Shire Says Fourth-Quarter Sales Rose, Net Income Falls -- Update
February 11 2016 - 10:58AM
Dow Jones News
By Denise Roland
Shire PLC said sales increased 9% year-over-year to $1.72
billion in the fourth quarter of the year, largely due to strong
revenue growth for its attention-deficit-hyperactivity disorder
drug Vyvanse, though net income fell sharply due to a tough
year-earlier comparison.
Dublin-based Shire's revenue growth has outpaced the broader
industry at a time when cost-conscious U.S. payers are heaping
pressure on drugmakers to lower their prices. That is because its
treatments mostly target rare disease and have a significant impact
on patients' quality of life, according to Chief Executive Flemming
Ornskov. "I think we have the right strategy," he said. "In a
potentially tough environment, we are well positioned."
The company's franchise in hereditary angioedema--a rare disease
that causes sudden and potentially fatal swelling--is emblematic of
the company's approach. The pair of drugs, Cinryze and Firazyr,
notched growth of 23% and 22% in 2015. Shire said that growth was
largely due to volume expansion, but that price increases also
played a part.
Shire moved to expand its presence in rare diseases earlier this
year with its $32 billion acquisition of Baxalta Inc., which
specializes in treatments for hemophilia, a rare condition in which
impairs the body's ability to stem bleeding by forming blood clots.
It has said the deal will create the world's biggest maker of rare
disease drugs and that the combined company could deliver $20
billion in product sales by 2020.
Even in more common conditions, such as ADHD, Shire raised
prices to boost growth. In 2015, the company's best-selling ADHD
drug Vyvanse generated $1.7 billion in revenue, up 19% from a year
earlier. A company spokesman said around a third was due to price
increases. Dr. Ornskov said the company behaved "reasonably in
terms of price increases" and that payers rewarded companies that
bring innovative drugs to the market.
Shire's net income fell 87% to $281 million, though the
year-earlier figure of $2.2 billion was boosted by a $1.6 billion
breakup fee from AbbVie Inc. Operating income, which strips out
certain one-time items, increased 17% to $764 million, as revenue
growth eclipsed increases in research and administrative expenses.
The strong dollar cut into Shire's financial performance. At
constant currencies, fourth-quarter revenue increased 12%, while
operating profit climbed 19%.
The company said adjusted, diluted earnings per American
depositary receipt increased 10%, or 14% at constant currencies, to
$11.68 for 2015, beating earlier guidance that full-year profit
would grow in the mid to high single digits.
Shares in Shire were down 0.67% at GBP35.44 on Thursday
afternoon.
Dr. Ornskov said excluding the Baxalta acquisition, which hasn't
closed, Shire would deliver double digit revenue growth and a 7-10%
increase in adjusted, diluted earnings per ADS. He said the slight
slowdown in earnings growth was due to planned investment in
manufacturing capacity as the company prepares for a number of new
drug launches.
Shire said it would pay investors an interim dividend of 22.16
cents per ordinary share, or 66.48 cents per ADS for the six months
ended December 31. That brings the year dividend to 26.37 cents per
ordinary share, up 15% from 2014.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
February 11, 2016 10:43 ET (15:43 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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