Shire hit by decline in full year operating income

Pharmaceuticals company Shire took a hit on Thursday after admitting that on a US GAAP basis its 2012 operating income fell 14 per cent as it revealed that sales of its Adderall XR product had dropped 19 per cent.

In an otherwise upbeat set of results, the company said sales of Adderall has fallen to $429m, primarily due to lower prescription volumes following the approval of a new generic version of the product in the second quarter of 2012. Reported product sales were also affected by the accounting for the settlement of the Impax Laboratories litigation.

Operating income, on a US GAAP (generally accepted accounting principles) basis, declined from $1,109m to $949m year-on-year, primarily resulting from charges to impair intangible assets for its Resolor product in

the EU ($198m) in 2012. The impairments were due to lower actual and projected performance for the product given the increasingly challenging European reimbursement environment, the group said.

Furthermore, a charge of $58m also negatively affected operating income, which related to the agreement in principle with the US government to resolve a previously disclosed civil investigation.

However, the group stressed its confidence in the year ahead and said it is in a strong position following what it described as a strong set of results.

Full year product sales rose 12% to $4,407m, with total revenues up 10% at $4,681m. In the fourth quarter product sales rose 5.0%, with total revenues also up 5.0% at $1,201m. Product sales fell 35% to $82m during the period.

Angus Russell, Chief Executive Officer, said: "It's been another strong year for Shire with 12% growth in product sales and 14% growth in non-GAAP earnings, which have driven particularly strong cash generation. While delivering strong financial results, we continue to invest in our emerging late stage R&D [research & development] pipeline.

"Our ADHD portfolio is performing very well in a growing global market and we see further growth going forward. The positive opinion received from the European regulators for Elvanse is a significant milestone and we're now preparing for country launches in some of the largest markets in Europe.

"Our late stage R&D pipeline now holds the prospect of future growth from LDX (the active ingredient in Vyvanse) in major depressive disorder, binge eating disorder and negative symptoms of schizophrenia. Our intrathecal programs are also progressing well as we plan the next clinical trials for Hunter CNS and Sanfilippo A and continue to enrol MLD patients into the ongoing Phase 1/2 trial. A phase 2b study of SPD602, our iron chelating product, is underway and headline results are expected later this year.

"Shire is in great shape, with the current business performing well, a promising pipeline of new growth opportunities, and the strategy in place to deliver an exciting future. As we look forward to the year ahead, we expect our financial results to show further growth in line with current consensus earnings expectations for 2013(1)."

The share price fell 3.4% to 2,072p by 13:00.

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