Shire's fourth-quarter sales rise 8 percent, guides for slower growth in 2018

Shire said Wednesday that fourth-quarter product sales rose 8 percent year-over-year to $3.9 billion, below analyst estimates of about $4 billion, as overall revenue lifted 9 percent to $4.1 billion. Net income in the three-month period reached $3.1 billion, versus $457.3 million in the same quarter of 2016, boosted by a $2.5-billion credit linked to recent changes to US tax legislation.

In the quarter, Shire recorded $837.7 million in revenue for its haemophilia portfolio, versus $811 million in the year-ago period, with sales of the ADHD treatment Vyvanse growing from $474.4 million in the fourth quarter of 2016 to $540.8 million. CEO Flemming Ornskov commented "the overall ADHD market in the US has come down; it used to be double digit growth, now it is mid-single digit growth." The executive remarked "of particular note are the strong performance of our immunology franchise and the significant contribution from recently launched products, as well as growth in international markets."

For 2017, product sales jumped 33 percent to $14.4 billion, with overall revenue up by the same percentage to $15.2 billion, ahead of analyst estimates of around $15 billion. Shire noted that the increase was fuelled by the inclusion of about $7 billion in revenue from Baxalta, which it acquired in 2016. The company indicated that excluding Baxalta, product sales for 2017 rose by 7 percent year-over-year.

However, the company reported that full-year sales of Lialda/Mezavant plunged 28 percent versus 2016 to $569.4 million, hit by the FDA approval in June of a generic version from Zydus Cadila. Ornskov suggested that the impact on the ulcerative colitis therapy took 2 percentage points off the company's sales growth. Shire added that annual net income reached $4.3 billion, versus $327.4 million in 2016.  

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Ornskov said "2018  is a year  of continued  focus  on  commercial  execution  and  targeted  investment  in our  manufacturing  infrastructure,  new  product  launches,  and  pipeline  to drive  future  growth." The executive added "we expect to deliver mid-single digit product sales growth in 2018 after absorbing the anticipated impact of generics." Although analysts have suggested that Shire's haemophilia franchise will come under pressure following the recent US approval of Roche's Hemlibra, Ornskov said that the business continued to be very strong. "It's quite clear in some segments of that franchise we will see increased competition, initially in the inhibitor part of the market and second in the haemophilia A mainstream market," Ornskov explained.

For the full year, product sales are expected to be in the range of $14.9 billion to $15.3 billion, with earnings per share between $14.90 and $15.50. Ornskov noted that earnings growth would be hampered by costs incurred from the start-up of a new US plasma manufacturing site, greater competition from generic drugs and lower royalties. Additionally, Shire backed its mid-term revenue forecast of 2020 revenue in the range of $17 billion to $18 billion.  

Last month, Shire announced its intention to operate as two separate divisions, specifically, neurosciences and rare diseases. The decision was made following the first stage of a strategic review initiated in August 2017.

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