2nd Aug 2016 12:13
LONDON (Alliance News) - Shares in Irish pharmaceuticals company Shire PLC rose Tuesday after it upgraded its earnings guidance for 2016 following the completion of its acquisition of the US's Baxalta Inc in early June, as well as its expectations on cost synergies from the deal, while reporting a rise in revenue for the first half of the year.
The stock was up 2.8% at 5,060.41 pence Tuesday after the midday announcement.
Shire now expects to achieve operating cost synergies from the Baxalta deal of at least USD700 million in its third year following the closing of the acquisition, up 40% from its previous expectations.
For the first half of 2016, Shire reported pretax profit of USD508.3 million, down from USD591.2 million the year before, as integration and acquisition costs of GBP454.1 million offset a rise in revenue to USD4.14 billion from USD3.05 billion.
Within this, product sales rose to USD3.95 billion from USD2.90 billion, including a nearly 60% jump in product sales in the second quarter.
The company said revenue growth was bolstered by a rise in sales of its Shire legacy products in the second quarter, as well as a 12% rise in legacy Baxalta product sales. Baxalta legacy product sales contributed USD559 million in the second quarter.
Shire said that, excluding Baxalta, product sales were up 19%, bolstered by strong performances from core attention deficit hyperactivity disorder and binge eating disorder treatment Vyvanse, which was helped by growth in prescriptions demand in the US, price increases since the second quarter of 2015, and also some growth in international markets.
In its Genetic Diseases segment, product sales were up 16% in the second quarter, helped by strong performances from its hereditary angiodema therapies Cinryze and Firazyr, and in Internal Medicine, product sales rose 19%, boosted by continued growth in Shire's gastro-intestinal products.
Shire set out its new guidance for 2016 following the acquisition and the strong half-year performance, now expecting total product sales on a non-generally accepted accounting principles basis of USD10 billion to USD11 billion, and non GAAP diluted earnings per American depositary share of between USD12.70 to USD13.10.
The combined research and development, and selling general and administrative costs are expected to be between USD4.1 billion and USD4.4 billion.
At the time of its first quarter results in April, Shire had guided for full-year product sales to increase 11% to 14% on a reported basis for 2016, and between 13% and 17% on a non-generally accepted accounting principles, constant currency basis, as part of its longer-term efforts to reach a targeted USD20 billion in product sales by 2020.
It proposed an interim dividend of USD4.63 cents, up from USD4.21 cents the previous year.
Elsewhere, Shire said it had made strong progress across its pipeline of late stage product candidates. During the half the company obtained US approval for its first medicine in ophthalmics, Xiidra, which it expects to launch in the third quarter of 2016.
"Baxalta integration activities continue to progress very well and, with our new operating structure in place, we are raising our operating cost synergy expectations by 40% to at least USD700 million in year three post close. This would not have been possible without the commitment of all our employees, who have worked tirelessly in recent months to help drive efficiencies across the business, so that we can continue to deliver best-in-class therapies to patients around the world," said Chief Executive Officer Flemming Ornskov in a statement.
"We remain resolutely focused on achieving our goals, and I am very confident that Shire will continue to deliver strong growth as we integrate Baxalta and advance our combined portfolio of products," Ornskov added.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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