: Shire Buys New River for $2.6 Billion

Shire's $2.6 billion all-cash acquisition of its Vyvanse partner New River Pharmaceuticals is no surprise. The original deal signed by the companies in 2005 engineered Shire's motivation to buy New River in the event Vyvanse became a success. New River's unusually consolidated ownership allowed it to remain independent until the eve of Vyvanse's approval and secure a top-drawer takeout valuation.

Shire PLC’s $2.6 billion all-cash acquisition of its lisdexamfetamine dimesylate (Vyvanse) partner New River Pharmaceuticals Inc. isn’t exactly a surprise, even if the timing of the late February deal—only a few days prior to the approval of the companies’ potential blockbuster once-a-day ADHD therapy—was somewhat unexpected. [See Deal] What’s more, the deal’s valuation is another reminder of biotechs’ growing leverage over their pharmaceutical partners. Many will continue to extract top dollar from specialty and Big pharmaceutical acquirers.

That unorthodox deal timing was, according to Shire management, a reflection of its comfort level with Vyvanse’s prospects and anticipated approval and labeling (garnered through months of FDA interaction before...

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