Shire plc (SHPG): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Shire reported first quarter 2014 earnings of $2.36 per ADS, beating the Zacks Consensus Estimate of $2.22. Quarterly revenues increased 18% to $1.3 billion, in line with the Zacks Consensus Estimate. The acquisition of ViroPharma is expected to boost the bottom line by 7% in 2014. AbbVie recently proposed to acquire Shire for 20.44 in cash and 0.7988 AbbVie shares per Shire share. The proposal was initially made on May 30, 2014. However, Shire reiterated that its board has already considered the proposal in detail and unanimously rejected it as it believes that the proposal fundamentally undervalues Shire and its prospects. With the proposed acquisition, the stock has been holding up steady in the last few days. However, we do not see further upside potential at the current levels and downgrade our recommendation to Neutral.

Overview:

Founded in 1986, Dublin-based Shire is a specialty biopharmaceutical company catering to diverse medical needs through research and development, manufacture, sale, and distribution of pharmaceutical products.

Shire repositioned its business in 2013 undertaking a realignment program with strategic focus on rare diseases and greater operational discipline. With an aim to reduce overlap, Shire has merged its three autonomous divisions into one. Shire re-aligned its business structure to drive growth and innovation. As per the strategy, Shire has an "In-Line" marketed product group and a Pipeline Group, with centralized corporate functions. The In-Line marketed products group consist of five business lines, which will focus on commercial delivery Rare Diseases, Neuroscience (formerly Behavioral Health), Gastrointestinal (GI), Regenerative Medicine (RM) and Internal Medicine (with a focus on Adderall XR, Fosrenol and Xagrid) . The Pipeline Group consists of Research & Development (R&D) and Business Development (BD). The unit focused on late-stage development programs with pre-clinical development focus being primarily on rare diseases, led by a single R&D organization. The BD unit will focus on identifying later-stage development programs and in-market products in target specialist areas. Further, Shire will expand its footprint in Asia and Latin America with a key focus on Japan, China and Brazil.

For 2013, the company reported revenues of $4.9 billion, up 9% year over year. Product sales of $4.7 billion were up 12% from 2012. Shire also receives royalty revenues which mainly comprise income earned from the sale of the authorized generic version of Adderall XR, 3TC, Zeffix, Fosrenol, and others. Income from royalties came in at $153.7 million, down 36% from 2012.

Key Drugs

Indication

Sales in 2013 (in millions of dollars)

Vyvanse

Attention deficit and hyperactivity disorder (ADHD)

$1,227.8

Intuniv

ADHD

$334.9

Lialda

Ulcerative Colitis

$528.9

Pentasa

Ulcerative Colitis

$280.6

Fosrenol

Hyperphosphatemia in end stage renal disease

$183.4

Replagal

Fabry disease

$467.9

Elaprase

Hunter syndrome

$545.6

Vpriv

Gaucher disease

$342.7

Firazyr

hereditary angioedema or HAE

$234.8

Adderall XR

ADHD

$375.4

Xagrid

Essential thrombocythemia

$99.4


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: RM , ADHD , SHPG

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