In a bid to realign operations, Shire plc (SHPG) announced that it plans to relocate over 500 positions to Massachusetts from its Chesterbrook, PA site.
Shire also plans to establish Lexington, MA as its operational headquarters in the U.S.
The relocation plans are part of “One Shire” program through which the company will streamline business globally through two principal locations – Massachusetts and Switzerland – with support from a limited number of regional and national offices around the world.
Shire expects to realize approximately $25 million in annual savings beginning in 2016 by simplifying operations in these two locations. The relocation will also allow better alignment and execution of priorities between the commercial and research and development teams.
Shire plans to relocate employees in several phases beginning in the first quarter of 2015 and intends to complete the transition by the first quarter of 2016.
Meanwhile, interim Chief Financial Officer (CFO) James Bowling will be leaving by Feb 28, 2015. Subsequently, Jeff Poulton, Head of Investor Relations, will assume the role of interim CFO effective January 1, 2015 and will be based in Lexington.
We remind investors that Shire had repositioned its business in 2013, undertaking a realignment program with strategic focus on rare diseases and greater operational discipline. With an aim to reduce overlap, the company has merged its three autonomous divisions into a single one to drive growth and innovation.
With AbbVie (ABBV) terminating its acquisition offer in Oct 2014, we expect Shire to focus on its existing drugs and pipeline. We believe the company’s efforts to build a leaner organization with better focus on rare diseases should lead to improved margins.
Shire carries a Zacks Rank #3 (Hold). Investors interested in the health care sector may consider companies like Valeant Pharmaceuticals (VRX) and Sucampo Pharmaceuticals Inc (SCMP), both of which carry a Zacks Rank #1 (Strong Buy).
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