Shire plc (LSE: SHP,
NASDAQ: SHPGY) the global specialty biopharmaceutical company, announces
results for the year to December 31, 2009.
Financial Highlights Full Year 2009 Q4 2009
Product sales $2,694 million -2% $777 million +10%
Product sales from core products $2,067 million +25% $585 million +36%
Total revenues $3,008 million 0% $893 million +17%
Non GAAP operating income $889 million -7% $313 million +30%
US GAAP operating income $620 million +51% $268 million +39%
Non GAAP diluted earnings per ADS $3.49 -10% $1.11 +9%
US GAAP diluted earnings per ADS $2.69 +214% $0.94 +20%
These results include the effect of a change in best estimate of the
Medicaid rebate liability for ADDERALL XR, which increased fourth quarter
product sales by $98 million, and fourth quarter Non GAAP diluted earnings
per American Depositary Share ("ADS") by 32 cents. Product sales excluding
this change in best estimate would have been $2,596 million for the year to
December 31, 2009 and $679 million for the fourth quarter. Non GAAP diluted
earnings per ADS excluding this change in best estimate would have been $3.17
for the year to December 31, 2009 and 79 cents for the fourth quarter. For
further details see pages 9 to 10 and 26.
Angus Russell, Chief Executive Officer, commented:
"In this challenging and transformational year for Shire, I believe these
excellent results reflect the success of our focused strategy and business
Strong fourth quarter sales growth of 36% from our core product
portfolio, supported by our increasing international reach, has contributed
significantly to our full year Non GAAP diluted earnings per ADS of $3.49.
Our recent decision to lower our best estimate of the Medicaid sales rebates
for ADDERALL XR contributed 32 cents to these earnings, which was not
previously anticipated in our guidance framework.
Our growth prospects remain excellent and our core product portfolio
currently has robust exclusivity protection. We have launched INTUNIV
successfully in the US, we plan to launch velaglucerase alfa (VPRIV)
imminently, and there is also an opportunity for REPLAGAL to enter the US
market. We have already seen encouraging signs for the future success of
these three products. REPLAGAL has increased its share in ex-US markets and
we expect this momentum to increase.
VYVANSE, our leading ADHD treatment with a current monthly US ADHD market
share of 13.6%, continues to grow and build strong brand recognition in the
US and has recently been launched in Canada. ADDERALL XR continues to
generate value from both product sales and a considerable royalty stream.
We have also demonstrated a pro-active approach to cost management in
2009 as promised, and have the opportunity to leverage our existing
infrastructure to deliver expanding margins in the future. We enter 2010 with
a strong balance sheet and excellent cash generation. This will allow us to
continue to expand our international presence and consider potential
acquisitions and in-licensing opportunities that fit our strategy.
We look forward to growing revenues and earnings in 2010 and re-iterate
our aspirational target of mid-teen revenue growth on average between 2009
These results include the effect of a change in best estimate of the
Medicaid rebate liability for ADDERALL XR, which increased product sales by
$98 million, and Non GAAP diluted earnings per ADS by 32 cents. Revenues and
Non GAAP diluted earnings per ADS excluding this change in best estimate for
the year to December 31, 2009 would have been $2,910 million and $3.17
respectively. For further details see pages 9-10 and 26.
The Non GAAP financial measures included in the tables above are
explained on pages 27 and 28, and are reconciled to the most directly
comparable financial measures prepared in accordance with US GAAP on pages 22
to 23 and 26 (full year) and pages 24 to 26 (Q4).
- Product sales from core products were up 25% to $2,067 million (2008:
$1,653 million). On a constant exchange rate ("CER") basis, which is a
Non GAAP measure, core product sales were up 28% driven by continued
strong growth from:
- VYVANSE(R) (up 58% to $505 million, CER: up 58%);
- LIALDA(R) / MEZAVANT(R) (up 68% to $236 million, CER: up 69%);
- ELAPRASE(R) (up 16% to $353 million, CER: up 20%); and
- REPLAGAL(R) (up 10% to $194 million, CER: up 16%).
- Product sales including ADDERALL XR(R) were down 2% to $2,694 million
(CER: 0%), due to the expected decline in ADDERALL XR product sales
($627 million, down 43% on 2008) following the launch of authorized
generic versions by Teva Pharmaceuticals USA Inc. ("Teva") in April
2009 and Impax Laboratories Inc. ("Impax") in October 2009, with the
strong performance from Shire's core products (up 25%) offsetting the
decrease in ADDERALL XR product sales.
- Revenues for the year to December 31, 2009 decreased marginally to
$3,008 million (2008: $3,022 million), as the 25% increase in core
product sales and royalty income received on Teva and Impax's sales of
authorized generic ADDERALL XR offset the decline in ADDERALL XR
- Non GAAP operating income decreased by 7%, or $69 million, to $889
million as a result of the marginally lower revenues and Shire's
increased investment in research and development in 2009, which were
partially offset by lower selling, general and administrative costs
from Shire's continued focus on cost management. On a US GAAP basis,
operating income in 2009 was $620 million, compared to $412 million in
2008, an increase of 51% (2008 included in-process R&D ("IPR&D")
charges of $263 million related to the acquisitions of Jerini AG
("Jerini") and METAZYM).
- Non GAAP diluted earnings per ADS were down 10% to $3.49 (2008: $3.86).
On a US GAAP basis diluted earnings per ADS increased to $2.69 compared
to $0.86 in 2008, up 214% (earnings in 2008 were impacted by interest
charges on the Transkaryotic Therapies Inc. ("TKT") appraisal rights
settlement, IPR&D and other impairment charges, all of which reduced US
GAAP diluted earnings per ADS in 2008).
- Cash generation, which is a Non GAAP measure, in 2009 was $921 million
(2008: $1,231 million), a decrease of $310 million. Cash generation was
lower in 2009 due to lower net sales receipts following the
genericization of ADDERALL XR. Cash generation in 2008 also included
cash inflows from forward exchange contracts which were not repeated in
We enter 2010 with good momentum driven by the growth of our core product
portfolio. 2010 will also benefit from the change in best estimate for
ADDERALL XR rebates implemented in the fourth quarter of 2009 against a
background of further erosion of the brand and the impact of adverse business
In the first quarter of 2010 we expect our total revenues and Non GAAP
diluted earnings per ADS to be lower than the same period in 2009, which was
the last quarter before ADDERALL XR faced generic competition. For the
balance of the year Shire expects to generate both total revenue growth and
Non GAAP diluted earnings per ADS growth compared to 2009.
During 2010 we expect to see gross margins as a percentage of product
sales at a similar level to 2009. We will further increase our focused
investment in R&D and targeted investment will increase SG&A year on year. We
expect a Non GAAP effective tax rate in 2010 at a similar level to 2009.
We look forward to growing both total revenues and reported Non GAAP
diluted earnings per ADS in the full year 2010 compared to the excellent 2009
Non GAAP results and re-iterate our aspirational target of mid-teen revenue
growth on average between 2009 and 2015.
Subject to obtaining the relevant regulatory/governmental approvals,
product launches in 2010 will include:
- VPRIV(TM) for the treatment of Gaucher disease in the US and
- REPLAGAL for the treatment of Fabry disease in the US;
- MEZAVANT for the treatment of ulcerative colitis in certain
EU and RoW countries;
- FIRAZYR(R) for the symptomatic treatment of acute attacks of hereditary
angiodema in certain European and Latin American countries;
- EQUASYM(R) for the treatment of ADHD in certain EU
- VYVANSE for the treatment of ADHD in Canada.