Shire's new products reach $1 billion after solid 2008
This article was originally published in Scrip
Shire continued its strong 2008 performance through to the end of the year, posting a sales increase of 27% to $2.75 billion. Fourth-quarter revenue increased by 6% to $766 million but missed JP Morgan analyst expectations by 5%.
The company's new products drove sales, reaching the $1 billion mark and accounting for 36% of total annual product sales, compared with just 6% in 2006.
Sales of Shire's lead product Adderall XR fell by 1% to $275 million as the product's share of the US attention deficit hyperactivity disorder (ADHD) market fell from 25.5% in 2007 to 22.6%.
The company expects a significant decline of Adderall XR sales in 2009 due to the imminent introduction of a generic version by Barr Pharmaceuticals. The two companies are currently locked in a patent dispute. Depending on the outcome, Barr will either launch its own generic version, or Shire will supply the product to Barr for it to repackage and sell as a generic.
Shire is less reliant on Adderall XR now than it was in 2006 when the product accounted for 56% of the company's total product sales. Adderall XR now accounts for around 40% of sales.
Vyvanse (lisdexamfetamine dimesilate) had sales of $103.2 million in the quarter, up by 57% compared with the fourth quarter of 2007. The product now has around an 8% share of the US ADHD market.
JP Morgan analysts said Shire was starting to control costs and that Vyvanse sales did not affect the margin. They believe that Shire should be given more credit for potential long-term SG&A margin improvement.
Shire's R&D costs declined by 36% to $132.2 million in the fourth quarter, while SG&A expenses grew by 2% to $339.2 million.
focus on non GAAP
Shire's CEO, Angus Russell, was critical of companies focusing on US GAAP figures and not on basic bottom-line figures. Referring to himself as "an old fashioned guy" in terms of financial reporting, he was keen to stress Shire's non GAAP earnings per share of $3.86 in 2008 and relatively strong cash position of $218 million at the end of last year.
Numerous companies are now in financial trouble because they ignored their debt-laden cash positions to focus on US GAAP earnings, he added.
The company reiterated its 2009 non GAAP diluted EPS guidance of $3.00-3.40.
Shire's Fourth-quarter and Full-year Top Product Sales 2008 ($ mill)
Product | Fourth quarter | % change | Full year | % change |
Adderall XR | 275 | -1 | 1,102 | +7 |
Vyvanse | 103 | +57 | 319 | +317 |
Elaprase | 75 | +30 | 305 | +68 |
Pentasa | 47 | -3 | 186 | +5 |
Replagal | 44 | +14 | 176 | +22 |
Lialda/ Mezavant | 41 | +39 | 140 | +178 |
Fosrenol | 34 | +29 | 155 | +52 |
Carbatrol | 20 | +4 | 76 | +5 |
Xagrid | 20 | +9 | 79 | +18 |
Daytrana | 18 | -23 | 79 | +23 |
Shire admitted that it was looking for deals to leverage its expertise. However, the company will only consider acquiring products in Phase IIa or later-stage development, Mr Russell said.
The company was guarded about emerging markets, following GlaxoSmithKline's recent decision to cut the prices of its medicines in 50 least developed countries. The BRIC markets are flooded with generics and so the environment had changed from when big pharma established itself in western countries, Mr Russell claimed.