) first quarter 2012 earnings (excluding special items) of $1.48
per American Depositary Share (
), were 20% above the year-ago earnings. The year-over-year
increase was attributed to higher revenue in the reported quarter.
The Zacks Consensus Estimate was $1.56 per share.
Revenues increased 21% to $1.17 billion, above the Zacks
Consensus Estimate of $1.15 billion. Revenues were driven by higher
Quarter in Detail
Product sales went up 24% to $1.11 billion. Products that
performed well during the quarter include Vyvanse (up 29% to $260
million), Replagal (up 28% to $134 million), Elaprase (up 21% to
$126 million), Vpriv (up 22% to $72 million) and Intuniv (up 63% to
Firazyr sales were $20 million, up from $15 million reported in
the previous quarter. Dermagraft, which was added to Shire's
portfolio after the Advanced BioHealing Inc. acquisition, generated
revenues of $49 million in the quarter.
Adderall XR first quarter sales remained flat year over year as
an increase in prescription demand was offset by higher sales
deductions. Sales deductions of Adderall XR are expected in the
range of 60% - 65% of gross sales of the product in 2012.
Royalties decreased 24% to $56.3 million. The decrease in
royalty revenue was primarily due to a 62% fall in 3TC and Zeffix
royalties (combined $13.6 million) partially offset by an increase
in Adderall XR (up 51% to $25.3 million) and Fosrenol (up 23% to
$10.0 million) royalties.
Research & development (R&D) costs climbed 10% to $190.9
million. Selling, general & administrative (SG&A) expenses
increased 25% to $440.8 million. The higher SG&A expenses
reflected incorporation Advanced BioHealing Inc.'s costs.
For 2012, Shire is anticipating revenues in low-teens and
earnings growth. Product sales are expected to grow in the
mid-teens range in 2012. Royalty income along with other revenue is
expected to decline 15% - 25%.
Gross margins are expected to be slightly lower than 2011 due to
the Advanced BioHealing Inc. acquisition. Shire expects 2012
combined R&D and SG&A expenses (adjusted) to increase in
the range of 12% - 14% (previously guided: 10% - 12%) on a
The threat of generic competition, which several of Shire's
products are already facing or are likely to face, puts immense
pressure on the company's pipeline.
Shire is seeking to expand its pipeline through acquisitions and
collaborations. Shire's acquisition list includes Pervasis
Therapeutics (almost all the assets), FerroKin Biosciences, Inc,
Movetis and Advanced BioHealing Inc.
The Ferrokin acquisition along with the collaboration deal with
Sangamo BioSciences, Inc.
) significantly strengthens the company's hematology portfolio. We
are encouraged by Shire's efforts to develop its pipeline but
prefer to remain on the sidelines until we get more visibility on
We currently have a Neutral recommendation on Shire. The stock
carries a Zacks #3 Rank (Neutral rating) in the short run.
SANGAMO BIOSCI (
): Free Stock Analysis Report
SHIRE PLC-ADR (
): Free Stock Analysis Report
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