2012 Annual Report - DTR 6.3.5 Disclosure

2012 Annual Report - DTR 6.3.5 Disclosure

March 28, 2013 - Shire plc (LSE: SHP, NASDAQ: SHPGY), the global specialtybiopharmaceutical company, announces that the following documents have todaybeen posted or otherwise made available to shareholders:

* 2012 Annual Report and Accounts * Notice of the 2013 Annual General Meeting * Form of Proxy

In accordance with Listing Rule 9.6.1, a copy of each of these documents hasbeen uploaded to the National Storage Mechanism and will be available forviewing shortly.

The 2012 Annual Report and Accounts and Notice of the 2013 Annual GeneralMeeting are also available on Shire's website at www.shire.com.

Disclosure & Transparency Rule ("DTR") 6.3.5 requires the Company to discloseto the media certain information from its Annual Report, if that information isof a type that would be required to be disseminated in a half-yearly report.Accordingly, the Appendix to this announcement contains a management report andthe directors' responsibility statement. It should be read in conjunction withthe Company's unaudited full year results for the year ended December 31, 2012,issued on February 14, 2013 which comprises the Company's consolidatedfinancial statements prepared under U.S. GAAP. The Appendix together with theunaudited full year results constitute the material required by DTR 6.3.5 to becommunicated to the media in unedited full text through a Regulated InformationService. This material is not a substitute for reading the full 2012 AnnualReport.

The information included in the Appendix is extracted from the 2012 AnnualReport which was approved by the Directors on February 25, 2013.

Tony GuthrieDeputy Company Secretary

For further information please contact:

Investor Relations Eric Rojas ([email protected]) +1 781 482 0999 Sarah Elton-Farr +44 1256 894 157 ([email protected]) Notes to editors

Shire plc (the "Company") and its subsidiaries (collectively "Shire" or the"Group") develop and provide healthcare in the areas of:

* Behavioral Health and Gastro Intestinal conditions; * Rare Genetic Diseases; and * Regenerative Medicine; as well as other symptomatic conditions treated by specialist physicians. Toserve different patient groups, Shire operates in three distinct businessunits: Specialty Pharmaceuticals ("SP"), Human Genetic Therapies ("HGT") andRegenerative Medicine ("RM").

For further information about Shire, please visit our website: www.shire.com.

The "Safe Harbor" statement under the Private Securities Litigation Reform Actof 1995

Statements included herein that are not historical facts are forward-lookingstatements. Such forward-looking statements involve a number of risks anduncertainties and are subject to change at any time. In the event such risks oruncertainties materialize, Shire's results could be materially adverselyaffected. The risks and uncertainties include, but are not limited to, that: * Shire's products may not be a commercial success; * revenues from ADDERALL XR® are subject to generic erosion;

* the failure to obtain and maintain reimbursement, or an adequate level of

reimbursement, by third-party payors in a timely manner for Shire's

products may impact future revenues and earnings;

* Shire relies on a single source for manufacture of certain of its products

and a disruption to the supply chain for those products may result in Shire

being unable to continue marketing or developing a product or may result in

Shire being unable to do so on a commercially viable basis;

* Shire uses third party manufacturers to manufacture many of its products

and is reliant upon third party contractors for certain goods and services,

and any inability of these third party manufacturers to manufacture

products, or any failure of these third party contractors to provide these

goods and services, in each case in accordance with its respective

contractual obligations, could adversely affect Shire's ability to manage

its manufacturing processes or to operate its business;

* the development, approval and manufacturing of Shire's products is subject

to extensive oversight by various regulatory agencies and regulatory

approvals or interventions associated with changes to manufacturing sites,

ingredients or manufacturing processes could lead to significant delays,

increase in operating costs, lost product sales, an interruption of

research activities or the delay of new product launches;

* the actions of certain customers could affect Shire's ability to sell or

market products profitably and fluctuations in buying or distribution patterns by such customers could adversely impact Shire's revenues, financial conditions or results of operations; * investigations or enforcement action by regulatory authorities or law

enforcement agencies relating to Shire's activities in the highly regulated

markets in which it operates may result in the distraction of senior management, significant legal costs and the payment of substantial compensation or fines; * adverse outcomes in legal matters and other disputes, including Shire's ability to obtain, maintain, enforce and defend patents and other intellectual property rights required for its business, could have a

material adverse effect on Shire's revenues, financial condition or results

of operations;

and other risks and uncertainties detailed from time to time in Shire's filingswith the Securities and Exchange Commission, including those risks outlined onpages 26 to 32. APPENDIX Contents Page 1. Chairman's review 4 2. Chief Executive Officer's review 6 3. Financial Review - Overview 8

- Results of operations for the year to December 31, 2012 11

- Financial condition at December 31, 2012 16 - Liquidity and capital resources 17 - Treasury policies and organization 22 4. Principal risks and uncertainties - Mitigation of principal risks 25 - Risk factors related to the Company's business 26

- General risk factors related to the Company and to the 29health care industry

5. Directors' responsibility statement - Directors' responsibility statement 33

1. Chairman's Review

At Shire we have always embraced change as an opportunity to become evenbetter. Our ability to anticipate and adapt has been at the heart of oursuccess - from the earliest days right through to the present. Looking ahead,we are well prepared to enjoy the next chapter of growth and change in ourongoing story.

2012 highlights

* We have enjoyed another strong year * We have a solid foundation for going forward * We are well positioned for continued global growth We have enjoyed another strong year at Shire. This is particularly pleasing,given the backdrop of challenges across the pharmaceuticals industry and theworld economy. Over the years we have established a fantastic record of growth, built on thevision and leadership of successive Chief Executives and the talent, skills anddedication of all our employees. Our success is a credit to both theindividuals involved and the unique culture of Shire.

Focusing on patients

We continue to follow our strategy of focusing on meeting the needs of selectedgroups of patients with conditions where we have products and expertise. Wehave always had this specialized approach and continue to believe it is theright strategy for the future. But around this core principle is the need toadapt and evolve. We are never complacent and we will continue to change, tokeep the company competitive, keep it growing and moving forward. This iseveryone's job in Shire.

Change is our strength

The ability of the company to change is its greatest strength. It has enabledShire to progress from a small company only offering one treatment in onemarket to becoming a multifaceted specialist company offering patient solutionsaround the world. For us change is the responsible thing to do. By changing inthe right way we maintain and live up to our role as an industry leader butmore importantly offer patients medicines and hope not there before. Change has also been a feature of the Board in recent years. We now have acomplex multinational business and the Board has evolved accordingly. We havethe right balance of skill sets and experience to enable continued success.Membership includes pharmaceutical backgrounds, as well as those with depth infinance, international banking, private equity, medicine and science.

Courage and wisdom

Change takes courage - it's a key outcome of our brave culture. Change takeswisdom, too. You need to know what to change and how to change it and you needto have the right people in place, with the right attitude at the right time. Speaking of the right people, we have been very fortunate to have had AngusRussell as Chief Executive over the last several years - his contributions havebeen many. On behalf of the Board I would like to thank Angus for his excellentleadership that has brought the company to where it stands today and we wishhim and his family well in his retirement. With the retirement of Angus, I am confident that his successor, Dr. FlemmingOrnskov, will lead us to the next level of success and international growth.Flemming comes with an impressive set of skills and considerable internationalexperience, including working with both large and small companies. And hisbackground as a physician will be a great asset to ensure we keep our patientfocus. I look forward to working closely with Flemming in the months and yearsahead. We also welcomed Dr. Steven Gillis to the Board of Directors this year,he brings deep technical and scientific knowledge as well as an entrepreneurialapproach.

Continuing to grow and succeed

Looking ahead, we have a sound strategy and we are committed to continue togrow internationally, to increase our patient focus and add even greater value.For us, a changing world is a good thing. It's an opportunity to see the worlddifferently; to seize the initiative and ultimately strengthen the business andensure continued growth and success. Mathew EmmensChairman

2. Chief Executive Officer’s review

This year saw us continue to deliver on our growth commitments and furtheradvance our pipeline. We articulated a 2020 vision and built on our uniqueculture of aspiring to be as brave as the people we help.

2012 highlights

* We continued to deliver growth * We advanced our pipeline, creating significant opportunities for growth beyond 2015

* We distilled and communicated where we want to take the company: our 2020

vision Continuing to deliver

We achieved our target of mid-teens earnings growth again this year, havingdelivered ahead of expectations for the last couple of years with growth ratesof over 20%.

The business continued to perform extremely well. VYVANSE® and INTUNIV®, ourtreatments for attention deficit hyperactivity disorder ("ADHD"), bothincreased their share of the growing US market, further consolidating ourleading position in this area. FIRAZYR®, our treatment for hereditaryangiodema, launched strongly in the US and we continued robust global sales ofour other rare disease treatments: ELAPRASE®, for Hunter syndrome, VPRIV®, forGaucher disease, and REPLAGAL®, for Fabry disease. We underlined our belief inour Regenerative Medicine business through announcing investment in a newcampus in California and the rollout of a new commercial strategy.

Looking to extend our treatments

During the year we had continued successes in our clinical milestones for ourprogram of new uses for VYVANSE.

We are undertaking late stage studies for lisdexamfetamine dimesylate ("LDX"),the active ingredient in VYVANSE, as a treatment for major depressive disorderand recently initiated our Phase 3 programs for binge eating disorder andnegative symptoms of schizophrenia.

In addition, we have identified potential new indications for FIRAZYR andDERMAGRAFT®. Our intrathecal trials for Hunter CNS, SanFilippo A andMetachromatic Leukodystrophy are also progressing as anticipated. So throughthis year we managed to build a very good late stage pipeline to fuel ourgrowth in the years ahead.

We also added to our expertise in hematology through our acquisition ofFerroKin Biosciences, Inc., ("FerroKin") and strengthened our regenerativemedicine pipeline with the acquisition of Pervasis Therapeutics, Inc.,("Pervasis"), bringing us the Phase 2 product in development, VASCUGEL®.

Preparing to launch ELVANSE across Europe

We received approval of ELVANSE® (currently marketed in the US as VYVANSE) andwe are now preparing for launch in eight European markets. We already haveexperience of the ADHD market in Europe through our EQUASYM® product and weknow that there is a patient need for a product with the profile of ELVANSE.The launch will be a significant milestone in the globalization of our majorADHD franchise and the company overall. It follows our successful launch ofVYVANSE (marketed as VENVANSE®) in Brazil.

Collaborating for quicker better outcomes

Our collaborative culture is a key Shire strength. We're moving into a worldwhere more people are seeing the benefits of partnerships and collaborationwith outside agencies, companies and academia. It's a much better model,because it gives you access to a wider range of opportunities and skill setsthat can enhance the solutions we develop for our patients. At Shire,partnering and collaborating with third parties has always been a corecapability and it fits the increasingly changing and dynamic world inhealthcare, where you have to make a lot of quick decisions and timeframes tendto be shorter in terms of product development and opportunity. We have workedwith partners from day one. It's just more of the same for us. We're buildingour collaborations, with academia, with institutions, with companies that workin the areas of expertise that we're focused on, such as rare genetic diseases.In doing this we are investing in the best ideas.

Putting patients at the heart of everything we do

Over the past few years the world of healthcare has completely changed -aligning with our objectives and business model. Markets are much moreheterogeneous now, and one size does not fit all. You have to tailor yourinnovation, your capabilities and your treatments to suit individual needs.This is where our focus of putting the patient at the centre of everything wedo and focusing on specialist treated and rare diseases with small patientnumbers puts us in a strong position. It allows us to understand the needs ofthe patients and the relatively small number of physicians who help them. Ourrelationships with them provide us with real insights into how patients livetheir lives - the challenges they face and how we can help and add value aroundbeyond the provision of treatments. Educating people so they really understanda rare disease for example, or helping patients treat themselves at home ratherthan having to travel long distances to specialists centers. There's a lot morewe can do to help patients and their physicians, building greater value foreveryone involved along the way. And this is what our new 2020 vision is about.Being a responsible business goes to the heart of our vision and for us isdistilled to a single core consideration: What is the right thing to do? Thisguides everything we do from day-to-day across our business.

Taking brave steps to do more for our patients

Our view of the world, with the patient at the centre, has directly driven ourshared culture of aspiring to be as brave as the people we help. Ourdecentralized, market-driven and increasingly international business is unitedby this shared commitment to identify new ways to help our patients as much aswe possibly can. Transforming the business Our shared culture will continue to be fundamental as we enter our next stageof global expansion. The globalization of our business is one of the mostexciting development opportunities since I joined the company 13 years ago.When I came to the company in 1999 we were dependent on one product for ADHD inthe US. Now we have a strong portfolio of products across behavioral health,gastro intestinal diseases, rare genetic diseases and regenerative medicine,which we sell in over 50 markets around the world. Looking ahead, we have ahuge global opportunity with a very strong platform and a proven strategy andbusiness model for future growth. Our highly specialized, patient-focused, collaborative approach is increasinglyseen as the way forward in our industry - we have led the way. As I prepare toretire from the business, I am extremely proud of what we have achievedtogether and look forward to seeing the continued growth and success of the company in the years ahead. Angus RussellChief Executive Officer 3. Financial Review Overview Shire plc is a leading specialty biopharmaceutical company that focuses onmeeting the needs of the specialist physician. The Company has grown throughacquisition, completing a series of major transactions that have broughttherapeutic, geographic and pipeline growth and diversification. The Companywill continue to evaluate companies, products and pipeline opportunities thatoffer a good strategic fit and have the potential to deliver demonstrable valueto all of the Company's stakeholders: patients, physicians, policy makers,payors, investors and employees. Substantially all of the Company's revenues, expenditures and net assets areattributable to the research and development ("R&D"), manufacture, sale anddistribution of pharmaceutical products within three reportable segments: SP,HGT and RM. The Company also earns royalties (where Shire has out-licensedproducts to third parties) which are recorded as revenues.

Revenues are derived primarily from two sources - sales of the Company's ownproducts and royalties:

* 94% (2011: 93%) of total revenues are derived from product sales, of which

64% (2011: 66%) are within SP, 32% (2011: 31%) are within HGT and 4% (2011:

3%) are within RM; and

* 5% of total revenues are derived from royalties (2011: 6%).

The markets in which the Company conducts its business are highly competitiveand highly regulated.

There is increasing legislation both in the US and the rest of the world whichis placing downward pressure on the net pricing of pharmaceutical products andmedical devices. For example the US government passed healthcare reformlegislation in 2010 which included an increase in Medicaid rebate rates andextended Medicaid rebates to those products provided through Medicaid managedcare organizations. The legislation also imposed excise fees to be paid by bothpharmaceutical manufacturers (from 2011) and medical device companies (from2013). The impact of these recent changes to US healthcare legislation, andother healthcare reforms in the rest of the world, has not to date had amaterial impact on the Company's results of operations.

The healthcare industry is also experiencing:

* pressure from governments and healthcare providers to keep prices low while

increasing access to drugs; * increasing challenges from third party payors for products to have demonstrable clinical benefit, with pricing and reimbursement approval becoming increasingly linked to a product's clinical effectiveness and impact on overall costs of patient care;

* increased R&D costs, because development programs are typically larger and

take longer to get approval from regulators; * challenges to existing patents from generic manufacturers; * governments and healthcare systems favoring earlier entry of low cost generic drugs; and * higher marketing costs, due to increased competition for market share.

Shire's strategy has been developed to address these industry-wide competitivepressures. This strategy has resulted in a series of initiatives in thefollowing areas:

Markets

Historically, Shire's portfolio of approved products has been heavily weightedtowards the North American market. The acquisition in 2005 of TranskaryoticTherapies Inc. ("TKT") and the consequent establishment of the Company's HGTbusiness, together with the acquisitions of New River Pharmaceuticals in 2007(which brought full rights to ADHD product VYVANSE), Jerini AG ("Jerini") in2008 (which brought the HAE product FIRAZYR), EQUASYM in 2009 (whichfacilitated Shire's immediate access to the European ADHD market) and MovetisNV ("Movetis") in 2010 (which brought EU rights to RESOLOR®). The acquisitionof Advanced BioHealing, Inc. ("ABH") in 2011 (which subsequently became RM),and FerroKin in 2012 (which brought a new hematology drug to the SP portfolio)provided Shire with platforms to increase its presence in Europe and the restof the world ("RoW"), thereby working towards diversifying the risk associatedwith reliance on one geographic market. In 2012 the SP and HGT businessesderived 15% and 75%, respectively, of their product sales from outside of theUS. Currently all RM product sales are generated in the US. Shire has ongoingcommercialization and late-stage development activities, which are expected tofurther supplement the diversification of revenues in the future, including thefollowing:

* continued launch of VYVANSE in Brazil (marketed as VENVANSE) and the

potential approval and launch of VYVANSE in Mexico;

* approval of ELVANSE/TYVENSE® in certain countries in the EU for treatment

of ADHD in children;

* filing in 2012 of an application to expand the label of FIRAZYR in the EU

to include the treatment of attacks of ACE-inhibitor induced Angioedema;

* filing in 2012 of an application in Europe for the VPRIV label to be

updated with data regarding the impact of VPRIV on certain parameters of

bone disease in Type 1 Gaucher patients;

* INTUNIV Phase 3 clinical program to support submission of an MAA in the EU;

and

* continued roll-out of DERMAGRAFT in Canada and RESOLOR in the EU.

R&D

Over the last five years Shire has focused its R&D efforts on products in itscore therapeutic areas and concentrated its resources on obtaining regulatoryapproval for later-stage pipeline products within these core therapeutic areas.In addition to continued efforts in its late stage pipeline for the ADHD,Gastro Intestinal ("GI"), HGT and RM therapeutic areas, Shire has alsoprogressed work on an earlier stage pipeline. Evidence of the successful progression of the late stage pipeline can be seenin the granting of approval and associated launches of the Company's productsover the last five years. In this time several products have receivedregulatory approval including: in the US, INTUNIV in 2009, VPRIV in 2010, andFIRAZYR in 2011; in the EU, VPRIV in 2010 and ELVANSE/TYVENSE in 2012; inCanada, VYVANSE in 2010 and DERMAGRAFT in 2012. Shire's strategy is focused on the development of product candidates that havea lower risk profile. As Shire further expanded its earlier phase pipeline, R&Dcosts in 2012 included expenditure on several pre-clinical to Phase 3 studiesfor products in development as well as Phase 3(b) and Phase 4 studies tosupport recently launched products in the SP and HGT businesses, together withthe development of new projects in the SP, HGT and RM businesses.

Patents and Market Exclusivity

The loss or expiration of patent protection or regulatory exclusivity withrespect to any of the Company's major products could have a material adverseeffect on the Company's revenues, financial condition and results ofoperations, as generic products may enter the market. Companies selling genericproducts often do not need to complete extensive clinical studies when theyseek registration of a generic or biosimilar product and accordingly, they aregenerally able to sell the Company's products at a much lower price. As expected, in 2009 Teva and Impax commenced commercial shipments of theirauthorized generic versions of ADDERALL XR, which led to lower sales of brandedADDERALL XR compared to the period prior to the authorized generic launch. InJune 2012 the US Food and Drug Administration ("US") reached a decision on theCitizen Petition for ADDERALL XR which was filed in October 2005. The FDA alsoapproved an abbreviated new drug application ("ANDA")for a generic version ofADDERALL XR. Sales of AXR decreased in 2012 due to the launch of a new genericproduct. In 2011 authorized generic and generic versions of the Company's CARBATROL® andREMINYL® products respectively were launched, which led to lower sales of thesebranded products compared to the period before loss of exclusivity.

Shire is engaged in various legal proceedings with generic manufacturers withrespect to its VYVANSE, INTUNIV, FOSRENOL®, LIALDA® and ADDERALL XR patents.

Business Development

Shire seeks to focus its business development activity on the acquisition andin-licensing of products which offer a good strategic fit and have thepotential to deliver demonstrable value to all of the Company's stakeholders.

Recent mergers or acquisitions

In 2012 Shire acquired FerroKin which added SPD602 to the SP business unit (SPD602 is in Phase 2 for treatment of iron overload following numerous bloodtransfusions).

Through the acquisition of ABH in 2011 Shire obtained DERMAGRAFT, which iscurrently marketed in the US for the treatment of DFU, and established the RMbusiness unit. In 2012 Shire acquired substantially all the assets and certainliabilities of Pervasis which added VASCUGEL (now SRM003) to the RM businessunit (SRM003 is in Phase 2 development for acute vascular repair). Through the acquisition of Movetis in 2010, Shire obtained RESOLOR, which isapproved for the treatment of chronic constipation in women in the EU andSwitzerland. In addition, in 2012 Shire acquired the rights to market RESOLORin the US.

Collaboration and licensing activity

Shire has also entered into a number of collaboration and license agreements,including:

* a collaboration and license agreement with Sangamo to develop therapeutics

for hemophilia and other monogenic diseases based on Sangamo's ZFP

technology in 2012;

* an exclusive license in markets outside of North America for the ActRIIB

class of molecules being developed by Acceleron in 2010. The collaboration

with Acceleron will initially focus on further developing HGT-4510 (also

called ACE-031) for the treatment of patients with Duchenne muscular

dystrophy ("DMD");

* a worldwide exclusive license from IGAN Biosciences, Inc. to develop and

commercialize protease-based therapeutics for the treatment of IgA

nephropathy, a rare kidney disease;

* Shionogi co-development and co-commercialization agreement for VYVANSE and

INTUNIV in Japan. Organization and Structure Shire's internal financial reporting is in line with its business unit andmanagement reporting structure. The Company has three business units and threereporting segments: SP, HGT and RM. During 2010, to support the Company'sgeographical expansion and diversification, Shire established an internationalcommercial hub in Switzerland.

On January 23, 2013 Shire announced that it had decided to proceed with acollective dismissal and business closure at its site in Turnhout, Belgium.This decision follows the conclusion of an information and consultationprocess. Shire will continue to sell RESOLOR in Europe and the supply ofRESOLOR for patients in Europe who rely on the medicine will not be affected.The collective dismissal and business closure of the Turnhout site is notexpected to have a material impact on the Company's consolidated financialposition and results of operations in future periods.

Results of operations for the years to December 31, 2012

Financial highlights for the year to December 31, 2012 are as follows:

* Product sales in 2012 were up 12% to $4,407 million (2011: $3,950 million).

On a Constant Exchange Rate ("CER") 1 basis, which is a Non GAAP measure,

product sales were up 13%.

Product sales excluding ADDERALL XR grew strongly and were up 16% particularlydriven by growth from VYVANSE (up 28% to $1,030 million), VPRIV (up 20% to $307million), INTUNIV (up 29% to $288 million) and FIRAZYR (up 252% to $116million). ADDERALL XR product sales were down 19% to $429 million primarily due to lowerprescription volumes following the approval of a new generic version ofADDERALL XR in the second quarter of 2012. Reported product sales were alsoimpacted by the accounting for the settlement of the Impax Laboratories, Inc.("Impax") litigation.

* Total revenues increased by 10% (up 12% on a Non GAAP CER basis) as the

growth in product sales was partially offset by lower royalties and other

revenues (down 12%), primarily ADDERALL XR royalties following the launch

of a new generic competitor in the second quarter of 2012. The decline in

ADDERALL XR royalties was partially offset by the recognition of one-time

royalty income of $38 million following resolution of a disagreement with

GlaxoSmithKline ("GSK") and ViiV Healthcare ("Viiv") relating to royalty

payments for 3TC® and ZEFFIX®.

* Operating income in 2012 was down 14% to $949 million (2011: $1,109

million) primarily resulting from charges to impair intangible assets for

RESOLOR in the EU ($198 million). The impairments were due to lower actual

and projected performance for the product given the increasingly

challenging European reimbursement environment. Operating income in 2012

was also impacted by a charge of $58 million in relation to the agreement

in principle with the US Government to resolve a previously disclosed civil

investigation. Excluding these charges operating income in 2012 was up by

9%.

* Diluted earnings per ordinary share decreased by 13% to $1.31 (2011: $1.51)

primarily due to the lower operating income, partially offset by a lower

effective tax rate of 18% (2011: 21%).

1. The Company's management analyzes product sales and revenue growth for

certain products sold in markets outside of the US on a constant exchange

rate ("CER") basis, so that product sales and revenue growth can be

considered excluding movements in foreign exchange rates. Product sales and

revenue growth on a CER basis is a Non-GAAP financial measure ("Non-GAAP

CER"), computed by comparing 2012 product sales and revenues restated using

2011 average foreign exchange rates to 2011 actual product sales and

revenues. This Non-GAAP financial measure is used by Shire's management,

and is considered to provide useful information to investors about the Company's results of operations, because it facilitates an evaluation of the Company's year on year performance on a comparable basis. Average exchange rates for the year to December 31, 2012 were $1.59:£1.00 and $1.29:€1.00 (2011: $1.60:£1.00 and $1.39:€1.00).

Total revenues

The following table provides an analysis of the Company's total revenues bysource: Year to December 31, 2012 2011 Change $'M $'M % __________________ __________________ __________________ Product sales 4,406.7 3,950.2 +12% Royalties 241.6 283.5 -15% Other revenues 32.9 29.7 +11% __________________ __________________ __________________ Total 4,681.2 4,263.4 +10% __________________ __________________ __________________ Product sales Year to Year to December 31, December 31, Product sales Non-GAAP US Exit CER prescription market 2012 2011 growth growth growth1 share1 $'M $'M % % % % SP BehavioralHealth VYVANSE 1,029.8 805.0 +28 +28 +17 17 ADDERALL 429.0 532.8 -19 -19 -11 5XR INTUNIV 287.8 223.0 +29 +29 +34 5 EQUASYM 29.2 19.9 +47 +53 n/a2 n/a2 GI LIALDA / 399.9 372.1 +7 +8 +5 22MEZAVANT® PENTASA® 265.8 251.4 +6 +6 -5 14 RESOLOR 11.8 6.1 +93 n/a n/a3 n/a3 GeneralProducts FOSRENOL 172.0 166.9 +3 +6 -19 4 XAGRID® 97.2 90.6 +7 +14 n/a2 n/a2 Other 112.4 147.8 -24 -23 n/a n/aproductsales __________________ __________________ ______________ 2,834.9 2,615.6 +8 __________________ __________________ ______________ HGT ELAPRASE 497.6 464.9 +7 +11 n/a3 n/a3 REPLAGAL 497.5 475.2 +5 +10 n/a2 n/a2 VPRIV 306.6 256.2 +20 +23 n/a2 n/a2 FIRAZYR 116.3 33.0 +252 +258 n/a2 n/a2 __________________ __________________ ______________ 1,418.0 1,229.3 +15 __________________ __________________ ______________ RM DERMAGRAFT 153.8 105.3 +46 +46 4 n/a2 n/a2 __________________ __________________ ______________ Total RM 153.8 105.3 +46productsales __________________ __________________ ______________ __________________ __________________ ______________ Total 4,406.7 3,950.2 +12productsales __________________ __________________ ______________

(1) Data provided by IMS. Exit market share represents the average US marketshare in the month ended December 31, 2012.

(2) IMS NPA Data not available.

(3) Not sold in the US in the year to December 31, 2012.

(4) DERMAGRAFT was acquired by Shire on June 28, 2011 (sales growth abovereflects full year 2012 sales compared to post acquisition sales for 2011).

Specialty Pharmaceuticals VYVANSE - ADHD VYVANSE product sales grew strongly (28%) in 2012 as a result of higherprescription demand, due to growth in US ADHD market (+9%) and VYVANSE's shareof that market, and as a result of a price increase taken in 2012. Thesepositive factors, together with lower sales deductions in 2012, more thanoffset the effect of higher retailer destocking in 2012 compared to 2011 andsome shipment slippage at the end of the fourth quarter.

Litigation proceedings regarding VYVANSE are ongoing.

ADDERALL XR - ADHD

ADDERALL XR product sales decreased (-19%) in 2012 as a result of lower USprescription demand following the introduction of a new generic competitor andthe impact of the accounting for the legal settlement with Impax, which reducedreported product sales by $42 million in 2012, in addition to the effect ofproduct destocking in 2012 compared to stocking in 2011 and, higher salesdeductions. These negative factors were partially offset by the benefit of aprice increase taken during 2012. On February 7, 2013 Shire and Impax settled all litigation relating to Shire'scontract to supply Impax with authorized generic ADDERALL XR. Under the termsof the settlement Shire will make a one-time cash payment to Impax of $48million, which has been recorded as a liability at December 31, 2012. Inaccordance with US GAAP, as this represents a payment to a customer, the amounthas been recorded in the Income Statement as a reduction in reported ADDERALLXR product sales and royalties ($42 million and $6 million respectively) in2012.

INTUNIV - ADHD

INTUNIV product sales were up 29% compared to 2011, primarily driven by stronggrowth in US prescription demand (up 34% compared to 2011), together with priceincreases taken during 2012. These positive factors were partially offset bylower stocking in 2012 and higher sales deductions in 2012 compared to 2011.

Litigation proceedings relating to the Company's INTUNIV patents are inprogress.

LIALDA/MEZAVANT - Ulcerative colitis

The growth in product sales for LIALDA/MEZAVANT (7%) in 2012 was primarilydriven by higher market share in the US and a price increase taken since thefourth quarter of 2011, the effects of which were partially offset by productdestocking in 2012 compared to a small amount of product stocking in 2011 andhigher sales deductions in 2012. Growth in US net product sales was partiallyoffset by the impact of lower priced imports into certain European markets.

Litigation proceedings regarding LIALDA/MEZAVANT are ongoing.

PENTASA - Ulcerative colitis

PENTASA product sales were up 6% as the benefit of price increases waspartially offset by lower prescription demand, a small amount of destocking in2012 and higher sales deductions as compared to 2011.

FOSRENOL - Hyperphosphatemia

Product sales of FOSRENOL in the US increased (3%) due to the effect of priceincreases in 2012 and lower sales deductions compared to 2011, which more thanoffset the decline in prescription demand. Product sales of FOSRENOL outsidethe US decreased marginally primarily because of the impact of unfavorableforeign exchange.

Litigation proceedings regarding Shire's FOSRENOL patents are ongoing.

Human Genetic Therapies

ELAPRASE - Hunter syndrome

Reported ELAPRASE sales growth (7%) was driven by an increase in the number ofpatients on therapy. On a Non GAAP CER basis, ELAPRASE sales grew by 11% asreported sales were held back by unfavorable foreign exchange (amounting toapproximately $20 million) primarily due to weaker European currencies in 2012compared to 2011. The increase in ELAPRASE sales between the third quarter andfourth quarter of 2012 was partly driven by the timing of certain large ordersfrom markets which order less frequently.

REPLAGAL - Fabry disease

Reported REPLAGAL sales growth (5%) was driven by an increase in the number ofpatients on therapy. On a Non GAAP CER basis, REPLAGAL sales grew by 10%, asreported sales were impacted by unfavorable foreign exchange (amounting toapproximately $26 million), primarily due to weaker European currencies in 2012compared to 2011. The reduction in REPLAGAL sales between the third and fourthquarter of 2012 was partly driven by the timing of certain large orders frommarkets which order less frequently.

Litigation proceedings regarding REPLAGAL are ongoing.

VPRIV - Gaucher disease

Reported VPRIV sales growth (20%) was driven by an increase in the number ofpatients on therapy. On a Non GAAP CER basis, VPRIV sales increased by 23% asreported sales were also held back by unfavorable foreign exchange (amountingto approximately $8 million).

FIRAZYR - HAE

Reported FIRAZYR sales growth (252%) was driven largely by the first full yearof sales in the US market, following launch of FIRAZYR in the market in fourthquarter of 2011. Regenerative Medicine DERMAGRAFT - DFU DERMAGRAFT product sales were up 46%(1) compared to sales reported by Shiresubsequent to acquisition in 2011. On a full year basis, sales for DERMAGRAFTwere down 21% reflecting the impact of an ongoing restructuring of the RM salesand marketing organization and the implementation of a new commercial model,all of which is expected to position DERMAGRAFT for future sales growth.

1. Shire acquired DERMAGRAFT through its acquisition of ABH on June 28, 2011

and reported revenues from DERMAGRAFT of $105.3m relating to the post

acquisition period in 2011.

Royalties Year to Year to December 31, December 31, 2012 2011 Change $'M $'M % ____________ ____________ ___________ 3TC and ZEFFIX 91.6 82.7 +11% ADDERALL XR 70.3 107.1 -34% FOSRENOL 53.3 46.5 +15% Other 26.4 47.2 -44% ____________ ____________ __________ Total 241.6 283.5 -15% ____________ ____________ __________ Royalties from 3TC and ZEFFIX include one-time royalty income of $38 million inrespect of prior periods due to resolution of the disagreement between Shire,GSK and ViiV as to how the royalty rate for these products should be applied.This one-time income more than offset the underlying decline in 3TC and ZEFFIXroyalties as a result of increased competition and the expiry of patents incertain territories in 2012.

Royalties from ADDERALL XR in 2012 were significantly impacted by the lowerroyalty rate payable on sales of authorized generic ADDERALL XR by Impax,following the launch of a new generic version of ADDERALL XR in late secondquarter of 2012.

FOSRENOL royalties increased primarily due to higher royalties received onsales in Japan.

Other royalties decreased primarily due to increased generic competition.

Cost of product sales

Cost of product sales increased to $645.4 million for the year to December 31,2012 (15% of product sales), up from $588.1 million in the corresponding periodin 2011 (2011: 15% of product sales). The costs of product sales as apercentage of product sales remained constant as the impact of lower grossmargins in 2012 was offset by the fair value adjustment relating to DERMAGRAFTinventories and costs incurred on the transfer of manufacturing from OwingsMills in 2011 which were not repeated in 2012. For the year to December 31, 2012 cost of product sales included depreciationof $31.5 million (2011: $39.8 million) and amortization of $0.7 million (2011:$1.7 million). R&D R&D expenditure increased to $965.5 million for the year to December 31, 2012(22% of product sales), compared to $770.7 million in the corresponding periodin 2011 (20% of product sales). In the year to December 31, 2012 R&D includedup-front payment of $13.0 million to Sangamo, $10.0 million to acquire the USrights for prucalopride (marketed in certain countries in Europe as RESOLOR)and IPR&D impairment charges in respect of RESOLOR of $71.2 million (2011:$16.0 million). Excluding these costs R&D increased by $100.6 million or 20% inthe year to December 31, 2012 due to the Company's continued investment in anumber of targeted R&D programs, particularly new uses of LDX and recentlyacquired assets including SPD602 for iron overload (acquired with FerroKin). R&D in 2012 also included a full year of ABH's R&D costs (ABH was acquired inlate June 2011).

R&D in the year to December 31, 2012 included depreciation of $22.5 million(2011: $25.2 million).

Selling, general and administrative ("SG&A")

SG&A expenditure increased to $2,114.0 million (48% of product sales) for theyear to December 31, 2012 from $1,751.4 million (44% of product sales) in thecorresponding period in 2011. In the year to December 31, 2012 SG&A increasedby $362.6 million, or 21%, as 2012 included higher intangible assetamortization, the impact of impairment charges and higher legal and litigationcosts, which included a charge of $57.5 million in relation to the agreement inprinciple with the US Government and settling the litigation related to thetermination of co-promotion agreement for VYVANSE. Impairment charges of $126.7 million relate to RESOLOR intangible assets as theactual and projected performance for RESOLOR has been adversely affected by thechallenging European reimbursement environment. Shire has evaluated alternativesales and marketing strategies for RESOLOR in response to these challenges buthas judged that projected profitability levels will continue to be below thelevel forecast at the time of the acquisition of Movetis.

For the year to December 31, 2012 SG&A included depreciation of $59.8 million(2011: $63.1 million) and amortization of $194.1 million (2011: $165.0million).

(Gain)/loss on sale of product rights

For the year to December 31, 2012 Shire recorded a gain on sale of productrights of $18.1 million (2011: loss of $6.0 million) following re-measurementof the contingent consideration receivable from the divestment of DAYTRANA®.

Integration and acquisition costs

For the year to December 31, 2012 Shire recorded integration and acquisitioncosts of $25.2 million (2011: $13.7 million), primarily associated with theacquisition of FerroKin and the integration of ABH. In 2011 integration andacquisition costs primarily related to the acquisition of ABH.

Interest expense

For the year to December 31, 2012 Shire incurred interest expense of $38.2million (2011: $39.1 million). Interest expense principally relates to thecoupon and amortization of issue costs on Shire's $1,100 million 2.75%convertible bonds due 2014.

Taxation

The effective rate of tax in 2012 was 18% (2011: 21%). The effective tax ratein 2012 is lower than 2011 due to favorable changes in profit mix in 2012 andthe benefit of the recognition of foreign tax credits.

Financial condition at December 31, 2012

Cash & cash equivalents

Cash and cash equivalents increased by $862.2 million to $1,482.2 million(December 31, 2011: $620.0 million). Cash generated by operating activities of$1,382.9 million was offset by the cost of acquiring FerroKin, other capitalexpenditure, the purchase of shares (both by the employee benefit trust ("EBT")and under the share buy-back program) and dividend payments.

Other intangible assets, net

Other intangible assets have decreased by $104.9 million to $2,388.1 million(December 31, 2011: $2,493.0 million). Additions in the year of $281.6 million,principally relating to intangible assets acquired with FerroKin and fromPervasis and the license acquired from Mt. Sinai School of Medicine of New YorkUniversity ("Mt. Sinai"), were offset by intangible asset amortization andimpairment charges of $194.8 million and $197.9 million respectively.

Accounts payable and accrued expenses

Accounts payable and accrued expenses have increased by $131.0 million to$1,501.5 million (December 31, 2011: $1,370.5 million) mainly due to therecognition of liabilities in relation to the settlement of litigation withImpax Laboratories Inc. and the agreement in principle reached with the USGovernment regarding the investigation into the sales and marketing of ADDERALLXR, DAYTRANA and VYVANSE.

Convertible bonds Convertible bonds - current liabilities have decreased by $1,100 million due tothe reclassification of the Company's $1,100 million 2.75% convertible bondsdue 2014 and convertible into fully paid Ordinary Shares of Shire plc (the"Bonds") from current to non-current liabilities in 2012 as the Company is nolonger required to redeem the Bonds within twelve months of the balance sheetdate.

Other non-current liabilities

Other non-current liabilities increased by $97.3 million to $241.6 million(December 31, 2011: $144.3 million) due primarily to the recognition ofnon-current contingent consideration payable totaling $120.4 million related tothe FerroKin and Pervasis business combinations and the license agreement withMt. Sinai.

Liquidity and capital resources

General

The Company's funding requirements depend on a number of factors, including thetiming and extent of its development programs; corporate, business and productacquisitions; the level of resources required for the expansion of certainmanufacturing and marketing capabilities as the product base expands; increasesin accounts receivable and inventory which may arise with any increase inproduct sales; competitive and technological developments; the timing and costof obtaining required regulatory approvals for new products; the timing andquantum of milestone payments on collaborative projects; the timing and quantumof tax and dividend payments; the timing and quantum of purchases by the EBT ofShire shares in the market to satisfy awards granted under Shire's employeeshare plans; the timing and quantum of purchases of Shire shares under theshare buy-back program; and the amount of cash generated from sales of Shire'sproducts and royalty receipts. An important part of Shire's business strategy is to protect its products andtechnologies through the use of patents, proprietary technologies and trademarks, to the extent available. The Company intends to defend its intellectualproperty and as a result may need cash for funding the cost of litigation.

The Company finances its activities through cash generated from operatingactivities; credit facilities; private and public offerings of equity and debtsecurities; and the proceeds of asset or investment disposals.

Shire's balance sheet includes $1,482.2 million of cash and cash equivalents atDecember 31, 2012. Substantially all of Shire's debt relates to the Bonds. TheBonds were potentially redeemable at the option of Bondholders at theirprincipal amount including accrued and unpaid interest on May 9, 2012 (the "PutOption"), and remain redeemable following the occurrence of a change of controlof Shire. On April 9, 2012 the deadline for Bondholders to choose to exercisethe Put Option passed. No elections from the Bondholders were received by thisdate and the Bonds are now due on the Final Maturity date. In addition, Shirehas a revolving credit facility of $1,200 million which matures in 2015 (the"RCF"), which is currently undrawn.

Shire 2.75% Convertible Bonds due 2014

On May 9, 2007 Shire issued the Bonds and the net proceeds of the issuance,after deducting the commissions and other direct costs of issue, totaled$1,081.7 million. In connection with the Scheme the Trust Deed was amended andrestated in 2008 in order to provide that, following the substitution of Shireplc in place of Shire Biopharmaceutical Holdings as the principal obligor andissuer of the Bonds, the Bonds would be convertible into Ordinary Shares ofShire plc. The Bonds were issued at 100% of their principal amount, and unless previouslypurchased and cancelled, redeemed or converted, will be redeemed on May 9, 2014(the "Final Maturity Date") at their principal amount. The Bonds bear interest at 2.75% per annum, payable semi-annually in arrears onNovember 9 and May 9. The Bonds constitute direct, unconditional,unsubordinated and unsecured obligations of the Company, and rank pari passuand ratably, without any preference amongst themselves, and equally with allother existing and future unsecured and unsubordinated obligations of theCompany. The Bonds may be redeemed at the option of the Company, at their principalamount together with accrued and unpaid interest if: (i) at any time after May23, 2012 if on no less than 20 dealing days in any period of 30 consecutivedealing days the value of Shire's Ordinary Shares underlying each Bond in theprincipal amount of $100,000 would exceed $130,000; or (ii) at any timeconversion rights have been exercised, and/or purchases and correspondingcancellations, and/or redemptions effected in respect of 85% or more inprincipal amount of Bonds originally issued. The Bonds are repayable in USdollars, but also contain provisions entitling the Company to settle redemptionamounts in Pounds sterling, or in the case of the Final Maturity Date or anychange of control Shire, by delivery of the underlying Ordinary Shares and acash top-up amount. The Bonds are convertible into Ordinary Shares during the conversion period,being the period from June 18, 2007 until the earlier of: (i) the close ofbusiness on the date falling fourteen days prior to the Final Maturity Date;(ii) if the Bonds have been called for redemption by the Company, the close ofbusiness fourteen days before the date fixed for redemption; (iii) the close ofbusiness on the day prior to a Bond holder giving notice of redemption inaccordance with the conditions; and (iv) the giving of notice by the trusteethat the Bonds are accelerated by reason of the occurrence of an event ofdefault.

Upon conversion, the Bond holder is entitled to receive Ordinary Shares at theconversion price of $32.83 per ordinary share, (subject to adjustment asoutlined below).

The conversion price is subject to adjustment in respect of (i) any dividend ordistribution by the Company, (ii) a change of control and (iii) customaryanti-dilution adjustments for, inter alia, share consolidations, share splits,spin-off events, rights issues, bonus issues and reorganizations. The initialconversion price of $33.5879 was adjusted to $33.17 with effect from March 11,2009 as a result of cumulative dividend payments during the period from October2007 to April 2009 inclusive, and was further adjusted to $32.83 with effectfrom March 11, 2011 as a result of cumulative dividend payments during theperiod April 2009 to April 2011 inclusive. The Ordinary Shares issued onconversion will be delivered credited as fully paid, and will rank pari passuin all respects with all fully paid Ordinary Shares in issue on the relevantconversion date.

Revolving Credit Facilities Agreement

On November 23, 2010 the Company entered into a committed multicurrencyrevolving and swingline facilities agreement with a number of financialinstitutions, for which Abbey National Treasury Services Plc (trading asSantander Global Banking and Markets), Bank of America Securities Limited,Barclays Capital, Citigroup Global Markets Limited, Lloyds TSB Bank plc and TheRoyal Bank of Scotland plc acted as mandated lead arrangers and bookrunners(the "new RCF"). The new RCF is for an aggregate amount of $1,200 million andcancelled the Company's then existing committed revolving credit facility (the"old RCF"). The new RCF, which includes a $250 million swingline facility, maybe used for general corporate purposes and matures on November 23, 2015. The interest rate on each loan drawn under the new RCF for each interest periodis the percentage rate per annum which is the aggregate of the applicablemargin (ranging from 0.90 to 2.25 per cent per annum) and LIBOR for theapplicable currency and interest period. Shire also pays a commitment fee onundrawn amounts at 35 per cent per annum of the applicable margin. Under the new RCF it is required that (i) Shire's ratio of Net Debt to EBITDA(as defined within the new RCF agreement) does not exceed 3.5 to 1 for eitherthe 12 month period ending December 31 or June 30 unless Shire has exercisedits option (which is subject to certain conditions) to increase it to 4.0 to 1for two consecutive testing dates; (ii) the ratio of EBITDA to Net Interest (asdefined in the new RCF agreement) must not be less than 4.0 to 1, for eitherthe 12 month period ending December 31 or June 30, and (iii) additionallimitations on the creation of liens, disposal of assets, incurrence ofindebtedness, making of loans, giving of guarantees and granting security overassets. These financial and operating covenants have not had, and are notexpected to have, an effect on the Company's financial position and liquidity.

On entering into the new RCF in November 2010 the Company paid arrangementcosts of $8.0 million, which have been recorded as deferred charges, withamortization of these costs to the Company's income statement over thecontractual term of the new RCF.

The availability of loans under the new RCF is subject to customary conditions.

Financing

Shire anticipates that its operating cash flow together with available cash,cash equivalents and the RCF will be sufficient to meet its anticipated futureoperating expenses, share buy-back program, capital expenditures, tax andinterest payments, lease obligations and milestone payments as they become dueover the next twelve months.

If the Company decides to acquire other businesses, it expects to fund theseacquisitions from existing cash resources, the RCF and possibly through newborrowings and the issue of new equity if necessary.

Share buy-back program

Shire has a strong balance sheet and continued robust cash generation, andconsiders efficient use of capital on behalf of shareholders an importantobjective. Therefore, during the year to December 31, 2012 the Companycommenced a share buy-back program, for the purpose of returning funds toshareholders, of up to $500 million through both direct purchases of OrdinaryShares and through the purchase of Ordinary Shares underlying ADRs.

During the year ended December 31, 2012 the Company made on-market repurchasestotaling 3,631,571 Ordinary Shares at a cost of $106.4 million (excludingtransaction costs). This represents 0.65% of the issued share capital of theCompany as at the year end. The program covers purchases of Ordinary Shares forcancellation or to be held as treasury shares, in accordance with the authorityrenewed by shareholders at the Company's AGM on April 24, 2012 when the Companywas authorized to make market purchases of up to 56,253,208 of its own OrdinaryShares. That authority will expire at the 2013 AGM and in accordance with usualpractice a resolution to renew it for another year will be proposed.

Sources and uses of cash

The following table provides an analysis of the Company's gross and net debt(excluding restricted cash), as at December 31, 2012 and 2011:

2012 2011December 31, $'M $'M _________________ _________________ Cash and cash equivalents1 1,482.2 620.0 _________________ _________________ Shire 2.75% Convertible bonds 1,100.0 1,100.0 Other debt 9.3 8.2 _________________ _________________ Total debt 1,109.3 1,108.2 _________________ _________________ Net cash/(debt) 372.9 (488.2) _________________ _________________ (1) Substantially all of the Company's cash and cash equivalents are held byforeign subsidiaries (i.e. those subsidiaries incorporated outside of Jersey,Channel Islands, the jurisdiction of incorporation of Shire plc, Shire'sholding company). The amount of cash and cash equivalents held by foreignsubsidiaries has not had, and is not expected to have, a material impact on theCompany's liquidity and capital resources.

Cash flow activity

Net cash provided by operating activities for the year to December 31, 2012increased by $309.3 million or 29% to $1,382.9 million (2011: $1,073.6 million)as higher cash receipts from gross product sales and improved cash collectionsfor aged European receivables more than offset higher operating expenses andsales deduction payments in the year. Net cash used in investing activities was $271.0 million in the year toDecember 31, 2012, principally relating to the expenditure on property, plantand equipment of $149.6 million and the cash paid (net of cash acquired) of$97.0 million for the acquisition of FerroKin ($94.5 million) and Pervasis($2.5 million). Capital expenditure on property, plant and equipment primarilyincludes expenditure of $65.0 million on computer software and hardware due toSAP upgrade and construction and leasehold improvements at different Companysites of $45.2 million.

Net cash used in financing activities was $244.3 million for the year toDecember 31, 2012, principally due to the purchase of shares by the EBT, thepurchase of shares under the share buy-back program and dividend payments,offset by the tax benefit associated with the exercise of stock options.

Outstanding Letters of credit

At December 31, 2012, the Company had irrevocable standby letters of credit andguarantees with various banks totaling $38.2 million, providing security forthe Company's performance of various obligations. These obligations areprimarily in respect of the recoverability of insurance claims, leaseobligations and supply commitments.

Cash requirements

At December 31, 2011 the Group's cash requirement for long-term liabilitiesreflected on the balance sheet and other contractual obligations were asfollows: Payments due by period Less than More than Total 1 year 1 - 3 years 3 - 5 years 5 years $'M $'M $'M $'M $'M _______________ _______________ _______________ _______________ ______________ Convertible 1,145.4 30.3 1,115.1 - -bonds(i) Operating 244.3 49.6 61.0 40.8 92.9leasesobligation(ii) Purchase 806.8 670.1 127.7 4.4 4.6obligations(iii) Other 230.2 - 159.3 37.8 33.1long-termliabilitiesreflectedon theBalanceSheet (iv) _______________ _______________ _____________ _____________ ______________ Total 2,426.7 750.0 1,463.1 83.0 130.6 _______________ _______________ _____________ _____________

______________

i. Shire's $1,100 million principal amount of 2.75% convertible bonds due 2014

and the interest on the Bonds has been included based on their contractual

payment dates. The principal amount of $1,100 million has been included

within payments due in one to three years based on the Final Maturity Date

of the Bonds. On April 9, 2012 the deadline for Bondholders to choose to exercise their Put Option on May 9, 2012 passed. No elections from the Bondholders were received by this date and the Bonds are now due on the Final Maturity Date, subject to the certain exceptions. As the Company is

no longer required to redeem the Bonds within twelve months of the balance

sheet date, the Bonds have been presented as a non-current liability at

December 31, 2012. Further details are included within Liquidity and

capital resources: Shire 2.75% Convertible Bonds due 2014 above.

ii. The Company leases certain land, facilities, motor vehicles and certain

equipment under operating leases expiring through 2021.

iii. Purchase obligations include agreements to purchase goods, investments or

services (including clinical trials, contract manufacturing and capital

equipment), including open purchase orders, that are enforceable and

legally binding and that specify all significant terms. Shire expects to

fund these commitments with cash flows from operating activities.

iv. Unrecognized tax benefits and associated interest and penalties of $58.9

million are included within payments due in one to three years.

The contractual obligations table above does not include certain milestones andother contractual commitments where payment is contingent upon the occurrenceof events which are yet to occur (and therefore payment is not yet due). AtDecember 31, 2012 the most significant of the Company's milestone andcontractual commitments which are contingent on the occurrence of future eventsare as follows:

(i) Collaboration with Acceleron for ActRIIB class of molecules

On September 9, 2010 Shire announced that it had expanded its HGT pipeline byacquiring an exclusive license in markets outside of North America for theActRIIB class of molecules being developed by Acceleron. The collaboration willinitially focus on further developing HGT-4510 (also called ACE-031), the leadActRIIB drug candidate, which is in development for the treatment of patientswith DMD. The Phase 2a trial is on hold and clinical safety is under review.HGT-4510 and the other ActRIIB class of molecules have the potential to be usedin other muscular and neuromuscular disorders with high unmet medical need.

In the year to December 31, 2010 Shire made an upfront payment of $45 millionto Acceleron which has been expensed to R&D.

In the year to December 31, 2012 Shire's share of R&D costs under thiscollaboration agreement was $4.5 million (2011: $10.1 million; 2010: $2.7million) which were expensed to R&D. Shire will pay Acceleron up to a further$165.0 million, subject to certain development, regulatory and sales milestonesbeing met for HGT-4510 in DMD, up to an additional $288 million for successfulcommercialization of other indications and molecules, and royalties on productsales.

Shire and Acceleron will conduct the collaboration through a joint steeringcommittee, with subcommittees including a joint manufacture committee, and ajoint patent committee to monitor the development of HGT-4510 and othercompounds.

(ii) Research Collaboration with Santaris Pharma A/S ("Santaris") on LockedNucleic Acid ("LNA") Drug Platform

On August 24, 2009 Shire announced that it had entered into a researchcollaboration with Santaris, to develop its proprietary LNA technology in arange of rare diseases. LNA technology has the benefit of shortened targetvalidation and proof of concept, potentially increasing the speed and loweringthe cost of development. As part of the joint research project Santaris willdesign, develop and deliver pre-clinical LNA oligonucleotides forShire-selected orphan disease targets, and Shire will have the exclusive rightto further develop and commercialize these candidate compounds on a worldwidebasis.

In the year to December 31, 2009 Shire made an upfront payment to Santaris of$6.5 million, for technology access and R&D funding, which was expensed to R&D.

In the year to December 31, 2012 Shire paid success milestones and othersupport costs of $3.0 million (2011: $2.5 million; 2010: $4.0 million) and $8.1million (2011: $5.3 million; 2010: $2.3 million) to Santaris respectively,which were expensed to R&D. Shire has remaining obligations to pay Santaris$13.5 million subject to certain success criteria, and development and salesmilestones up to a maximum of $69.0 million for each indication. Shire willalso pay single or double digit tiered royalties on net sales of the product.

Shire and Santaris have formed a joint research committee to monitor R&Dactivities through preclinical lead candidate selection at which point alldevelopment and commercialization costs will be the responsibility of Shire.

(iii) Collaboration and license agreement with Sangamo to develop therapeuticsfor hemophilia

On February 1, 2012 Shire and Sangamo announced that they had entered into acollaboration and license agreement to develop therapeutics for hemophilia andother monogenic diseases based on Sangamo's ZFP technology. Sangamo isresponsible for all activities through submission of Investigational NewDrug Applications and European Clinical Trial Applications for each product andShire will reimburse Sangamo for its internal and external researchprogram-related costs. Shire is responsible for clinical development andcommercialization of products arising from the collaboration. In the year to December 31, 2012 Shire made an upfront payment to Sangamo of$13.0 million, for technology access and R&D funding, which was expensed to R&D. In the year to December 31, 2012 Shire's share of R&D costs under thiscollaboration agreement was $8.9 million (2011: $nil; 2010: $nil) which wereexpensed to R&D. Shire may be required to pay research, regulatory, developmentand commercial milestone payments up to a maximum of $213.5 million and to payroyalties on net sales of the product.

(iv) Acquisition of FerroKin

On April 2, 2012 Shire completed the acquisition of 100% of the outstandingshare capital of FerroKin. The acquisition-date fair value of considerationtotaled $159.3 million, comprising cash consideration paid on closing of $94.5million and the fair value of contingent consideration payable of $64.8million. The maximum amount of contingent cash consideration which may bepayable by Shire in future periods is $225.0 million. The amount of contingentcash consideration ultimately payable by Shire is dependent upon theachievement of certain clinical development, regulatory and net salesmilestones.

(v) Acquisition of certain assets & liabilities of Pervasis

On April 19, 2012 Shire acquired substantially all the assets and certainliabilities of Pervasis. The acquisition date fair value of the considerationtotaled $26.1 million, comprising cash consideration paid on closing of $2.5million and the fair value of contingent consideration payable of $23.6million. The maximum amount of contingent cash consideration which may bepayable by Shire in future periods is $169.5 million. The amount of contingentcash consideration ultimately payable by Shire is dependent upon achievement ofcertain clinical development, regulatory and net sales milestones.

Treasury policies and organization

The Company's principal treasury operations are coordinated by its corporatetreasury function. All treasury operations are conducted within a framework ofpolicies and procedures approved annually by the Board of Directors. As amatter of policy, the Company does not undertake speculative transactions thatwould increase its credit, currency or interest rate exposure.

Interest rate risk

The Company is exposed to interest rate risk on restricted cash, cash and cashequivalents and on foreign exchange contracts on which interest is at floatingrates. This exposure is primarily to US dollar, Pounds sterling, Euro andCanadian dollar interest rates. As the Company maintains all of its cash,liquid investments and foreign exchange contracts on a short term basis forliquidity purposes, this risk is not actively managed. In the year to December31, 2012 the average interest rate received on cash and liquid investments wasless than 1% per annum. The largest proportion of these cash and liquidinvestments was in US dollar money market and liquidity funds.

The Company incurs interest at a fixed rate of 2.75% on its $1,100 million inprincipal amount convertible bonds due 2014.

No derivative instruments were entered into during the year to December 31,2012 to manage interest rate exposure. The Company continues to review itsinterest rate risk and the policies in place to manage the risk.

Foreign exchange risk

The Company trades in numerous countries and as a consequence has transactionaland translational foreign exchange exposures.

Transactional exposure arises where transactions occur in currencies differentto the functional currency of the relevant subsidiary. The main tradingcurrencies of the Company are the US dollar, Pounds Sterling, Swiss Franc andthe Euro. It is the Company's policy that these exposures are minimized to theextent practicable by denominating transactions in the subsidiary's functionalcurrency. Where significant exposures remain, the Company uses foreign exchange contracts(being spot, forward and swap contracts) to manage the exposure for balancesheet assets and liabilities that are denominated in currencies different tothe functional currency of the relevant subsidiary. These assets andliabilities relate predominantly to intercompany financing and specificexternal receivables. The foreign exchange contracts have not been designatedas hedging instruments. Cash flows from derivative instruments are presentedwithin net cash provided by operating activities in the consolidated cash flowstatement, unless the derivative instruments are economically hedging specificinvesting or financing activities.

Translational foreign exchange exposure arises on the translation into USdollars of the financial statements of non-US dollar functional subsidiaries.

At December 31, 2012 the Company had 19 swap and forward foreign exchangecontracts outstanding to manage currency risk. The swaps and forward contractsmature within 90 days. The Company did not have credit risk related contingentfeatures or collateral linked to the derivatives. At December 31, 2012 the fairvalue of these contracts was a net liability of $1.7 million. Further detailsare included below.

Foreign exchange risk sensitivity

The following exchange rate sensitivity analysis summarises the sensitivity ofthe Company's reported revenues and net income to hypothetical changes in theaverage annual exchange rates of the Euro, Pound Sterling and Swiss Francagainst the US Dollar, (assuming a hypothetical 10% strengthening of the USDollar against each of the aforementioned currencies in the year to December31, 2012): Increase/(reduction) Increase/(reduction) in net in revenues income $M $M Euro (76) (42) Pound Sterling (22) (2) Swiss Franc - 30

A 10% weakening of the US Dollar against the aforementioned currencies wouldhave an equal and opposite effect.

The table below provides information about the Company's swap and forwardforeign exchange contracts by currency pair. The table presents the netprincipal amounts and weighted average exchange rates of all outstandingcontracts. All contracts have a maturity date of less than three months.

December 31, 2012 Principal Value of Weighted Amount Average Fair Receivable Exchange Rate Value $'M $'M _______________ _______________ _______________ Swap foreign exchange contracts Receive USD/Pay EUR 213.7 1.30 (2.8) Receive GBP/Pay USD 117.5 1.61 1.1 Receive USD/Pay CAD 7.8 1.01 0.1 Receive USD/Pay SEK 9.0 0.15 (0.2) Receive USD/Pay AUD 2.5 1.04 - Receive USD/Pay MXN 3.6 0.08 0.1 Concentration of credit risk Financial instruments that potentially expose Shire to concentrations of creditrisk consist primarily of short-term cash investments, derivative contracts andtrade accounts receivable (from product sales and from third parties from whichthe Company receives royalties). Cash is invested in short-term money marketinstruments, including money market and liquidity funds and bank term deposits.The money market and liquidity funds in which Shire invests are all triple Arated by both Standard and Poor's and by Moody's credit rating agencies. The Company is exposed to the credit risk of the counterparties with which itenters into derivative instruments. The Company limits this exposure through asystem of internal credit limits which vary according to ratings assigned tothe counterparties by the major rating agencies. The internal credit limits areapproved by the Board and exposure against these limits is monitored by thecorporate treasury function. The counterparties to these derivatives contractsare major international financial institutions. The Company's revenues from product sales in the US are mainly governed byagreements with major pharmaceutical wholesalers and relationships with otherpharmaceutical distributors and retail pharmacy chains. For the year toDecember 31, 2012 there were three customers in the US that accounted for 50%of the Company's product sales. However, such customers typically havesignificant cash resources and as such the risk from concentration of credit isconsidered acceptable. The Company has taken positive steps to manage anycredit risk associated with these transactions and operates clearly definedcredit evaluation procedures. However, an inability of one or more of thesewholesalers to honor their debts to the Company could have an adverse effect onthe Company's financial condition and results of operations. A substantial portion of the Company's accounts receivable in countries outsideof the United States is derived from product sales to government-owned orgovernment-supported healthcare providers. The Company's recovery of theseaccounts receivable is therefore dependent upon the financial stability andcreditworthiness of the relevant governments. In recent years thecreditworthiness and general economic condition of the Relevant Countries hasdeteriorated. As a result, in some of these countries the Company isexperiencing delays in the remittance of receivables due from government-ownedor government-supported healthcare providers.

The Company's aggregate accounts receivable, net of the allowance for doubtfulaccounts, in total from government-owned or government-supported healthcareproviders in the Relevant Countries are as follows:

December 31, December 31, 2012 2011 $'M $'M Total accounts receivable, net in the 137 184Relevant Countries Total accounts receivable, net in the 17%

22%

Relevant Countries as a percentage of totaloutstanding accounts receivable, net Accounts receivable, net due from 130

170

government-owned or government-supportedhealthcare providers for the RelevantCountries Accounts receivable due from government-owned or government-supportedhealthcare providers in the Relevant Countries of $130 million (2011: $170million) are split by country as follows: Greece $6 million (2011: $4 million);Ireland $1 million (2011: $1 million); Italy $62 million (2011: $81 million);Portugal $13 million (2011: $14 million) and Spain $48 million (2011: $70million). The Company continues to receive remittances in relation to government-owned orgovernment-supported healthcare providers in the Relevant Countries and in theyear to December 31, 2012 received $280.2 million in settlement of accountsreceivable in the Relevant Countries - $4 million was from Greece; $142.3million from Italy; $15.2 million from Portugal and $118.7 million from Spain.

To date the Company has not incurred significant losses on the accountsreceivable in the Relevant Countries, and continues to consider that suchaccounts receivable are recoverable.

Other than the accounts receivable from government-owned or supportedhealthcare providers outlined above, the Company does not hold any othergovernment debt from the Relevant Countries. Additionally the Company does notconsider it is currently exposed to significant sovereign credit risk outsideof the Relevant Countries. The Company continues to evaluate all its accounts receivable for potentialcollection risks and has made provision for amounts where collection isconsidered to be doubtful. If the financial condition of the Relevant Countriesor other Eurozone countries suffer significant deterioration, such that theirability to make payments becomes uncertain, or if one or more Eurozone membercountries withdraws from the Euro, additional allowances for doubtful accountsmay be required, and losses may be incurred, in future periods. Any such losscould have an adverse effect on the Company's financial condition and resultsof operations. Graham HetheringtonChief Financial Officer

4. Principal risks and uncertainties

Principal risks and uncertainties

The Group has adopted a risk management strategy designed to identify, assessand manage the significant risks that it faces. While the Group aims toidentify and manage such risks, no risk management strategy can provideabsolute assurance against loss.

Mitigation of principal risks

The management and mitigation of risks are a key focus for the Group. The Grouphas established a Risk Council which is supported by the Global Compliance andRisk Management ("GCRM") Department to oversee the management and mitigation of

the principal risks faced by the Group, as set out below.

Risk Council

The Risk Council is charged with overseeing the Group's risk management processand activities. Chaired by the Chief Compliance and Risk Officer, the RiskCouncil's membership includes senior members of the Group's business units andcorporate functions, in addition to the Head of Internal Audit. Each businessunit and corporate function is required to periodically review the significantrisks facing their business or function, and are provided with a framework touse in their review. This review, which occurs biannually, includes identifyingoperational risks, compliance risks and risks to the achievement of goals andobjectives. The Risk Council ensures that there is an owner who is responsiblefor the management or mitigation of each identified risk. Material risks andassociated mitigation plans are recorded on a corporate risk schedule forongoing review and assessment by the Risk Council.

The risk schedule is also reviewed and validated by the Leadership Team. Inaddition, the risk schedule is reviewed biannually by the Audit, Compliance andRisk ("ACR") Committee, and annually by the Board.

GCRM

The Risk Council is assisted by the GCRM Department, which is responsible forsupporting the development and implementation of practices that facilitateemployees' compliance with laws and Company policy. The GCRM Departmentprovides assistance to help employees meet high ethical standards and complywith applicable laws and regulations. The principal focus of Shire's compliance effort is to prevent and detectmisconduct or non-compliance with laws or regulations through the promotion ofethical behavior, policy development, appropriate training, monitoring andaudit. Shire employees are encouraged to seek help and to report suspectedcases of misconduct and to do so without fear of retaliation. Employees canreport suspected cases of misconduct to management or through the confidentialreporting lines managed by the GCRM Department. Concerns and allegations arefairly and independently investigated and appropriate disciplinary action istaken if warranted. The GCRM Department is managed by the Chief Compliance and Risk Officer, whoreports directly to the CEO. The Chief Compliance and Risk Officer chairs theRisk Council and regularly provides summary reports on the Risk Council andCompliance activities to the ACR Committee. The Chief Compliance and RiskOfficer has access at all times to the Chairman of the ACR Committee whichprovides a mechanism for bypassing the executive management should the needever arise. Set out below are the Group's key risk factors that have been identifiedthrough the Group's approach to risk management. Some of these risk factors arespecific to the Group, and others are more generally applicable to thepharmaceutical industry or specific markets in which the Group operates. TheGroup considers that these risk factors apply equally and therefore all shouldbe carefully considered before any investment is made in Shire.

RISK FACTORS RELATED TO THE COMPANY'S BUSINESS

The Company's products may not be a commercial success

The commercial success of the Company's marketed products and other newproducts that the Company may launch in the future, will depend on theirapproval and acceptance by physicians, patients and other key decision-makers,as well as the receipt of marketing approvals in different countries and thetime taken to obtain them, the scope of marketing approvals as reflected in theproduct's label, approval of reimbursement at commercially sustainable pricesin those countries where price and reimbursement is negotiated, and safety,efficacy, convenience and cost-effectiveness of the product as compared tocompetitive products.

The Company's revenues, financial condition or results of operations may beadversely affected if any or all of the following occur:

* if the Company's products, or competitive products, are genericized; * if the prices of the Company's products suffer forced reductions or if prices of competitor products are reduced significantly;

* if there are unanticipated adverse events experienced with the Company's

products or those of a competitor's product not seen in clinical trials that impact the physician's willingness to prescribe the Company's products; * if issues arise from clinical trials being conducted for post marketing

purposes or for registration in another country or if regulatory agencies

in one country act in a way that raises concerns for regulatory agencies or

for prescribers or patients in another country;

* if patients, payors or physicians favor other treatments over the Company's

products; * if the Company's products are subject to more stringent government regulation than competitor products;

* loss of patent protection or other forms of exclusivity, or the ability of

competitors to challenge or circumvent patents or other forms of exclusivity; * if planned geographical expansion into new markets is not successful;

* if the sizes of the patient populations for the Company's products are less

than expected; or

* if there are lawsuits filed against the Company, including but not limited

to, product liability claims, consumer law claims, and payor or

reimbursement litigation.

If the Company is unable to commercialize its products successfully, there maybe a material adverse effect on the Company's revenues, financial condition orresults of operations.

Revenues from ADDERALL XR are subject to generic erosion

During 2012 the FDA clarified the regulatory pathway required for approval ofgeneric versions of ADDERALL XR and in June 2012 Actavis received approval tolaunch its own generic version of ADDERALL XR. Shire sells authorized genericversions of ADDERALL XR to Teva and Impax and also continues to sell thebranded version of ADDERALL XR.

Revenues from ADDERALL XR have declined as a result of these developments andcould decline further if:

* generic or authorized generic versions of ADDERALL XR capture more of

Shire's branded market share;

* the FDA approves additional ANDAs for generic versions of ADDERALL XR which

could further reduce branded market share;

* the production of ADDERALL XR is disrupted by difficulties in obtaining a

sufficient supply of amphetamine salts including, but not limited to, an

inability to obtain sufficient quota from the US Drug Enforcement Agency

("DEA"); * there are changes in reimbursement policies of third-party payors; or * there are changes to the level of sales deductions for ADDERALL XR for private or public payors.

The failure to obtain and maintain reimbursement, or an adequate level ofreimbursement, by third-party payors in a timely manner for the Company'sproducts may impact future revenues and earnings

The Company's revenues are partly dependent on the level of reimbursementprovided to the Company by governmental reimbursement schemes for its products.Changes to governmental policy or practices could adversely affect theCompany's revenues, financial condition and results of operations. In addition,the reimbursement of treatments by health care providers, private healthinsurers and other organizations, such as health maintenance organizations andmanaged care organizations is under downward pressure and this, in turn, couldadversely impact the prices at which the Company can sell its products. The market for the Company's products could be significantly influenced by thefollowing, which could result in lower prices for the Company's products and/ora reduced demand for the Company's products:

* higher levels of controls on the use of the Company's products and/or

requirements for additional price concessions by managed health care

organizations or government authorities;

* legislative proposals to reform health care and government insurance

programs in many of the Company's markets; or

* price controls, unsuccessful government tenders, or non-reimbursement of

new medicines or new indications for which the health economic (i.e. cost/

benefit) rationales are not well established.

The cost of treatment for some of the Company's products is high, in particularREPLAGAL, ELAPRASE and VPRIV which are used for the treatment of certain raregenetic diseases. The Company may encounter difficulty in obtaining ormaintaining satisfactory pricing and reimbursement for such products. Thefailure to obtain and maintain pricing and reimbursement at satisfactory levelsfor its products may adversely affect the Company's revenues, financialcondition or results of operations.

The Company relies on a single source for manufacture of certain of itsproducts. A disruption to the supply chain for these products may result in theCompany being unable to continue marketing or developing a product or mayresult in the Company being unable to do so on a commercially viable basis

The Company sources some products from third party contract manufacturers, andfor certain products has its own manufacturing capability. Although the Companydual-sources certain key products and/or active ingredients, the Companycurrently relies on a single source for production of the final drug productfor each of ADDERALL XR, FIRAZYR, FOSRENOL, INTUNIV, LIALDA, PENTASA, RESOLORand VPRIV (in the US), relies on a single active ingredient source for each ofELAPRASE, FIRAZYR, FOSRENOL, INTUNIV, REPLAGAL, RESOLOR and VPRIV (in the US)and relies on a single source for certain serum reagents, the mesh frameworkand the manifold used in the manufacture of DERMAGRAFT. The Company uses third party manufacturers to manufacture many of its productsand is reliant upon third party contractors for certain goods and services. Anyinability of these third party manufacturers to manufacture products, or anyfailure of these third party contractors to provide these goods and services,in each case in accordance with its respective contractual obligations, couldadversely affect the Company's ability to manage its manufacturing processes orto operate its business The Company may experience supply failures or delays beyond its control if anyof its third party manufacturers do not supply the Company on time with therequired volumes, or supply products that do not meet regulatory requirements.Any such third party supply failures could lead to significant delays, increasein operating costs, lost product sales, an interruption of research activities,or the delay of new product launches, all of which could have a materialadverse effect on the Company's revenues, financial condition or results ofoperations. The Company has also entered into many agreements with third parties for theprovision of goods and services to enable it to operate its business. If thethird party does not provide the goods or services on the agreed basis andwithin the specified timeframe, the Company may not be able to continue thedevelopment or commercialization of its products as planned or on a commercialbasis.

The development, approval and manufacturing of the Company's products issubject to extensive oversight by various regulatory agencies

Pharmaceutical and device manufacturing sites must be inspected and approved byregulatory agencies such as the FDA. Active ingredients, excipients andpackaging materials used in the manufacturing process must be obtained fromsources approved by regulatory agencies.

The development and approval of the Company's products depends on the abilityto procure ingredients and packaging materials from approved sources and forthe manufacturing process to be conducted at approved sites. Changes ofmanufacturer or changes of source of ingredients or packaging materials mustgenerally be approved by the regulatory agencies, which will involve testingand additional inspections to ensure compliance with the applicable regulatoryagency's regulations and standards. The need to qualify a new manufacturer orsource of ingredients or packaging materials can take a significant amount oftime. Should it become necessary to change a manufacturer or supplier ofingredients or packaging materials, or to qualify an additional supplier, theCompany may not be able do so quickly which could delay the manufacturingprocess. US-based manufacturers must be registered with the DEA and similar regulatoryauthorities if they handle controlled substances. Certain of the Company'sproducts, including ADDERALL XR and VYVANSE, contain ingredients which arecontrolled substances subject to quotas managed by the DEA. As a result, theCompany's procurement and production quotas may not be sufficient to meetcommercial demand.

The Company manufactures VPRIV, ELAPRASE, REPLAGAL, and DERMAGRAFT usingcomplex biological processes. The complexity of the manufacturing results in anumber of risks, including the risk of viral or other contamination.

Regulatory approvals or interventions associated with changes to manufacturingsites, ingredients or manufacturing processes could lead to significant delays,increase in operating costs, lost product sales, an interruption of researchactivities, or the delay of new product launches, all of which could have amaterial adverse effect on the Company's revenues, financial condition andresults of operations. The actions of certain customers could affect the Company's ability to sell ormarket products profitably. Fluctuations in buying or distribution patterns bysuch customers can adversely impact the Company's revenues, financialconditions or results of operations A considerable portion of the Company's product sales are made to majorpharmaceutical wholesale distributors, as well as to large pharmacies, in boththe US and Europe. In 2012, for example, 50% of the Company's product saleswere attributable to three customers in the US: McKesson Corp., CardinalHealth, Inc and AmerisourceBergen Corp. In the event of financial failure ofany of these customers there could be a material adverse effect on theCompany's revenues, financial condition or results of operations. The Company'srevenues, financial condition or results of operations could also be affectedby fluctuations in customer buying or distribution patterns. These fluctuationsmay result from seasonality, pricing, wholesaler inventory objectives, or otherfactors. A significant portion of the Company's revenues for certain productsfor treatment of rare genetic diseases are concentrated with a small number ofcustomers. Changes in the buying patterns of those customers may have anadverse effect on the Company's revenues, financial condition or results ofoperations. Investigations or enforcement action by regulatory authorities or lawenforcement agencies relating to the Company's activities in the highlyregulated markets in which it operates may result in the distraction of seniormanagement, significant legal costs and the payment of substantial compensationor fines The Company engages in various marketing, promotional and educationalactivities pertaining to, as well as the sale of, pharmaceutical products andmedical devices in a number of jurisdictions around the world. The promotion,marketing and sale of pharmaceutical products and medical devices is highlyregulated and the operations of market participants, such as the Company, areclosely supervised by regulatory authorities and law enforcement agencies,including the US Department of Health and Human Services, the FDA, the USDepartment of Justice, the US Securities and Exchange Commission and the DEA.These authorities and agencies and their equivalents in countries outside theUS have broad authority to investigate market participants for potentialviolations of federal laws relating to the marketing and promotion ofpharmaceutical products and medical devices, including the False Claims Act,the Anti-Kickback Statute and the Foreign Corrupt Practices Act, among others,for alleged improper conduct, including corrupt payments to governmentofficials, improper payments to medical professionals, off-label marketing ofpharmaceutical products and medical devices, and the submission of false claimsfor reimbursement by the federal government. Healthcare companies may also besubject to enforcement actions or prosecution for such conduct. Any inquiriesor investigations into the operations of, or enforcement or other regulatoryaction against, the Company by such authorities could result in significantdefense costs, fines, penalties and injunctive or administrative remedies,distract management to the detriment of the business, result in the exclusionof certain products, or the Company, from government reimbursement programs orsubject the Company to regulatory controls or government monitoring of itsactivities in the future. The Company is subject to certain ongoinginvestigations by governmental agencies.

Adverse outcomes in legal matters and other disputes could have a materialadverse effect on the Company's revenues, financial condition or results ofoperations

During the ordinary course of its business the Company may be involved inclaims, disputes and litigation with third parties, employees, regulatoryagencies, governmental authorities and other parties. The range of matters ofa legal nature that might arise is extremely broad but could include, withoutlimitation, employment claims and disputes, intellectual property claims anddisputes, contract claims and disputes, product liability claims and disputes,regulatory litigation and tax audits and disputes. Any unfavorable outcome in such matters could adversely impact the Company'sability to develop or commercialize its products, adversely affect theprofitability of existing products, subject the Company to significant defensecosts, fines, penalties, audit findings and injunctive or administrativeremedies, distract management to the detriment of the business, result in theexclusion of certain products, or the Company, from government reimbursementprograms or subject the Company to regulatory controls or government monitoringof its activities in the future. Any such outcomes could have a materialadverse effect on the Company's revenue, financial condition or results ofoperations. GENERAL RISK FACTORS RELATED TO THE COMPANY AND TO THE HEALTHCARE INDUSTRY The actions of governments, industry regulators and the economic environmentsin which the Company operates may adversely affect its ability to develop andprofitably market its products The healthcare industry is heavily regulated. Changes to laws or regulationsimpacting the healthcare industry, in any country in which the Company conductsits business, may adversely impact the Company's revenues, financial conditionor results of operations. For example, changes to the regulations relating tothe exclusivity periods available for the Company's products may allow for theearlier entry of generic or biosimilar competitor products. A slowdown of global economic growth, or continued instability of the Eurozone,could have negative consequences for the Company's business and increase therisk of non-payment by the Company's customers Growth of the global pharmaceutical market has become increasingly tied toglobal economic growth. Accordingly a substantial and lasting slowdown of theglobal economy or major national economies could negatively affect growth inthe markets in which the Company operates. Such a slowdown, or any resultantausterity measures adopted by governments in response to a slowdown, could alsoreduce the level of reimbursement that governments are willing and able toprovide to the Company for its products and, as a result, adversely affect theCompany's revenues, financial condition or results of operations. Any slowing economic environment may also lead to financial difficulties forsome of the Company's significant customers. In such situations, the Companycould experience delays in payment or non-payment of amounts owed which mayresult in a rising level of contractual defaults by its contractualcounterparties. The Company does business, both directly (with government hospitals, clinics,pharmacies and other agencies) and indirectly (through wholesalers anddistributors), with a number of Eurozone governments, including the governmentsof Greece, Ireland, Italy, Portugal and Spain. These and other countries haveexperienced, and may continue to experience, declines in theircreditworthiness. These events could in turn result in these countries makingsignificant cuts to their public spending, including national healthcarebudgets, in an attempt to manage their budget deficits, or could result in agreater risk of default or non-payment of outstanding payment obligations, anyof which could adversely affect the Company's revenues, financial condition orresults of operations. In addition, there are concerns for the overall stability and suitability ofthe Euro as a single currency, given the economic and political challengesfacing individual Eurozone countries. Continuing deterioration in thecreditworthiness of Eurozone countries, the withdrawal of one or more membercountries from the EU, or the failure of the Euro as a common European currencycould adversely affect the Company's revenues, financial condition or resultsof operations. The introduction of new products by competitors may impact future revenues The markets in which the Company operates are highly competitive. Many of theCompany's competitors are large, well-known pharmaceutical, biotechnology,chemical and healthcare companies with considerable resources. Companies withmore resources and larger R&D expenditures have a greater ability to fundclinical trials and other development work necessary for regulatoryapplications. They may also be more successful than the Company in acquiring orlicensing new products for development and commercialization. If any productthat competes with one of the Company's principal drugs is approved, theCompany's sales of that drug could be negatively impacted.

The pharmaceutical, biotechnology and device industries are also characterizedby continuous product development and technological change. The Company'sproducts could, therefore, be rendered obsolete or uneconomic, through thedevelopment of new products, new methods of treatment, or technologicaladvances in manufacturing or production by its competitors which may impactfuture revenues.

The successful development of products is highly uncertain and requiressignificant expenditures and time

Products that appear promising in research or development may be delayed orfail to reach later stages of development as:

* preclinical or clinical tests may show the product to lack safety or efficacy; * delays may be caused by slow enrolment in clinical studies; regulatory

requirements for clinical trial drug supplies; extended length of time to

achieve study endpoints; additional time requirements for data analysis or

dossier preparation; time required for discussions with regulatory

agencies, including regulatory agency requests for additional preclinical

or clinical data; delays at regulatory agencies due to staffing or resource

limitations; analysis of or changes to study design; unexpected safety,

efficacy, or manufacturing issues; delays may arise from shared control

with collaborative partners in the planning and execution of the product

development, scaling of the manufacturing process, or getting approval for

manufacturing;

* manufacturing issues, pricing or reimbursement issues, or other factors may

render the product economically unviable; * the proprietary rights of others and their competing products and technologies may prevent the product from being developed or commercialized; or * the product may fail to receive necessary regulatory approvals. Success in preclinical and early clinical trials does not ensure that latestage clinical trials will be successful. Clinical results are frequentlysusceptible to varying interpretations that may delay, limit, or preventregulatory approvals. The length of time necessary to complete clinical trialsand to submit an application for marketing approval for a final decision by aregulatory authority varies significantly and may be difficult to predict. Ifthe Company's large-scale or late-stage clinical trials for a product are notsuccessful, the Company will not recover its substantial investments in thatproduct. In addition, even if the products receive regulatory approval, they remainsubject to ongoing regulatory requirements, including, for example, obligationsto conduct additional clinical trials or other non-clinical testing, changes tothe product label (which could impact its marketability and prospects forcommercial success), new or revised requirements for manufacturing, writtennotifications to physicians, or product recalls or withdrawals.

The failure of a strategic partner to develop and commercialize products couldresult in delays in development, approval or loss of revenue

The Company enters into strategic partnerships with other companies in areassuch as product development and sales and marketing. In these partnerships, theCompany is sometimes dependent on its partner to deliver results. While thesepartnerships are governed by contracts, the Company may not exercise directcontrol. If a partner fails to perform or experiences financial difficulties,the Company may suffer a delay in the development, a delay in the approval or areduction in sales or royalties of a product. The failure to secure new products or compounds for development, either throughin-licensing, acquisition or internal research and development efforts, or thefailure to realize expected benefits from acquisitions of businesses orproducts, may have an adverse impact on the Company's future results The Company's future results will depend, to a significant extent, upon itsability to develop, in-license or acquire new products or compounds, or toacquire other businesses. The expected benefits from acquired products,compounds or businesses may not be realized or may require significantlygreater resources and expenditure than originally anticipated. The failure torealize expected benefits from acquisitions of businesses or products, or thefailure to develop, in-license or acquire new products or compounds on acommercially viable basis, could have a material adverse effect on theCompany's revenues, financial condition or results of operations.

The Company may fail to obtain, maintain, enforce or defend the intellectualproperty rights required to conduct its business

The Company's success depends upon its ability and the ability of its partnersand licensors to protect their intellectual property rights. Where possible,the Company's strategy is to register intellectual property rights, such aspatents and trade marks. The Company also relies on various trade secrets,unpatented know-how and technological innovations and contractual arrangementswith third parties to maintain its competitive position. The failure to obtain,maintain, enforce or defend such intellectual property rights, for any reason,could allow third parties to make competing products or impact the Company'sability to develop, manufacture and market its own products on a commerciallyviable basis, or at all, which could have a material adverse effect on theCompany's revenues, financial condition or results of operations. The Company intends to enforce its patent rights vigorously and believes thatits commercial partners, licensors and third party manufacturers intend toenforce vigorously those patent rights they have licensed to the Company.However, the Company's patent rights, and patent rights that the Company haslicensed, may not provide valid patent protection sufficiently broad to preventany third party from developing, using or commercializing products that aresimilar or functionally equivalent to the Company's products or technologies.These patent rights may be challenged, revoked, invalidated, infringed orcircumvented by third parties. Laws relating to such rights may in future alsobe changed or withdrawn. Additionally, the Company's products, or the technologies or processes used toformulate or manufacture those products may now, or in the future, infringe thepatent rights of third parties. It is also possible that third parties willobtain patent or other proprietary rights that might be necessary or useful forthe development, manufacture or sale of the Company's products. The Company mayneed to obtain licenses for intellectual property rights from others and maynot be able to obtain these licenses on commercially reasonable terms, if atall. The Company also relies on trade secrets and other unpatented proprietaryinformation, which it generally seeks to protect by confidentiality andnondisclosure agreements with its employees, consultants, advisors andpartners. These agreements may not effectively prevent disclosure ofconfidential information and may not provide the Company with an adequateremedy in the event of unauthorized disclosure. In addition, if the Company'semployees, scientific consultants or partners develop inventions or processesthat may be applicable to the Company's products under development, suchinventions and processes will not necessarily become the Company's property,but may remain the property of those persons or their employers. The Company has filed applications to register various trade marks for use inconnection with its products in various countries and also, with respect tocertain products, relies on the trade marks of third parties. These trade marksmay not afford adequate protection or the Company or the third parties may nothave the financial resources to enforce their rights under these trade markswhich may enable others to use the trade marks and dilute their value.

In the regular course of business, the Company is party to litigation or otherproceedings relating to intellectual property rights.

If a marketed product fails to work effectively or causes adverse side effects,this could result in damage to the Company's reputation, the withdrawal of theproduct and legal action against the Company Unanticipated side effects or unfavorable publicity from complaints concerningany of the Company's products, or those of its competitors, could have anadverse effect on the Company's ability to obtain or maintain regulatoryapprovals or successfully market its products. The testing, manufacturing,marketing and sales of pharmaceutical products and medical devices entails arisk of product liability claims, product recalls, litigation and associatedadverse publicity. The cost of defending against such claims is expensive evenwhen the claims are not merited. A successful product liability claim againstthe Company could require the Company to pay a substantial monetary award. If,in the absence of adequate insurance coverage, the Company does not havesufficient financial resources to satisfy a liability resulting from such aclaim or to fund the legal defense of such a claim, it could become insolvent.Product liability insurance coverage is expensive, difficult to obtain and maynot be available in the future on acceptable terms. Although the Companycarries product liability insurance when available, this coverage may not beadequate. In addition, it cannot be certain that insurance coverage for presentor future products will be available. Moreover, an adverse judgment in aproduct liability suit, even if insured or eventually overturned on appeal,could generate substantial negative publicity about the Company's products andbusiness and inhibit or prevent commercialization of other products.

Loss of highly qualified personnel could cause the Company subsequent financialloss

The Company faces competition for highly qualified personnel from othercompanies, academic institutions, government entities and other organizations.It may not be able to successfully attract and retain such personnel. TheCompany has agreements with a number of its key personnel for periods of oneyear or less. The loss of such personnel, or the inability to attract andretain the additional, highly skilled employees required for its activitiescould have an adverse effect on the Company's business.

5. Directors' responsibility statement

Each of the current Directors, whose names and functions are listed below,confirms that, to the best of his or her knowledge:

i. the Group financial statements, which have been prepared under accounting

principles generally accepted in the United States ("US GAAP"), present

fairly, in all material respects, the financial condition, results of

operations and cash flows of the Group; and

ii. the Business review includes a fair review of the development and

performance of the business and the position of the Group and the

undertakings included in the consolidation taken as a whole, together with

a description of the principal risks and uncertainties they face.

Matthew Emmens - Chairman

Angus Russell - Chief Executive Officer

Dr. Flemming Ornskov - Chief Executive Officer Designate

Graham Hetherington - Chief Financial Officer

David Kappler - Non-Executive Director

William Burns - Non-Executive Director

Dr. Steven Gillis - Non-Executive Director

Dr. David Ginsburg - Non-Executive Director

Susan Kilsby - Non-Executive Director

Anne Minto OBE - Non-Executive Director

David Stout - Non-Executive Director

The following are trade marks either owned or licensed by Shire plc orcompanies within the Shire group which are the subject of trade markregistrations in certain territories, or which are owned by third parties asindicated and referred to in this document:

ADDERALL XR® (mixed salts of a single entity amphetamine)

CARBATROL® (carbamazepine extended-release capsules)

DAYTRANA® (trade mark of Noven Pharmaceutical Inc.

DERMAGRAFT® (human fibroblast-derived dermal substitute)

ELAPRASE® (idursulfase)

ELVANSE® (lisdexamfetamine dimesylate)

EQUASYM® (methylphenidate hydrochloride)

EQUASYM XL® (methylphenidate hydrochloride)

FIRAZYR® (icatibant)

FOSRENOL® (lanthanum carbonate)

INTUNIV® (guanfacine extended release)

LIALDA® (trade mark of Nogra International Limited

MEZAVANT® (trade mark of Giuliani International Limited)

PENTASA® (trade mark of Ferring B.V. Corp

REMINYL® (galantamine hydrobromide) (United Kingdom and Republic of Ireland)(trade mark of Johnson & Johnson, excluding UK and Republic of Ireland)

REMINYL XL™ (galantamine hydrobromide) (UK and Republic of Ireland) (trade markof J&J, excluding UK and Republic of Ireland)

REPLAGAL® (agalsidase alfa)

RESOLOR® (prucalopride)

TYVENSE® (lisdexamfetamine dimesylate)

VENVANSE® (lisdexamfetamine dimesylate)

VPRIV® (velaglucerase alfa)

VYVANSE® (lisdexamfetamine dimesylate)

XAGRID® (anagrelide hydrochloride)

ZEFFIX® (trade mark of GSK) 3TC® (trade mark of GSK) Press Release www.shire.com