Half-yearly Report

Management commentary Half Yearly Report August 1, 2014 -Shire plc (the "Company") (LSE: SHP, NASDAQ: SHPG),in accordance with the Financial Conduct Authority's Disclosure Rules andTransparency Rules, is publishing today its Half Yearly Report for the sixmonths ended June 30, 2014. It should be noted that on July 18, 2014 the Company previously announced itsresults in respect of the same period. For further information please contact: Investor Relations Jeff Poulton ([email protected]) +1 781 482 0945 Sarah Elton-Farr ([email protected]) +44 1256 894 157 Media Stephanie Fagan ([email protected]) +1 781 482 0460 Gwen Fisher ([email protected]) +1 484 595 9836Notes to editors Shire enables people with life-altering conditions to lead betterlives. Our strategy is to focus on developing and marketing innovativespecialty medicines to meet significant unmet patient needs. We focus on providing treatments in Neuroscience, Rare Diseases,Gastrointestinal, and Internal Medicine and we are developing treatments forsymptomatic conditions treated by specialist physicians in other targetedtherapeutic areas, such as Ophthalmology. www.shire.com Shire plc Half Yearly Report 2014 Registered in Jersey, No. 99854, 22 Grenville Street, St Helier, Jersey JE48PX Contents PageThe "safe harbor" statement under the Private Securities Litigation Reform Act 2of 1995Trade Marks 3Chief Executive Officer's review 4Business overview for the six months to June 30, 2014 5Results of operations for the six months to June 30, 2014 and June 30, 2013 11Principal risks and uncertainties 19Directors' responsibility statement 21Unaudited consolidated balance sheets at June 30, 2014 and December 31, 2013 22Unaudited consolidated statements of income for the six months to June 30, 2014 24and June 30, 2013Unaudited consolidated statement of comprehensive income for the six months to 26June 30, 2014 and June 30, 2013Unaudited consolidated statement of changes in equity for the six months to 27June 30, 2014Unaudited consolidated statement of cash flows for the six months to June 30, 282014 and June 30, 2013Notes to the unaudited consolidated financial statements 30Independent review report to Shire plc 56THE "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 risksor uncertainties 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 and revenues fromINTUNIV will become subject to generic competition starting in December 2014; - the failure to obtain and maintain reimbursement, or an adequate level ofreimbursement, by third-party payors in a timely manner for Shire's productsmay impact future revenues, financial condition and results of operations; - Shire conducts its own manufacturing operations for certain of its RareDiseases products and is reliant on third party contract manufacturers tomanufacture other products and to provide goods and services. Some of Shire'sproducts or ingredients are only available from a single approved source formanufacture. Any disruption to the supply chain for any of Shire's productsmay result in Shire being unable to continue marketing or developing a productor may result in Shire being unable to do so on a commercially viable basisfor some period of time; - the development, approval and manufacturing of Shire's products is subjectto extensive oversight by various regulatory agencies. Submission of anapplication for regulatory approval of any of our product candidates, such asour planned submission of a New Drug Application to the FDA for lifitegrast asa treatment for the signs and symptoms of dry eye disease in adults, may bedelayed for a number of reasons and, once submitted, may be subjected tolengthy review and ultimately rejected. Moreover, regulatory approvals orinterventions associated with changes to manufacturing sites, ingredients ormanufacturing processes could lead to significant delays, increase inoperating costs, lost product sales, an interruption of research activities orthe delay of new product launches; - the actions of certain customers could affect Shire's ability to sell ormarket products profitably. Fluctuations in buying or distribution patterns bysuch customers can adversely impact Shire's revenues, financial condition orresults of operations; - investigations or enforcement action by regulatory authorities or lawenforcement agencies relating to Shire's activities in the highly regulatedmarkets in which it operates may result in significant legal costs and thepayment of substantial compensation or fines; - adverse outcomes in legal matters and other disputes, including Shire'sability to enforce and defend patents and other intellectual property rightsrequired for its business, could have a material adverse effect on Shire'srevenues, financial condition or results of operations; - Shire faces intense competition for highly qualified personnel from othercompanies, academic institutions, government entities and other organizations.Shire is undergoing a corporate reorganization and the consequent uncertaintycould adversely impact Shire's ability to attract and/or retain the highlyskilled personnel needed for Shire to meet its strategic objectives; - failure to achieve Shire's strategic objectives with respect to theacquisition of ViroPharma Incorporated may adversely affect Shire's financialcondition and results of operations; - the recommended combination with AbbVie Inc. ("AbbVie") is subject to anumber of conditions, including approval by shareholders and regulators; and other risks and uncertainties detailed from time to time in Shire'sfilings with the Securities and Exchange Commission, including those risksoutlined in Shire's Annual Report on Form 10-K. TRADE MARKS All trade marks designated ® and ™ used in this press release are trade marksof Shire plc or companies within the Shire group except for CONCERTA® which isa trade mark of Alza Corporation, 3TC® and ZEFFIX® which are trade marks ofGlaxoSmithKline, PENTASA® which is a registered trade mark of FERRING B.V.,PLENADREN® which is a trade mark of DuoCourt Pharma AB, LIALDA® and MEZAVANT®which are trade marks of Nogra Pharma Limited, CALCICHEW® which is a trademark of Takeda Nycomed AS, and DAYTRANA® which is a trade mark of NovenTherapeutics, LLC. Certain trade marks of Shire plc or companies within theShire group are set out in Shire's Annual Report for the year ended December31, 2013. Chief Executive Officer's review We are pleased to enclose our financial results for the six-monthperiod ended June 30, 2014. This Half Yearly Report includes condensedconsolidated financial statements prepared in accordance with generallyaccepted accounting principles in the United States of America ("US GAAP"). Flemming Ornskov, M.D., Shire's Chief Executive Officer, commented: "I'm pleased with our strong first half results with product salesgrowing by 20%, Non GAAP diluted earnings per ADS growth of 40% and Non GAAPcash generation of $990 million. Our performance is a testament to the value AbbVie sees in Shire.On July 18, 2014 the Boards of Directors of AbbVie and Shire announced theiragreement on the terms of the combination of our two companies, and intentionto recommend that shareholders of each company vote in favor of thetransaction. We have driven strong sustainable growth in our Rare Diseases,Neuroscience and GI business units. CINRYZE, which came to us from ViroPharma,performed very strongly, generating product sales of $216 million, and webelieve this further demonstrates our ability to integrate assets whiledriving growth. Our 2014 performance to date means that we have made importantearly strides toward meeting our target of $10 billion in product sales by2020 - a target that excludes revenues from our two latest acquisitions,Lumena and Fibrotech. In summary, our pipeline and half-year results demonstrate that ourstrategy is delivering. Shire has been transforming our business throughgrowth, efficiency and a focus on commercial execution. Shire has multiple anddiverse drivers within our inline portfolio contributing to our overall 20%growth in product sales in the first half of 2014. In addition, we have aninnovative pipeline with opportunities in emerging therapeutic areas." Flemming Ornskov, M.D. Chief Executive Officer Business overview for the six months to June 30, 2014 The following discussion should be read in conjunction with theunaudited condensed consolidated financial statements and related notesappearing elsewhere in this Half Yearly Report for Shire plc and itssubsidiaries (collectively "Shire" or "the Group"). Significant events in the six months to June 30, 2014 and recentdevelopments Recommended combination of Shire and AbbVie - On July 18, 2014 the Boards of AbbVie and Shire announced thatthey have reached agreement on the terms of a recommended combination of Shirewith AbbVie. Under the terms of the combination, Shire shareholders will beentitled to receive £24.44 in cash and 0.8960 shares in the new AbbVie holdingcompany per Shire ordinary share. Products VYVANSE® - for the treatment of Attention Deficit Hyperactivity Disorder("ADHD") - On July 17, 2014, Shire announced top-line results from two Phase4 efficacy and safety studies of VYVANSE compared with CONCERTA®(methylphenidate HCl) with a placebo reference arm in adolescents aged 13-17diagnosed with ADHD. In SPD489-406, the forced-dose titration study, VYVANSEwas found to be statistically superior to CONCERTA on the primary efficacyanalysis (p = 0.0013) with mean reductions on the ADHD RS-IV total score of25.4 and 22.1 points, respectively. In SPD489-405, the dose optimizationstudy, neither VYVANSE nor CONCERTA was found to be statistically superior tothe other on the primary efficacy analysis (p = 0.0717), with a larger meanimprovement found for VYVANSE than CONCERTA (mean reductions on the ADHD-RS-IVtotal score of 25.6 and 23.5 points, respectively). The primary efficacyendpoint for both studies was defined as the change from baseline inADHD-RS-IV total score at Week 6 and Week 8, respectively. In both studies,the types of adverse events appear to be generally consistent with the knownsafety profile for VYVANSE established in studies of adolescents with ADHD.Further evaluation of the data for both studies is under way. - On June 12, 2014 Shire announced that it had agreed to a writtenrequest by the US Food and Drug Administration ("FDA") to conduct pediatricclinical studies to investigate the potential use of VYVANSE for the treatmentof ADHD in preschool-age children, ages 4 to 5. Upon FDA confirmation of atimely submission and review of data that adheres to the requirements of thewritten request, Shire will be entitled to the benefits of the BestPharmaceuticals for Children Act, including a six-month extension to theexclusivity afforded by Shire's patents for VYVANSE, which expire in 2023. INTUNIV® - for the treatment of ADHD in children/adolescents - On March 27, 2014 Shire announced the acceptance of submission ofa Marketing Authorization Application by the European Medicines Agency for itsonce-daily, non-stimulant guanfacine extended release product for thetreatment of ADHD in children/adolescents aged 6-17 years. Pipeline Lifitegrast (SHP606) - for the treatment of Dry Eye disease - On April 30, 2014 Shire announced top-line results from theprospective, randomized, double-masked, placebo-controlled SONATA trial whichindicated no ocular or drug-related serious adverse events. The safety dataindicated in the SONATA trial was entirely consistent with that observed inthe Phase 2, OPUS-1 and OPUS-2 studies. Additional data and analyses will besubmitted for presentation at upcoming medical meetings. Following a meeting with the FDA, on May 16, 2014 Shire announcedthat it intends to submit a New Drug Application ("NDA") for lifitegrast in2015 as a treatment for the signs and symptoms of Dry Eye disease in adults.In parallel to preparing for the NDA submission, Shire is assessing the needto collect additional clinical data to further strengthen the filing,marketing claims and rest-of world-opportunity for lifitegrast. VASCUGEL® (SHP613) - for the treatment of Acute Vascular Repair - Shire made the decision in Q2 2014 to discontinue further development ofVASCUGEL, intended to enhance blood vessel repair in patients undergoinghemodialysis. This decision was made based on portfolio prioritization as wellas unexpected challenges and complexities with the development program. No newpatients will be enrolled in the two Phase 2 trials, but those currently inthe trials will be followed for at least 12 weeks for safety. In addition, the64 patients enrolled in the Arteriovenous Fistula study will be followed forsix months, per the study protocol. Once the studies are closed out Shire willanalyze available data then make any further decisions regarding VASCUGEL. SHP465 for the treatment of ADHD - SHP465 (mixed salts of a single entity amphetamine) capsulesprovide an extended-release of amphetamines to provide coverage of ADHDsymptoms for adults throughout the day. Based on the FDA feedback received onApril 25, 2014, Shire is planning to resubmit the SHP465 NDA as a Class 2resubmission with a six month FDA review time. SHP465, if approved, will be aonce daily, product designed to treat ADHD in adults, with statisticallysignificant endpoints at 16 hours post-dose (statistically significantendpoints in clinical trials beginning at the 4-hour time point). CINRYZE® life cycle management and new uses - Shire is pursuing additional new formulations of CINRYZE for routineprophylaxis against Hereditary Angioedema ("HAE") attacks in adolescent andadult patients. Shire plans to initiate discussions with FDA in H2 2014 todetermine the appropriate path forward. In addition, Shire is furtherconsidering opportunities to pursue additional therapeutic indications thatmay involve the C1 Inhibitor. Maribavir (SHP620) for the treatment of cytomegalovirus ("CMV")infection in transplant patients - Shire is currently conducting two Phase 2 studies in transplantrecipients, both of which are fully enrolled. The first is a 160 patient trialin first-line treatment of asymptomatic CMV in transplant recipients. Thesecond is a 120 patient trial for the treatment of resistant/refractory CMVinfection/disease in transplant recipients. Preliminary results are expectedin the first half of 2015. SHP602 - for the treatment of Iron Overload - In March 2014, the SHP602 Phase 2 trial in pediatric and adultpatients with transfusion iron overload was placed on clinical hold as Shireevaluates nonclinical toxicology findings. The potential relevance of thesefindings to humans, if any, is unknown, however this assessment will lead to adelay that will impact the commercial value of this program. Following ourdecision to put the current trial on clinical hold, an impairment chargerelating to the IPR&D intangible asset has been recorded in Q1 2014. Other developments Completion of Lumena acquisition - On June 11, 2014 Shire completed its acquisition of Lumena, abiopharmaceutical company with late stage rare disease pipeline assets. Lumenabrings to Shire two new novel, once-daily, orally administered therapeuticcompounds: SHP625 (formerly LUM001), in Phase 2 clinical development with fourpotential orphan indications; and SHP626 (formerly LUM002), ready to enterPhase 2 clinical development later in 2014. SHP625 and SHP626 are bothinhibitors of the apical sodium-dependent bile acid transporter ("ASBT"),which is primarily responsible for recycling bile acids from the intestine tothe liver. SHP625 works by preventing recycling of bile acids back to theliver and is thought to reduce bile acid accumulation, improve liver functionand potentially relieve the extreme itching associated with cholestatic liverdisease and is in clinical trials in Alagille Syndrome, Progressive FamilialIntrahepatic Cholestasis, Primary Biliary Cirrhosis, and Primary SclerosingCholangitis. SHP626 is in development for the treatment of nonalcoholicsteatohepatitis, a common and often "silent" liver disease characterized byfat deposits in the liver and inflammation which can progress to significantfibrosis. Completion of Fibrotech acquisition - On July 4, 2014 Shire completed its acquisition of Fibrotech, anAustralian biopharmaceutical company developing a new class of orallyavailable drugs with a novel mechanism of action which has the potential toaddress both the inflammatory and fibrotic components of disease processes.Shire will undertake the further development of Fibrotech's lead productcandidate SHP627 (formerly FT011), which has completed a Phase 1 study inhealthy volunteers and a Phase 1B study in patients with renal impairment. Thefirst Phase 2 study is expected to be initiated to enroll Focal SegmentalGlomerulosclerosis ("FSGS") patients next year. In addition to the leadcompound SHP627, Shire has acquired Fibrotech's library of novel moleculesincluding FT061, which is in pre-clinical development. Refunds of US$410 million from the Canadian revenue authorities - On June 30, 2014, Shire announced that it had receivedassessments from the Canadian revenue authorities which entitle its Canadiansubsidiary, Shire Canada Inc. ("Shire Canada") to total cash refundsequivalent to US$410 million (C$440 million). The assessments agreed with original positions adopted by ShireCanada in its Canadian tax returns for the period 1999-2004. On June 24, 2014Shire received cash refunds of US$248 million (C$266 million)1. Shire Canadais entitled to receive additional cash refunds of US$162 million (C$174million), expected in late 2014. Following receipt of the assessments Shirerecorded a net credit to income taxes of US$216 million in the second quarterof 2014. The assessments do not impact Shire's current or future income taxprofile. 1 Translated using a CAD:USD exchange rate of 1:0.93, being theexchange rate on June 24, 2014. Transfer of CALCICHEW® product rights - In Q1 2014 Shire transferred the marketing authorizations for theCALCICHEW range of products in the UK and Ireland to Takeda PharmaceuticalCompany Limited. From January 1, 2014 Shire no longer recognized product salesfrom CALCICHEW. In addition in Q1 2014, Shire sold certain CALCICHEW trademarks to Takeda Nycomed AS ("Takeda") for cash proceeds of $43.5 million andrecognized a gain for the same amount. Legal Proceedings See note 16 Commitments and contingencies of this Half Yearly Report fordetails of Shire's legal proceedings. Dividend In respect of the six months ended June 30, 2014 the Board resolved to pay aninterim dividend of 3.83 US cents per Ordinary Share (2013: 3.00 US cents perOrdinary Share). Dividend payments will be made in Pounds Sterling to holders of OrdinaryShares and in US Dollars to holders of ADSs. A dividend of 2.242 pence perOrdinary Share (an increase of 15% compared to 2013: 1.95 pence) and 11.49 UScents per ADS (an increase of 28% compared to 2013: 9.00 US cents) will bepaid on October 3, 2014 to shareholders on the register as at the close ofbusiness on September 5, 2014. 2 Translated using a GBP:USD exchange rate of 1.7093. Research and development Products in registration as at June 30, 2014 VPRIV® for the treatment of Gaucher disease in Japan On July 3 2014, Shire received approval to market VPRIV for the treatment ofadult and pediatric patients with Gaucher disease in Japan. AGRYLIN®1 for the treatment of essential thrombocythaemia in Japan In the fourth quarter of 2013, Shire submitted a Marketing Authorisation tothe Ministry of Health, Labour and Welfare ("MHLW") in Japan, seeking approvalfor AGRYLIN in adult essential thrombocythaemia patients treated withcytoreductive therapy who have become intolerant to their current therapy orwhose platelet counts have not been reduced to an acceptable level. SHP465 for the treatment of ADHD Shire's NDA for SHP465 capsules was previously submitted in 2006 to supportthe use of SHP465 for the treatment of ADHD in adults. With the growing adultADHD population there is now a larger patient population and commercial needfor this type of product than there was seven years ago. Their needs of alonger acting, once daily treatment are not served and Shire believes thisprovides an opportunity to bring SHP465 forward as an additional choice oftreatment. SHP465 (mixed salts of a single entity amphetamine) capsulesprovide an extended-release of amphetamines to provide coverage of ADHDsymptoms for adults throughout the day. The active ingredients found in SHP465are a mixture of amphetamine salts and dextroamphetamine. Shire recentlyrequested FDA concurrence with the sponsor's proposed plans to addressoutstanding items previously outlined by the FDA to support approval of thisNDA. Based on FDA feedback received on April 25, 2014, Shire is planning todiscuss with the FDA plans to resubmit the SHP465 NDA. SHP465 is a once daily,three-component, extended-release, single-entity mixed amphetamine saltsproduct, if approved, designed to treat ADHD in adults with statisticallysignificant endpoints at 16 hours post-dose (statistically significantendpoints in clinical trials beginning at the 4-hour time point). INTUNIV for the treatment of ADHD in the EU In March 2014, Shire announced the acceptance of submission of an MAAby the EMA for once-daily, non-stimulant guanfacine extended release for thetreatment of ADHD in children/adolescents aged 6-17 years. Products in clinical development as at June 30, 2014 Phase 3 SHP606 lifitegrast for the treatment of Dry Eye disease Following a meeting with the FDA, on May 16, 2014 Shire announced that itintends to submit an NDA for lifitegrast in Q1 2015 as a treatment for thesigns and symptoms of Dry Eye disease in adults. In parallel to preparing forthe NDA submission, Shire is assessing the need to collect additional clinicaldata to further strengthen the filing, marketing claims and rest-ofworld-opportunity for lifitegrast. On April 30, 2014 Shire announced top-line results from the prospective,randomized, double-masked, placebo-controlled SONATA trial which indicated noocular or drug-related serious adverse events. The safety data indicated inthe SONATA trial was entirely consistent with that observed in the Phase 2,OPUS-1 and OPUS-2 studies for lifitegrast. Additional data and analyses willbe submitted for presentation at upcoming medical meetings. LDX2 for the treatment of Binge Eating Disorder In November 2013, Shire reported positive top-line results from twoidentically designed randomized placebo-controlled Phase 3 studies evaluatingthe efficacy and safety of LDX versus placebo in adults with BED. In bothstudies LDX was found to be statistically superior to placebo on the primaryefficacy analysis (p-value

1 August 2014