Shire CEO says company nearing decision on move from Chesterbrook

Shire P.L.C. has grown from about 100 local workers to around 1,100 since it moved to Wayne in 2004.
Shire P.L.C. has grown from about 100 local workers to around 1,100 since it moved to Wayne in 2004. (TOM GRALISH / Inquirer)
Posted: August 15, 2012

Shire P.L.C., which has grown from 100 local employees to about 1,100 since the specialty pharmaceutical company landed in Wayne in 2004, is nearing a decision on a likely move of its North American headquarters from Wayne to another spot in the region.

Shire chief executive officer Angus Russell said during a recent wide-ranging interview that the company needed a campus-like setting to handle its current workforce and future growth. Although he said he had met with Mayor Nutter on a variety of topics, including the move, Russell would not identify possible relocation sites, in the city or elsewhere.

Russell also said that Shire had cooperated with investigations of drug shortages and off-label marketing, that he agreed with critics who say illegal behavior by some drug companies will not change until top executives go to prison, and that his company can compete in the new health-care environment by offering distinctive medicine.

"We can't keep on this path of paying more and more for health care," Russell said. Sooner or later, consumers will have to pay a bigger part of the tab, he said. "When they do, the consumer will be more active, and that will drive competition in a healthy way. I think Shire recognizes that and we have a portfolio that plays to that."

Shire was started in 1986 in Basingstoke, southwest of London. In 2008, the company moved its corporate registration to Jersey, an English Channel island and British crown dependency, and put its headquarters in Dublin, Ireland. Both moves were for tax purposes. The company has about 5,000 employees in 29 countries.

Shire this month reported a second-quarter profit of $238.7 million, up from $205.5 million a year earlier, on revenue of $1.2 billion.

Russell, 56, was Shire's chief financial officer for nine years before becoming CEO in 2008. He has grown children in the United Kingdom from his first marriage, his fiancée lives in Montreal, and he officially lives in Florida for tax purposes. But he has an apartment here because he works mostly in this area when he is not traveling.

Asked about the $3.45 million Shire received from the State of Pennsylvania to set up in Wayne in 2004, Russell quickly says the company more than met the requirement that the company add 400 full-time employees.

Leases on Shire's four buildings in the Chesterbrook Business Center expire from the end of 2015 and through 2017. That leaves time, except that Shire wants to lease much more than the 450,000 square feet it has filled now. It wants a campus, with integration of offices and room to add more if it continues to grow.

"I don't want to move campuses every five to seven years," Russell said. "But I also don't want to have a bunch of empty buildings."

Endo Health Solutions Inc. received state money as part of its move from Chadds Ford, Delaware County, to the Atwater Corporate Center in Malvern, in Chester County. Atwater has room, along with a new taxpayer-funded exit ramp off the Pennsylvania Turnpike.

Philadelphia Deputy Mayor Alan Greenberger said Friday that the city suggested several sites, but that financial inducements did not come up because Shire was thinking on a "higher plane" about its real estate needs. "It wasn't so much us peddling as saying here are some possibilities and letting them test their premises of what they might want to do," Greenberger said.

Drugmaker GlaxoSmithKline P.L.C. has a building under construction at the Philadelphia Navy Yard that still has room.

"I know that," Russell said. "I know all the various sites in the area."

Russell worked for Zeneca and then AstraZeneca, which moved from Chesterbrook to Wilmington. He said North Jersey, which hosts several large health-care companies, was not a current possibility for Shire.

"My bias would be to stay in the Greater Philadelphia area," Russell said, without sharing a preference for Pennsylvania, New Jersey or Delaware.

According to a Securities and Exchange Commission filing, in 2009, Shire received a subpoena for documents from the U.S. Attorney's Office in Philadelphia and the Health and Human Services Office of Inspector General in an investigation of marketing practices of drugs, including Shire's top sellers Vyvanse, Adderall XR, Daytrana. The first two are approved for ADHD.

In 2012, the Federal Trade Commission and senators sought information about the recent drug-supply shortages, including with ADHD medicines.

Other federal prosecutors are looking at marketing practices for Dermagraft, a treatment for diabetic foot ulcers produced by Advanced BioHealing, which was acquired by Shire in 2011 and renamed Shire Regenerative Medicine in July.

Russell said that he told employees to give investigators all they ask for and that Shire had "complied entirely" with those requests. "I don't believe the government has any criticism of what we've shown them," Russell said, without predicting an outcome.

But a general complaint about the drug industry is that sometimes billion-dollar fines for illegal marketing are considered a cost of doing business and conduct will not change until top executives go to prison for harming patients or defrauding Medicare and Medicaid.

"I would agree absolutely," Russell said. "I've been in this industry for 33 years, and I don't like what I'm seeing in this industry. It upsets me. I can't sit here and say that and not be judged accordingly."


Contact staff writer David Sell at dsell@ phillynews.com or 215-854-4506. Read his blog at www.philly.com/phillypharma and on Twitter @phillypharma.

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