Shire Delivers Strong 2012 Results

SHIRE PLC - Shire Delivers Strong 2012 Results

PR Newswire

London, February 14

Shire Delivers Strong 2012 Results and Reiterates Confidence in 2013

US GAAP net cash provided by operating activities $1,383 million +29%

(1) Percentages compare to the full financial year 2011.

The Non GAAP financial measures included within this release are explained onpage 28, and are reconciled to the most directly comparable financial measuresprepared in accordance with US GAAP on pages 23 - 27.

Angus Russell, Chief Executive Officer, commented:

"It's been another strong year for Shire with 12% growth in product sales and14% growth in Non GAAP earnings which have driven particularly strong cashgeneration. While delivering strong financial results, we continue to invest inour emerging late stage R&D pipeline.

Our ADHD portfolio is performing very well in a growing global market and wesee further growth going forward. The positive opinion received from theEuropean regulators for ELVANSE is a significant milestone and we're nowpreparing for country launches in some of the largest markets in Europe. Allour rare disease treatments continue to grow and we saw particularly strongperformance from FIRAZYR in its first full year in the US market. We advancedour plans for developing our Regenerative Medicine business with theacquisition of VASCUGEL and the approval of DERMAGRAFT in Canada.

Our late stage R&D pipeline now holds the prospect of future growth from LDX(the active ingredient in VYVANSE) in major depressive disorder, binge eatingdisorder and negative symptoms of schizophrenia. Our intrathecal programs arealso progressing well as we plan the next clinical trials for Hunter CNS andSanfilippo A and continue to enrol MLD patients into the ongoing Phase 1/2trial. A phase 2b study of SPD602, our iron chelating product, is underway andheadline results are expected later this year.

We've completed a number of in-licensing deals and acquisitions in 2012,bringing us new technology platforms in rare diseases, hematology and a rangeof early stage and exciting differentiated treatments.

We've put in place our leadership succession plan. Dr. Flemming Ørnskov joinedus at the beginning of January and is familiarising himself with the businessbefore he assumes the role of CEO at the end of April. His considerablepharmaceutical and international experience will benefit Shire going forward.Today we announce that Sylvie Gregoire, President of our HGT business, hasdecided to leave Shire at the end of March, after five years. We're gratefulfor her significant contributions to the growth of Shire through establishingHGT as a leader in rare diseases.

Shire is in great shape, with the current business performing well, a promisingpipeline of new growth opportunities, and the strategy in place to deliver anexciting future. As we look forward to the year ahead, we expect our financialresults to show further growth in line with current consensus earningsexpectations for 2013(1)."

Full Year 2012 Unaudited Results

Product sales in 2012 were up 12% to $4,407 million (2011: $3,950 million). Ona Constant Exchange Rate ("CER") basis, which is a Non GAAP measure, productsales were up 13%.

Product sales excluding ADDERALL XR® grew strongly and were up 16%, drivenparticularly by growth from VYVANSE® (up 28% to $1,030 million), VPRIV® (up 20%to $307 million), INTUNIV® (up 29% to $288 million) and FIRAZYR® (up 252% to$116 million).

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 Q2 2012. Reported product sales were also impacted by theaccounting for the settlement of the Impax Laboratories, Inc. ("Impax")litigation (see page 6 for further details).

Total revenues increased by 10% (up 12% on a CER basis) as the growth inproduct sales was partially offset by lower royalties and other revenues (down12%), primarily ADDERALL XR royalties following the launch of a new genericcompetitor in Q2 2012. The decline in ADDERALL XR royalties was partiallyoffset by the recognition of one-time royalty income of $38 million followingresolution of a disagreement with GlaxoSmithKline ("GSK") and ViiV Healthcare("ViiV") relating to royalty payments for 3TC® and ZEFFIX®.

On a Non GAAP basis:

Operating income was up 9% to $1,474 million (2011: $1,357 million), as weinvested in our promising pipeline leading to total operating expensesincreasing at a slightly higher rate than total revenues. Research andDevelopment expenditure was up 16% particularly due to investment in new usesfor lisdexamfetamine dimesylate(1) ("LDX") and SPD602 for Iron Overload. Theeffect of higher Research and Development expenditure was moderated by a lowerrate of increase in Selling, General and Administrative expenditure (up 7%).

On a US GAAP basis:

Operating income in 2012 was down 14% to $949 million (2011: $1,109 million)primarily resulting from charges to impair intangible assets for RESOLOR® inthe EU ($198 million) in 2012. The impairments were due to lower actual andprojected performance for the product given the increasingly challengingEuropean reimbursement environment. Operating income in 2012 was also impactedby a charge of $58 million in relation to the agreement in principle with theUS Government to resolve a previously disclosed civil investigation (see page 6for further details).

Non GAAP diluted earnings per American Depository Share ("ADS") increased 14%to $6.10 (2011: $5.34), due to higher Non GAAP operating income and a lowereffective tax rate on Non GAAP income of 18% (2011: 22%).

On a US GAAP basis diluted earnings per ADS decreased 13% to $3.93 (2011:$4.53) primarily due to the lower US GAAP operating income, partially offset bya lower US GAAP effective tax rate of 18% (2011: 21%).

LDX, currently marketed as VYVANSE in the US and ELVANSE in certain territoriesin the EU for the treatment of ADHD.

Cash generation, a Non GAAP measure, grew strongly by 18% to $1,637 million(2011: $1,391 million) as higher cash receipts from gross product sales andimproved cash collections for aged European receivables more than offset higheroperating expenses and sales deduction payments in the year.

Free cash flow, also a Non GAAP measure, was up 43% to $1,256 million (2011:$879 million) due to higher cash generation, lower cash tax payments and lowercapital expenditure.

On a US GAAP basis, net cash provided by operating activities was up 29% to$1,383 million (2011: $1,074 million).

Reflecting our strong cash generation, net cash (also a Non GAAP measure) atDecember 31, 2012 was $373 million (December 31, 2011: Non GAAP net debt of$488 million) including the impact of share purchases totalling $106 millionunder the share buy-back program.

OUTLOOK

We enter 2013 in a good position following our strong performance in 2012 andthe investments we have made in previous years. We anticipate that our highlydifferentiated portfolio will deliver product sales growth in the low doubledigits.

We note the recent news of the approval of Barr's ANDA for ADDERALL XR. Wederive insignificant income from our authorised generic supply contract withBarr (now owned by TEVA). We believe that branded ADDERALL XR can continue tocompete successfully in a generic market as it has done over the last fouryears.

Royalties and other revenues are expected to be 30-40% lower than 2012. Thisreflects a full year's impact of the lower ADDERALL XR authorized genericroyalty rate receivable from Impax, along with generic competition and patentexpiry on other products, and the one-time $38 million of royalty incomerecorded in Q4 2012 following the resolution of the disagreement with GSK.

Our Non GAAP gross margin is expected to be at a similar level to 2012.

We expect high single digit growth in combined Non GAAP R&D and SG&A costs,with growth significantly weighted towards Non GAAP R&D as we continue toinvest in our promising pipeline and progress our late stage clinical trials.

Our core effective tax rate on Non GAAP income is anticipated to remain in therange of 18-20%.

As we look forward to the year ahead, we expect our financial results to showfurther growth in line with current consensus earnings expectations for 2013 (1).

Based on the most recent consensus estimates compiled by Consensus ForecastLtd, as of the date of this press release, of $6.72 Non GAAP diluted earningsper ADS for the year ended 31 December 2013, available on Shire's website (http://www.shire.com/shireplc/en/investors/forecasts).

FINANCIAL SUMMARY

Fourth Quarter 2012 Unaudited Results

US GAAP net cash provided by operating activities $372 million -9%

(1) Percentages compare to equivalent 2011 period.

Product sales in Q4 2012 were up 5% (up 5% on a CER basis) to $1,098 million(Q4 2011: $1,049 million).

Product sales excluding ADDERALL XR were up 10% due to strong growthparticularly from VYVANSE (up 18% to $257 million), INTUNIV (up 24% to $81million) and FIRAZYR(up 132% to $35 million). The growth in product salesexcluding ADDERALL XR was moderated by DERMAGRAFT® (down 65% to $19 million)due to the ongoing restructuring of the Regenerative Medicine ("RM") sales andmarketing organization.

ADDERALL XR product sales were down 35% to $82 million primarily due to lowerprescription demand following the approval of a new generic version of ADDERALLXR in Q2 2012, the accounting for the settlement of the Impax litigation (seepage 6 for further details) and higher sales deductions.

Total revenues were up 5% due to both higher product sales and royalties.Royalties in Q4 2012 benefited from one-time royalty income of $38 million for3TC and ZEFFIXfollowing the resolution of the disagreement with GSK and ViiV.

On a Non GAAP basis:

Operating income remained broadly constant at $368 million (Q4 2011: $369million), as the increase in total revenues was offset by higher Research andDevelopment expenditure (up 14%) as we continue to invest in a number of earlyand late stage pipeline programs expected to drive future growth. The effect ofhigher Research and Development expenditure was moderated by a lower rate ofincrease in Selling, General and Administrative expenditure (up 5%).

On a US GAAP basis:

Operating income was down 74% to $79 million (Q4 2011: $304 million) primarilydue to charges to impair intangible assets relating to RESOLOR in the EU of$171 million and higher legal and litigation costs in Q4 2012, including acharge of $58 million in relation to the agreement in principle with the USGovernment.

Non GAAP diluted earnings per ADS increased 4% to $1.58 (Q4 2011: $1.51) asbroadly constant Non GAAP operating income benefited from a lower effective taxrate on Non GAAP income of 15% (Q4 2011: 19%).

On a US GAAP basis diluted earnings per ADS decreased 83% to $0.22 (Q4 2011:$1.33), due to lower US GAAP operating income together with a higher US GAAPeffective tax rate of 35% (Q4 2011: 14%).

Cash generation, a Non GAAP measure, increased by 1% to $452 million (Q4 2011:$447 million).

Free cash flow, also a Non GAAP measure, decreased by 11% to $314 million (Q42011: $351 million) primarily due to higher cash tax payments in the quarter.

On a US GAAP basis, net cash provided by operating activities was down 9% to$372 million (Q4 2011: $409 million).

FOURTH QUARTER 2012 AND RECENT PRODUCT AND PIPELINE DEVELOPMENTS

Products

ELVANSE® (LDX) for the treatment of Attention Deficit Hyperactivity Disorder("ADHD") in Europe

On December 18, 2012 Shire announced a positive outcome from the EuropeanDecentralized Procedure for ELVANSE (to be known as TYVENSE® in Ireland).ELVANSE is indicated as part of a comprehensive treatment program for ADHD inchildren aged 6 years of age and over when response to previous methylphenidatetreatment is considered clinically inadequate.

Pipeline

LDX for the treatment of Binge Eating Disorder ("BED")

A Phase 3 clinical program to evaluate the efficacy and safety of LDX in adultswith BED was initiated in Q4 2012.

LDX for the treatment of Negative Symptoms of Schizophrenia ("NSS")

A Phase 3 clinical program to evaluate the efficacy and safety of LDX asadjunctive treatment to antipsychotic medications on negative symptoms inadults who have persistent predominant NSS was initiated in Q4 2012.

FIRAZYR for the treatment for Angiotensin Converting Enzyme Inhibitor-InducedAngioedema ("ACE-I AE")

In December 2012, Shire submitted a supplemental Marketing AuthorizationApplication to the European Medicines Agency ("EMA") seeking approval forFIRAZYR for the treatment of ACE-I AE in Europe. Depending upon the outcome ofdiscussions with the US Food and Drug Administration ("FDA") about appropriatedevelopment pathways for FIRAZYR as a possible ACE-I AE treatment option, Phase3 studies for the US market could begin in 2013.

VPRIV for the treatment of Gaucher disease (Type 1)

In December 2012, Shire filed with the EMA in Europe for the VPRIV label to beupdated with data regarding the impact of VPRIV on certain parameters of bonedisease in Type 1 Gaucher patients.

HGT2310 for the treatment of Hunter Syndrome with Central Nervous System("CNS") symptoms, idursulfase-IT

HGT2310 is in development as an Enzyme Replacement Therapy ("ERT") deliveredintrathecally for Hunter Syndrome patients with CNS symptoms. Shire initiated aPhase 1/2 clinical trial in Q1 2010 which has now completed. The top lineresults of this trial indicate that HGT2310 appears to be well tolerated at allthree doses studied during the timeframe of the trial. Furthermore,dose-dependent drug activity in vivo was evidenced by a decline inglycosaminoglycan ("GAG") levels in cerebrospinal fluid following treatment, abiomarker of metabolic activity. Full results from this trial will be presentedat the American College of Medical Genetics ("ACMG") meeting in March 2013.Shire is currently planning a pivotal clinical trial which is expected toinitiate in the second half of 2013, subject to customary regulatoryinteractions with the FDA and EMA.

HGT1410 for Sanfilippo A Syndrome (Mucopolysaccharidosis IIIA)

HGT1410 is in development as an ERT delivered intrathecally for the treatmentof Sanfilippo A Syndrome (Mucopolysaccharidosis IIIA). Shire initiated a Phase1/2 clinical trial in August 2010 which has now completed. The top line resultsof this trial indicate that HGT1410 appears to be well tolerated at all threedoses studied during the timeframe of the trial. Furthermore, dose-dependentdrug activity in vivo was evidenced by a decline in GAG levels in cerebrospinalfluid following treatment. Full results from this trial will be presented atthe ACMG meeting in March 2013. Shire is currently planning the next clinicaltrial for HGT1410, designed to measure a clinical response, which is expectedto initiate in the second half of 2013, subject to customary regulatoryinteractions with the FDA and EMA.

ABH001 for the treatment of Epidermolysis Bullosa ("EB")

In February 2013, Shire enrolled the first patient in its Phase 3 clinicalprogram for EB.

Shire reaches agreement in principle with the US Government

On February 1, 2013 Shire announced that it had reached an agreement inprinciple to resolve the previously disclosed civil investigation into Shire'sU.S. sales and marketing practices relating to ADDERALL XR, VYVANSE andDAYTRANA®. The agreement also addresses sales and marketing practices relatingto LIALDA® and PENTASA® pursuant to a subsequent voluntary disclosure made byShire. Shire has recorded a $57.5 million charge in Q4 2012, comprised of theagreement in principle amount, interest and costs. The agreement in principleis subject to change until this matter is finally resolved. Discussions betweenShire and the US Government are ongoing to establish a final resolution to theinvestigation.

Settlement of litigation with Impax

On February 7, 2013 Shire and Impax settled all litigation relating to Shire'scontract to supply Impax with authorized generic ADDERALL XR.

Under the terms of the settlement Shire will make a one-time cash payment toImpax of $48.0 million and Shire and Impax entered into an amended supplyagreement which will govern the supply of authorized generic ADDERALL XR fromShire to Impax until the end of the supply term on September 30, 2014. The cashpayment has been recorded as a liability at December 31, 2012. As it representsa payment to a customer, the cash payment has been recorded in the IncomeStatement as a reduction in reported ADDERALL XR product sales ($42.0 million)and royalties ($6.0 million) in 2012, in accordance with US GAAP. The reductionto revenues for Q4 2012 was $8.0 million, with the balance having been recordedin earlier periods.

Collective dismissal and business closure at Turnhout

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 of RESOLOR forpatients in Europe who rely on the medicine will not be affected.

Acquisition of Lotus Tissue Repair, Inc.

On February 12, 2013 Shire completed the acquisition of Lotus Tissue Repair,Inc. of Cambridge, MA, a privately held biotechnology company developing thefirst and only protein replacement therapy currently being investigated for thetreatment of dystrophic epidermolysis bullosa ("DEB"). DEB is a devastatingorphan disease for which there is no currently approved treatment option otherthan palliative care. Shire purchased the company for an upfront cash paymentand further contingent cash payments may be payable in future periods,depending on the achievement of certain safety and development milestones.

Leadership Team Changes

We announce today that Sylvie Gregoire, President of our HGT business willleave Shire at the end of March after five years with the Company. Sylvie hascontributed to the growth of Shire through leading the building of our rarediseases business; we're grateful for her significant contributions and we wishher well in the future. Flemming Ørnskov will assume interim leadership of thisbusiness from the end of March. Mike Yasick, who for the last five years hasled Shire's largest business unit, Behavioral Health, will assume interimleadership of the SP business from the end of March.

On November 15, 2012 Shire announced that Dr. Jeff Jonas had been appointed asPresident of Shire's RM business and has joined the Shire Leadership Team. Jeffhas been closely involved with the RM business since Shire acquired it asAdvanced BioHealing Inc. ("ABH") in June 2011. In addition to his role as headof the SP R&D team, Jeff has been leading the RM R&D team and has been a memberof the RM leadership team. As previously announced, Kevin Rakin, who led ABHsince 2007 and during its integration into Shire, has stepped down from hisposition as RM President and from the Shire Leadership Team to pursue newcareer interests.

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 in Q4 2012 Shire commenced a share buy-back program, forthe purpose of returning funds to shareholders, of up to $500 million, throughboth direct purchases of ordinary shares and through the purchase of ordinaryshares underlying American Depositary Receipts. As of February 13, 2013 Shirehad made on-market repurchases totaling 4,776,274 ordinary shares at a cost of$143 million (excluding transaction costs).

For the weighted average number of shares used for Non GAAP diluted earningsper ADS, please refer to the Non GAAP reconciliation tables on pages 23 - 26.

DIVIDEND

In respect of the six months ended December 31, 2012 the Board has resolved topay an interim dividend of 14.60 US cents per ordinary share (2011: 12.59 UScents per ordinary share).

Dividend payments will be made in Pounds Sterling to ordinary shareholders andin US Dollars to holders of ADSs. A dividend of 9.39 pence per ordinary share(2011: 7.96 pence) and 43.80 US cents per ADS (2011: 37.77 US cents) will bepaid on April 9, 2013 to shareholders on the register as at the close ofbusiness on March 8, 2013.

Together with the first interim payment of 2.73 US cents per ordinary share(2011: 2.48 US cents per ordinary share), this represents total dividends for2012 of 17.33 US cents per ordinary share (2011: 15.07 US cents per ordinaryshare), an increase of 15% in US Dollar terms.

ADDITIONAL INFORMATION

The following additional information is included in this press release:

Overview of Full Year 2012 Financial Results 9

For further information please contact:

OVERVIEW OF FULL YEAR 2012 FINANCIAL RESULTS

1. Product sales

NPA"). Exit market share represents the average US market share in the monthended December 31, 2012.

above reflects full year 2012 sales compared to post acquisition sales for 2011).

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.

ELAPRASE - Hunter syndrome

Reported ELAPRASE sales growth (7%) was driven by an increase in the number ofpatients on therapy. On a CER basis, ELAPRASE sales grew by 11% as reportedsales 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 Q3 and Q4 of 2012 waspartly driven by the timing of certain large orders from markets which orderless frequently.

REPLAGAL - Fabry disease

Reported REPLAGAL sales growth (5%) was driven by an increase in the number ofpatients on therapy. On a CER basis, REPLAGAL sales grew by 10%, as reportedsales were impacted by unfavorable foreign exchange (amounting to approximately$26 million), primarily due to weaker European currencies in 2012 compared to2011. The reduction in REPLAGAL sales between the third and fourth quarter of2012 was partly driven by the timing of certain large orders from markets whichorder less frequently.

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 Q42011, the effects of which were partially offset by product destocking in 2012compared to a small amount of product stocking in 2011 and higher salesdeductions in 2012. Growth in US net product sales was partially offset by theimpact of lower priced imports into certain European markets.

VPRIV - Gaucher disease

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

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.

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.

DERMAGRAFT - Diabetic Foot Ulcers ("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.

Shire acquired DERMAGRAFT through its acquisition of ABH on June 28, 2011 andreported revenues from DERMAGRAFT of $105.3m relating to the post acquisitionperiod in 2011.

FIRAZYR - Hereditary Angioedema

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 Q4 2011.

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.

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 Q2 2012.

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

Other royalties decreased primarily due to increased generic competition.

Non GAAP cost of product sales as a percentage of product sales increasedslightly in 2012 primarily due to slight dilution from DERMAGRAFT following theacquisition of ABH in Q2 2011.

US GAAP cost of product sales as a percentage of product sales remainedconstant as the impact of lower Non GAAP gross margins in 2012 was offset bythe fair value adjustment relating to DERMAGRAFT inventories and costs incurredon the transfer of manufacturing from Owings Mills in 2011 which were notrepeated in 2012.

Research and Development ("R&D")

Non GAAP R&D increased by $119.3 million, or 16%, due to our continuinginvestment in a number of targeted R&D programs, particularly new uses for LDXand recently acquired assets including SPD602 for iron overload (acquired withFerroKin Biosciences Inc. ("FerroKin")). R&D costs also include the first fullyear of RM's R&D expenditure.

US GAAP R&D increased by $194.8 million, or 25%, a higher rate of increase thanon a Non GAAP basis as 2012 included higher in-process R&D ("IPR&D") impairmentcharges relating to RESOLOR EU intangible assets and up-front payments inrespect of in-licensed and acquired products.

Selling, General and Administrative ("SG&A")

In Q2 2012 Shire amended its Non GAAP policy to exclude costs related to thesettlement of litigation, government investigations and other disputes,together with related external legal costs. Non GAAP SG&A in 2011 has not beenrestated as the amounts incurred in that period were not significant.

Non GAAP SG&A increased by $107.5 million, or 7%, as we continue to invest inour business to support our growth objectives. Non GAAP SG&A also included thefirst full year of RM's SG&A expenditure. Reported costs benefited (by 2percentage points) from the stronger US Dollar in 2012.

US GAAP SG&A increased by $362.6 million, or 21%, a higher rate of increasethan on a Non GAAP basis, 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 relate to RESOLOR intangible assets as the actual andprojected 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 N.V. ("Movetis").

Gain 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 tax rate on Non GAAP income in 2012 was 18% (2011: 22%) and theeffective tax rate on US GAAP income was 18% (2011: 21%). The effective taxrate on both Non GAAP and US GAAP income in 2012 is lower than 2011 due tofavorable changes in profit mix and the benefit of the recognition of foreigntax credits.

Unaudited US GAAP Consolidated Statements of Cash Flows 18

Selected Notes to the Unaudited US GAAP Financial Statements

Treasury stock: 10.7 million shares (2011: 11.8 million) (310.4) (287.2)

Unaudited US GAAP results for the three months and year to December 31, 2012Consolidated Statements of Income

Integration and acquisition costs 10.1 5.8 25.2 13.7

Cost of product sales includes amortization of intangible assets relating tofavorable manufacturing contracts of $nil for the three months to December 31,2012 (2011: $0.4 million) and $0.7 million for the year to December 31, 2012(2011: $1.7 million). R&D includes intangible asset impairment charges of $44.2million (2011: $nil) for the three months to December 31, 2012 and $71.2million (2011: $16.0 million) for the year to December 31, 2012. SG&A costsinclude amortization and impairment charges of intangible assets relating tointellectual property rights acquired of $174.2 million for the three months toDecember 31, 2012 (2011: $45.9 million) and $320.8 million for the year toDecember 31, 2012 (2011: $165.0 million).

Unaudited US GAAP results for the three months and year to December 31, 2012Consolidated Statements of Income (continued)

For the weighted average number of shares used for Non GAAP diluted earningsper ADS, please refer to the Non GAAP reconciliation tables on pages 23 - 26.

Unaudited US GAAP results for the three months and year to December 31, 2012Consolidated Statements of Cash Flows

Returns on investment from joint venture - - 4.9 5.2

Purchases of non-current investments (5.9) (2.4) (18.0) (10.7)

Proceeds from capital expenditure grants - - 8.4 -

Net cash used in investing activities(B) (55.4) (47.2) (271.0) (809.2)

Unaudited US GAAP results for the three months and year to December 31, 2012Consolidated Statements of Cash Flows (continued)

Repayment of revolving credit facility - - - (30.0)

Net cash used in financing activities(C) (155.7) (18.6) (244.3) (195.4)

Unaudited US GAAP results for the three months and year to December 31, 2012

Selected Notes to the Financial Statements

For the three month period ended December 31, 2012 interest on the convertiblebond has not been added back as the effect would be anti-dilutive

Excludes shares purchased by the EBT and under the share buy-back program andpresented by Shire as treasury stock.

Calculated using the treasury stock method.

Calculated using the "if converted" method.

For the weighted average number of shares used for Non GAAP diluted earningsper ADS, please refer to the Non GAAP reconciliation tables on pages 23 - 26.

The share equivalents not included in the calculation of the diluted weightedaverage number of shares are shown below:

Certain stock options have been excluded from the calculation of diluted EPSbecause (a) their exercise prices exceeded Shire's average share price duringthe calculation period or (b) the required performance conditions were notsatisfied as at the balance sheet date.

For the three month period ended December 31, 2012 the ordinary sharesunderlying the convertible bonds have not been included in the calculation ofthe diluted weighted average number of shares, as the effect of their inclusionwould be anti-dilutive.

Unaudited US GAAP results for the year to December 31, 2012

Selected Notes to the Financial Statements

Unaudited US GAAP results for the three months to December 31, 2012

Selected Notes to the Financial Statements

Unaudited results for the year to December 31, 2012

method investees 911.4 396.0 48.2 (18.1) 102.6 - 1,440.1

Income taxes (167.0) (59.5) (9.9) - (28.3) - (264.7)

(millions) - diluted 593.5 - - - - - 593.5

The following items are included in Adjustments:

Amortization and asset impairments: Impairment of IPR&D intangible assets forRESOLOR in the EU ($71.2 million), impairment charges of intellectual propertyrights acquired for RESOLOR in the EU ($126.7 million), amortization ofintangible assets relating to intellectual property rights acquired ($194.1million), impairment of available for sale securities ($4.0 million), and taxeffect of adjustments;

Acquisitions and integration activities: Up-front payments made to SangamoBiosciences Inc. and for the acquisition of the US rights to prucalopride(marketed in certain countries in Europe as RESOLOR) ($23.0 million), costsprimarily associated with the acquisition of FerroKin and the integration ofABH ($16.0 million), charges related to the change in fair value of deferredcontingent consideration ($9.2 million), and tax effect of adjustments;

Divestments, reorganizations and discontinued operations: Re-measurement ofDAYTRANA contingent consideration to fair value ($18.1 million) and tax effectof adjustments;

Legal and litigation costs: Costs related to litigation, governmentinvestigations, other disputes and external legal costs ($102.6 million), andtax effect of adjustments; and

Depreciation reclassification: Depreciation of $113.8 million included in Costof product sales, R&D costs and SG&A costs for US GAAP separately disclosed forthe presentation of Non GAAP earnings.

Unaudited results for the year to December 31, 2011

Non GAAP reconciliation

equity method investees 1,090.1 183.4 24.7 18.1 - 1,316.3

method investees, net of tax 2.5 - - - - 2.5

Numerator for diluted EPS 898.6 124.7 16.4 20.8 - 1,060.5

shares (millions) - diluted 595.4 - - - - 595.4

The following items are included in Adjustments:

Amortization and asset impairments: Impairment of intangible assets ($16.0million), amortization of intangible assets relating to intellectual propertyrights acquired ($165.0 million), impairment of available for sale securities($2.4 million), and tax effect of adjustments;

Acquisitions and integration activities:Unwind of ABH inventory fair valueadjustment ($11.0 million), costs associated with acquisition and integrationof ABH ($13.6 million) and integration of Movetis ($8.3 million), lessadjustment to contingent consideration payable for EQUASYM ($8.2 million), andtax effect of adjustments;

Divestments, reorganizations and discontinued operations: Accelerateddepreciation ($6.6 million) and dual running costs ($4.7 million) on thetransfer of manufacturing from Owings Mills to a third party, re-measurement ofDAYTRANA contingent consideration to fair value ($6.0 million), reorganizationcosts ($24.3 million) on the transfer of manufacturing from Owings Mills to athird party and the establishment of an international commercial hub inSwitzerland, gain on disposal of investment in Vertex ($23.5 million), and taxeffect of adjustments; and

Depreciation: Depreciation of $121.5 million included in Cost of product sales,R&D costs and SG&A costs for US GAAP separately disclosed for the presentationof Non GAAP earnings.

Unaudited results for the three months to December 31, 2012

Non GAAP reconciliation

The impact of convertible debt, net of tax has a dilutive effect on Non GAAPbasis.

The following items are included in Adjustments:

Amortization and asset impairments: Impairment of IPR&D intangible assets forRESOLOR ($44.2 million), impairment charges of intellectual property rightsacquired for RESOLOR in the EU ($126.7 million), amortization of intangibleassets relating to intellectual property rights acquired ($47.5 million),impairment of available for sale securities ($4.0 million), and tax effect ofadjustments;

Acquisition and integration activities: Costs primarily associated with theacquisition of FerroKin and the integration of ABH ($4.2 million), chargesrelated to the change in fair value of deferred contingent consideration ($5.9million), and tax effect of adjustments;

Divestments, reorganizations and discontinued operations: Re-measurement ofDAYTRANA contingent consideration to fair value ($1.6 million), and tax effectof adjustments;

Legal and litigation costs: Costs related to litigation, governmentinvestigations, other disputes and external legal costs ($62.2 million), andtax effect of adjustments; and

Depreciation reclassification: Depreciation of $29.6 million included in Costof product sales, R&D costs and SG&A costs for US GAAP separately disclosed forthe presentation of Non GAAP earnings.

Unaudited results for the three months to December 31, 2011

Non GAAP reconciliation

Loss on sale of product rights 2.2 - - (2.2) - -

The following items are included in Adjustments:

Amortization and asset impairments: Amortizationof intangible assets relatingto intellectual property rights acquired ($45.9 million), and tax effect ofadjustments;

Acquisition and integration activities: Unwind of ABH inventory fair valueadjustment ($2.0 million), costs associated with the acquisition andintegration of ABH ($3.5 million) and integration of Movetis ($2.3 million),and tax effect of adjustments;

Divestments, reorganizations and discontinued operations: Dual running costs($2.3 million) on the transfer of manufacturing from Owings Mills to a thirdparty, re-measurement of DAYTRANA contingent consideration to fair value ($2.2million), reorganization costs ($6.3 million) on the transfer of manufacturingfrom Owings Mills to a third party and establishment of an internationalcommercial hub in Switzerland, and tax effect of adjustments; and

Depreciation: Depreciation of $36.3 million included in Cost of product sales,R&D costs and SG&A costs for US GAAP separately disclosed for the presentationof Non GAAP earnings.

Unaudited results for the three months and year to December 31, 2012

Non GAAP reconciliation

The following table reconciles US GAAP net cash provided by operatingactivities to Non GAAP cash generation:

The following table reconciles US GAAP net cash provided by operatingactivities to Non GAAP free cash flow:

Non GAAP net cash/(debt) comprises:

Shire enables people with life-altering conditions to lead better lives.

Through our deep understanding of patients' needs, we develop and providehealthcare in the areas of:

Behavioral Health and Gastro Intestinal conditions

Rare Diseases

Regenerative Medicine

as well as other symptomatic conditions treated by specialist physicians.

We aspire to imagine and lead the future of healthcare, creating value forpatients, physicians, policymakers, payors and our shareholders.

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 ofreimbursement, by third party payors in a timely manner for Shire's productsmay impact future revenues and earnings;

Shire relies on a single source for manufacture of certain of its products anda disruption to the supply chain for those products may result in Shire beingunable to continue marketing or developing a product or may result in Shirebeing unable to do so on a commercially viable basis;

Shire uses third party manufacturers to manufacture many of its products and isreliant upon third party contractors for certain goods and services, and 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 Shire's ability to manage its manufacturing processes or tooperate its business;

the development, approval and manufacturing of Shire's products is subject toextensive oversight by various regulatory agencies and regulatory approvals orinterventions associated with changes to manufacturing sites, ingredients ormanufacturing processes could lead to significant delays, increase in operatingcosts, lost product sales, an interruption of research activities or the delayof new product launches;

the actions of certain customers could affect Shire's ability to sell or marketproducts profitably and fluctuations in buying or distribution patterns bysuch customers could adversely impact Shire's revenues, financial conditions 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 the distraction of seniormanagement, significant legal costs and the payment of substantial compensationor fines;

adverse outcomes in legal matters and other disputes, including Shire's abilityto obtain, maintain, enforce and defend patents and other intellectual propertyrights required for its business, could have a material adverse effect onShire'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 in"Item 1A: Risk Factors" in Shire's Form 10-K for the years ended December 31,2011 and 2012.

This press release contains financial measures not prepared in accordance withUS GAAP. These measures are referred to as "Non GAAP" measures and include: NonGAAP operating income; Non GAAP net income; Non GAAP diluted earnings per ADS;effective tax rate on Non GAAP income before income taxes and earnings/(losses)of equity method investees ("effective tax rate on Non GAAP income"); Non GAAPcost of product sales; Non GAAP research and development; Non GAAP selling,general and administrative; Non GAAP other income/expense; Non GAAP cashgeneration; Non GAAP free cash flow and Non GAAP net cash/(debt). These NonGAAP measures exclude the effect of certain cash and non-cash items, thatShire's management believes are not related to the core performance of Shire'sbusiness.

These Non GAAP financial measures are used by Shire's management to makeoperating decisions because they facilitate internal comparisons of Shire'sperformance to historical results and to competitors' results. Shire'sRemuneration Committee uses certain key Non GAAP measures when assessing theperformance and compensation of employees, including Shire's executivedirectors.

The Non GAAP measures are presented in this press release as Shire's managementbelieve that they will provide investors with a means of evaluating, and anunderstanding of how Shire's management evaluates, Shire's performance andresults on a comparable basis that is not otherwise apparent on a US GAAPbasis, since many non-recurring, infrequent or non-cash items that Shire'smanagement believe are not indicative of the core performance of the businessmay not be excluded when preparing financial measures under US GAAP.

These Non GAAP measures should not be considered in isolation from, assubstitutes for, or superior to financial measures prepared in accordance withUS GAAP.

Where applicable the following items, including their tax effect, have beenexcluded when calculating Non GAAP earnings for both 2012 and 2011, and fromour Outlook:

Amortization and asset impairments:Intangible asset amortization and impairment charges; andOther than temporary impairment of investments.

Acquisitions and integration activities:Up-front payments and milestones in respect of in-licensed and acquired products;Costs associated with acquisitions, including transaction costs, fair valueadjustments on contingent consideration and acquired inventory;Costs associated with the integration of companies; andNoncontrolling interests in consolidated variable interest entities.

Legal and litigation costs:Net legal costs related to the settlement of litigation, governmentinvestigations and other disputes (excluding internal legal team costs).

Depreciation, which is included in Cost of product sales, R&D and SG&A costs inour US GAAP results, has been separately disclosed for the presentation of 2011and 2012 Non GAAP earnings.

Cash generation represents net cash provided by operating activities, excludingup-front and milestone payments for in-licensed and acquired products, tax andinterest payments.

Free cash flow represents net cash provided by operating activities, excludingup-front and milestone payments for in-licensed and acquired products, butincluding capital expenditure in the ordinary course of business.

A reconciliation of Non GAAP financial measures to the most directly comparablemeasure under US GAAP is presented on pages 23 to 27.

Growth at CER, which is a Non GAAP measure, is computed by restating 2012results using average 2011 foreign exchange rates for the relevant period.

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). Average exchange rates for Q42012 were $1.61:£1.00 and $1.29:€1.00 (2011: $1.57:£1.00 and $1.35:€1.00).

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 3TC® and ZEFFIX®which are trade marks of GSK, PENTASA® which is a registered trade mark ofFERRING B.V., LIALDA® which is a trade mark of Nogra International Limited,MEZAVANT® which is a trade mark of Giuliani International Limited and DAYTRANA®which is a trade mark of Noven Pharmaceuticals Inc. Certain trade marks ofShire plc or companies within the Shire group are set out in Shire's AnnualReport on Form 10-K for the years ended December 31, 2011 and 2012 and theQuarterly Report on Form 10-Q for the three months and nine months endedSeptember 30, 2012.