February 14, 2018 / 12:20 PM / 7 days ago

Shire ‍sees slowdown in earnings growth as generic rivals bite

LONDON (Reuters) - Shire, which is splitting its rare disease and hyperactivity drugs into separate units, said 2018 sales would grow in mid-single figures and profits would rise at an even slower pace.

The London-listed pharmaceuticals firm reported full-year revenue on Wednesday of $15.16 billion (10.94 billion pounds), up 33 percent, and non-GAAP diluted earnings per American Depositary Share of $15.15, up 16 percent and towards the top of its guidance.

But Shire said earnings in the current year would be between $14.90 and $15.50, which at the midpoint is around 5 percent lower than consensus.

Chief Executive Flemming Ornskov said 2017 growth was boosted by a strong performance from its immunology medicines.

But earnings growth this year would be held back by costs incurred from the start-up of a new U.S plasma manufacturing site, greater competition from generic drugs and lower royalties, he said.

Sales of its ulcerative colitis drug Lialda were hit hard - falling 28 percent to $569.4 million - after the approval of a generic rival in June 2017. Lialda alone took 2 percentage points off the company’s sales growth, Ornskov told reporters.

The company is also facing increased competition in the haemophilia franchise it built with the acquisition of Baxalta two years ago.

Roche’s Hemlibra, a new haemophilia drug that was approved in the U.S in November and was recommended for approval in Europe last month, will impact Shire’s sales, analysts have said.

Ornskov, however, said haematology continued to be a very strong franchise for Shire.

“(But) 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,” he said.

Shares in Shire trading down after the results, although they clawed back most of the losses to trade broadly flat at 1530 GMT.

The company had already reduced its medium-term growth target in January, when it said it would split into two businesses under the same parent company.

Ornskov had said performance would be improved by creating two separate units, one focusing on small molecule pills that treat conditions like attention deficit hyperactivity disorder (ADHD) and the other on complex biologics for rare diseases.

Sales of Shire’s ADHD blockbuster Vyvanse increased 7 percent to $2.16 billion, although analysts said it missed forecasts in the final quarter.

“The overall ADHD market in the U.S. has come done; it used to be double digit growth, now it is mid-single digit growth,” he said.

But he added that the group still saw good growth in the adult segment where its new long-lasting product Mydayis is focused.

Editing by James Davey and Edmund Blair

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