February 16, 2017 / 12:27 PM / a year ago

Pharma group Shire produces top-of-the-range earnings

LONDON (Reuters) - Pharmaceuticals group Shire (SHP.L) on Thursday said it was extremely optimistic about long-term growth after reporting a 12 percent rise in earnings for the past year in which it made its largest ever acquisition.

Chief Executive Flemming Ornskov said Shire had delivered record product sales and earnings in a year when it bought haemophilia drugs company Baxalta for $32 billion (£26 billion) and launched a new medicine for dry eye disease.

He said sales in two of its biggest franchises - rare diseases and hyperactivity - rose by 14 percent in 2016, and he was confident the company would generate strong top and bottom line growth in 2017.

Total product sales would rise to $14.5-14.8 billion this year, up from $10.9 billion, Shire said, and earnings per share would rise to $14.60-$15.20.

The London-listed company posted non-GAAP diluted earnings per share of $13.10, right at the top of its guidance, on revenue up 78 percent to $11.4 billion.

Its shares, which have drifted 15 percent down from 12-month highs in September on worries about drugs pricing pressure, rose as much as 6 percent on Friday, in response to the company’s positive outlook.

They were trading up 5.6 percent at 48.44 pounds at 1434 GMT on Thursday, topping the FTSE 100 index .FTSE.

Analysts at Liberum, who have a “buy” rating on Shire, said its guidance would be taken well, and a recent under performance of the shares should reverse.

    The company produced a stronger result in haematology in the final quarter after sales disappointed in the third, which the company said was down to the timing of orders.

    Ornskov said he was “very optimistic” about the haematology franchise, although he said it “may take a little bit of time” to accelerate growth to the level he wanted.

    Pharmaceutical shares have been hit by political pressure on drugs pricing, highlighted by U.S. President Donald Trump’s comment last month the pharmaceutical industry had been “getting away with murder.”

    Ornskov said Shire was used to demonstrating the clear value of its drugs in terms of the impact they brought to patients.

    “Do we have to continue to highly justify our prices to outcomes? Yes,” he said. “But I feel very good about the products we have in our portfolio and our pipeline that we will be able to continue to do that.”

    Editing by David Goodman and Jane Merriman

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