Pharmaceuticals giant Shire takes £395m hit with Dermagraft sale

By DAILY MAIL CITY & FINANCE

Updated: 04:40 EDT, 18 January 2014

Shire has been forced to offload a loss-making foot ulcer treatment division after failing to turn the firm around.

The British pharmaceuticals giant paid £456million for Dermagraft in 2011, but will write off £395million on the value of the struggling division.

Shire will not receive any initial payment when giving the division to US rival Organogenesis, but could get up to £182million if sales rise significantly in the next five years.

Cure for pain: Shire will not receive any initial payment when giving Dermagraft to US rival Organogenesis

The business makes ‘living skin substitute’ that can help skin to re-grow on foot ulcers for those with diabetes. When Shire bought the company it was confident sales would grow.

But it has been hammered by a change in US healthcare rules, which have seen the amount paid out by the US government to people receiving the treatment slashed.

‘This has not been the company’s finest hour,’ said Panmure Gordon analyst Savvas Neophytou. But Shire shares rose 34 to 3019p after investors cheered the loss of the laggard division.

Dermagraft was founded by artificial hip maker Smith & Nephew, which sold the business in 2006 for £30million.