Shire finds market hard to please

Date: Thursday 09 Feb 2012

Pharmaceuticals giant Shire joined the list of big hitters disappointing the market with trading updates on Thursday as the shares turned south on the release of its full year figures.

The group said it had "another strong year" with revenues exceeding $4bn for the first time. Full year product sales were up 26% from a year earlier at $3,950m while total revenues rose 23% to $4,263bn.

Diluted earnings per American Depositary Share (ADS) jumped 26% to $5.34 while on a US generally accepted accounting principles (GAAP) basis they rose 43% to $4.53.

Focusing on the fourth quarter outcome, using US GAAP, product sales burst through the billion dollar barrier to $1,049.2m, up from $851.4m in the final quarter of 2010.

Total revenues, which includes royalties and sundry other revenues, rose to $1,142.2m from $931.2m a year earlier.

Product sales growth was experienced across the portfolio in the fourth quarter, particularly VYVANSE (up 20% to $217m), ADDERALL XR (up 40% to $125m), ELAPRASE (up 17% to $124m) and INTUNIV (up 52% to $65m), the group said. "Product sales of
DERMAGRAFT totalled $53m and represented six percentage points of our reported product sales growth in Q4 [fourth quarter] 2011," the company statement expounded.

"In ADHD [attention deficit hyperactivity disorder], sales of both VYVANSE and INTUNIV significantly outpaced the 10% growth of the US ADHD market," boasted Angus Russell, Chief Executive Officer of Shire.

Profit before tax jumped to $296.3m from $185.8 in the final quarter of the preceding year, while net income climbed to $255.3m from $165.1m in the corresponding quarter of 2010.

Fourth quarter earnings per share rose to 46.4 cents from 30.1 cents the year before, while the company has declared a final dividend for the year of 7.96p, up from 6.73p the year before, or 37.77 cents per ADS, up from 32.55 the year before.

"Supported by our strong cash generation, we will continue to invest in growth prospects that will further leverage our established infrastructure. We expect 2012 to be a year of good earnings growth, as we aim to deliver increasing value to all our stakeholders," Russell said.

The shares, which had been trading at around 2,170p prior to the midday release of the figures dipped to 2,127p shortly after noon before recovering a little to around 2,144p, down 30p on the day.

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