Shire plc: Continued Strong Product Sales Performance in Q3: On Track to Deliver Significant 2011 Earnings Growth

By Shire Plc, PRNE
Thursday, October 27, 2011

DUBLIN, October 28, 2011 -

Shire plc (LSE: SHP, NASDAQ: SHPGY), the global specialty biopharmaceutical company, announces results for the three months to September 30, 2011.

    Financial Highlights             Q3 2011(1)

    Product sales             $1,018 million    +28%
    Total revenues            $1,086 million    +24%

    Non GAAP operating income   $341 million    +15%
    US GAAP operating income    $255 million    +64%
    Non GAAP diluted earnings
    per ADS                            $1.28    +10%
    US GAAP diluted earnings
    per ADS                            $1.02    +96%
    Non GAAP cash generation    $296 million     +9%
    Non GAAP free cash flow     $138 million    +56%
    US GAAP net cash provided
    by operating activities     $179 million    +26%

(1)    Percentages compare to equivalent period in 2010.

The Non GAAP financial measures included within this release are explained on page 24, and are reconciled to the most directly comparable financial measures prepared in accordance with US GAAP on pages 19 - 23.

Angus Russell, Chief Executive Officer, commented:

“Shire has delivered another strong set of quarterly results. Total product sales were up 28% to $1,018 million, with our newly acquired regenerative medicine product, DERMAGRAFT for Diabetic Foot Ulcers, contributing sales of $50 million in the quarter. We’re on track to deliver significant 2011 earnings growth.

Sales of our rare disease treatments were very strong: with VPRIV up 31% and REPLAGAL up 40% versus the same quarter in 2010. FIRAZYR, our self-administered treatment for acute attacks of Hereditary Angioedema, was approved by the FDA in August and launched just a few weeks ago; initial demand from patients has been positive. This week we have also initiated a rolling Biologics License Application for REPLAGAL in the US, designated Fast Track by the FDA.

The US ADHD market continues to grow and with a strong ‘back to school’ season, our portfolio of treatments has gained share. VYVANSE sales were up 32% and INTUNIV sales grew 50%.

The investment in our product portfolio is already delivering benefits and we believe our R&D pipeline will provide important therapies to patients around the world. In addition to initiating Phase 3 clinical trials for VYVANSE as adjunctive therapy in Major Depressive Disorder (MDD), we’re releasing highlights of exploratory data showing that cognition and executive function were improved in patients with MDD taking VYVANSE as adjunctive therapy. We’ve also released positive new clinical data related to our Phase 3 European ADHD clinical program. Overall, we’ve increased investment in our R&D programs by 21% compared to Q3 2010, and still generated good earnings growth and strong cashflows.

Over the course of the year we’ve seen market expectations for Shire’s 2011 earnings rise, with further increases in the last quarter. After these good third quarter results, and after taking account of the lower royalty income that we will be recording in future periods, we remain on track to meet these increased expectations. We anticipate that this will be another very good year for Shire as we deliver strong sales and continue our investment program for sustained future growth.”

FINANCIAL SUMMARY

Third Quarter 2011 Unaudited Results

                            Q3 2011                       Q3 2010
                                       Non                          Non
                US GAAP   Adjustments  GAAP  US GAAP  Adjustments   GAAP
                     $M        $M       $M       $M          $M       $M
    Total
    revenues      1,086         -    1,086      874           -       874
    Operating
    income          255        86      341      156         142       298

    Diluted
    earnings
    per ADS       $1.02     $0.26    $1.28    $0.52       $0.64     $1.16
  • Product sales were up 28% to $1,018 million (Q3 2010: $794 million) as our existing products continued to demonstrate strong growth even when compared to the very good performance in Q3 2010. In Q3 2011 we recognized the first full quarter of DERMAGRAFT® sales which contributed six percentage points to product sales growth. On a constant exchange rate (”CER”) basis, which is a Non GAAP measure, product sales were up 25%.

Product sales in the quarter benefited from higher ADDERALL XR® sales, in part due to significantly lower sales deductions following a lowering of the estimate of inventory in the US retail pipeline.

  • The strong product sales growth more than offset declines in 3TC® and ZEFFIX® royalties, both of which are now affected by the disagreement with GlaxoSmithKline (”GSK”), to give growth in total revenues of 24%, to $1,086 million in the quarter (Q3 2010: $874 million).

  • As expected, research and development (”R&D”) was up 21% on a Non GAAP basis compared to Q3 2010, as we continue to invest in both early and late stage programs across our business to enable us to deliver future growth. On a US GAAP basis, R&D expenditure increased 2% compared to Q3 2010.

  • Non GAAP operating income was up 15% to $341 million (Q3 2010: $298 million). As expected, Non GAAP operating expenses increased at broadly the same rate as the increase in product sales compared to Q3 2010. This increase was due to increased investment in our R&D program and higher selling, general and administrative (”SG&A”) expenditure as we absorb the operating costs of Advanced BioHealing Inc. (”ABH”) and Movetis, neither of which were incurred in Q3 2010, in addition to supporting product launches and our continued growth.

Non GAAP diluted earnings per American Depositary Share (”ADS”) were up 10% to $1.28 (Q3 2010: $1.16), due to the higher Non GAAP operating income, partially offset by higher Non GAAP Other Expenses.

  • On a US GAAP basis, operating income was up 64% to $255 million (Q3 2010: $156 million). Q3 2010 included the up-front payment to Acceleron Pharma Inc. (”Acceleron”) and impairment charges relating to the divestment of DAYTRANA®.

US GAAP diluted earnings per ADS were up 96% to $1.02 (Q3 2010: $0.52), due to both higher US GAAP operating and Other Income (which for US GAAP includes the gain on disposal of shares held in Vertex Pharmaceuticals Inc. (”Vertex”)).

  • Cash generation, a Non GAAP measure, was up 9% to $296 million (Q3 2010: $271 million). Higher cash receipts from gross product sales were partially offset by lower royalty receipts and higher cash payments on the increased investment in R&D and SG&A, as well as higher sales deduction payments in the quarter.

Free cash flow, also a Non GAAP measure, was up 56% to $138 million compared to Q3 2010.  Free cash flow in Q3 2010 ($89 million) included the impact of the $45 million upfront payment to Acceleron.

On a US GAAP basis, net cash provided by operating activities was $179 million (Q3 2010: $142 million).

2011 OUTLOOK

After these third quarter results we remain on track to meet current market expectations for 2011 earnings.

For the full year we expect to see continued strong product sales growth. Royalty and other revenues combined are expected to continue to decline but now by around 17% for the full year (previous expectation, 10%) compared to 2010. Taken together, we expect year on year growth in total revenues in the second half to be broadly in line with the rate of 22% seen in the first half.

We continue to expect gross margins to be marginally diluted in the second half as a result of the inclusion of ABH, although gross margins for the full year should be in line with those recorded in 2010.

As previously indicated, we have significant opportunities for future growth. During the year we have initiated a program of investment to advance our pipeline and continue the international expansion of our portfolio. We continue to expect that combined R&D and SG&A for the full year will be around 20% higher than 2010, reflecting this investment program and the inclusion of ABH’s cost base in 2011.

We anticipate our Non GAAP effective tax rate to be between 22 and 24% for the full year.

Overall, the operational leverage we expect to achieve for the full year will drive significant earnings growth in 2011, and we reiterate our aspirational growth targets.

THIRD QUARTER 2011 AND RECENT PRODUCT AND PIPELINE DEVELOPMENTS

Products

FIRAZYR® - for the treatment of acute attacks of Hereditary Angioedema (”HAE”) in adults

  • On August 25, 2011 Shire announced that the U.S. Food and Drug Administration (”FDA”) had granted marketing approval for FIRAZYR in the US for treatment of acute attacks of HAE in adults 18 years of age and older. After injection training, patients may self-administer FIRAZYR, the first and only self-administered subcutaneous treatment for acute HAE. FIRAZYR has orphan drug designation status in Europe and the US for the treatment of acute HAE.

VPRIV® and REPLAGAL® Manufacturing Update

  • Shire has completed process validation runs for VPRIV at its new Lexington manufacturing facility and intends to file for regulatory approvals starting in November 2011. Approval for the manufacture of VPRIV at the Lexington facility is anticipated in early 2012 and will significantly increase Shire’s manufacturing capacity for VPRIV. In addition, this approval will release further capacity for the manufacturing of REPLAGAL at Shire’s Alewife facility where both VPRIV and REPLAGAL are currently manufactured.

VPRIV - for the treatment of Type 1 Gaucher disease

  • Shire’s continued focus remains on providing patients with long term, uninterrupted treatment with VPRIV, with approximately 1,200 patients worldwide currently on treatment. Shire has experienced an increase in demand for VPRIV following the recent announcement of CEREZYME® shortages in the US and other countries. Shire can accommodate a limited number of additional patients prior to approval of the Lexington facility. Shire will carefully monitor and seek to manage this increased demand until the Lexington facility is approved.  

REPLAGAL - for the treatment of Fabry disease

  • Earlier this week, Shire initiated a rolling Biologics License Application (”BLA”) for REPLAGAL in the US, designated Fast Track by the FDA. Shire plans to submit the final BLA sections in November 2011 and will request Priority Review of this submission in response to the continuing supply shortage of FABRAZYME®. In 2010 Shire withdrew its BLA in order to gather additional clinical data for REPLAGAL. These data, including data from Shire’s ongoing US Treatment Protocol, have now been evaluated and will be included in the new filing.

Shire is continuing to experience strong demand for REPLAGAL from both patients new to treatment and patients switching from FABRAZYME. Approximately 2,800 patients worldwide are currently receiving REPLAGAL and Shire can accommodate a modest number of new patients per month prior to approval of the Lexington facility. Shire will continue to carefully monitor the addition of new patients to ensure that we can provide patients with uninterrupted long term supply of REPLAGAL at the recommended dose and frequency.

Pipeline

DERMAGRAFT - for the treatment of Venous Leg Ulcers (”VLU”)

  • On August 24, 2011 Shire announced its preliminary analysis of the top-line results from ABH’s Phase 3 pivotal trial of DERMAGRAFT in subjects with VLU. The international pivotal trial was designed as a prospective, multicenter, randomized, controlled clinical study to assess the product’s safety and efficacy in the promotion of healing VLU. The preliminary analysis of the data was that the trial did not meet the primary endpoint mutually agreed with the FDA and European Medicine Agency.

VYVANSE® - for the treatment of Attention Deficit Hyperactivity Disorder (”ADHD”)

  • On October 21, 2011 Shire reported positive top line results of the first European Phase 3 study of once-daily lisdexamfetamine dimesylate (”LDX”) in children and adolescents aged 6 to 17 years with ADHD. The study, conducted at 48 sites across Europe, demonstrated that a once-daily morning dose of LDX resulted in positive efficacy results on the primary as well as key secondary endpoints compared to placebo, and a safety profile consistent with the known effects of amphetamine treatment and previous LDX trials. In the study, patients were randomized to receive LDX, osmotic-controlled extended-release methylphenidate (”OROS-MPH”; marketed as CONCERTA® and CONCERTA XL® by Johnson & Johnson) or placebo, over a period of seven weeks. The CONCERTA arm was included in order to provide data versus the current European standard of care as it is often required for approval and to support appropriate reimbursement. The primary measure was the change in total score of the ADHD-RS-IV of LDX versus placebo with OROS-MPH included as an active control.

VYVANSE - for the treatment of inadequate response in Major Depressive Disorder (”MDD”)

  • Today, in the live conference call for investors, Shire will present the highlights of new data from an exploratory study for VYVANSE as adjunctive therapy in adults with significant cognitive impairments with partially or fully remitted MDD. This study met its primary and secondary endpoints.

  • A Phase 3 clinical trial program to assess the efficacy and safety of VYVANSE as adjunctive therapy in patients with MDD has been initiated.

BOARD CHANGES

Mr Patrick Langlois, who has been a member of Shire’s Board of Directors for 6 years, will be stepping down from the Board and from the Company’s Audit, Compliance & Risk Committee and its Remuneration Committee on the expiry of his current term of office on November 10, 2011. Matthew Emmens, Chairman of Shire, said “We thank Patrick for his contribution to Shire over the past few years”.

ADDITIONAL INFORMATION

The following additional information is included in this press release:

                                      Page
    Overview of Third
    Quarter 2011 Financial
    Results                             6
    Financial Information              10
    Non GAAP Reconciliations           19
    Safe Harbor Statement              23
    Explanation of Non GAAP
    Measures                           24
    Trademarks                         25

OVERVIEW OF THIRD QUARTER 2011 FINANCIAL RESULTS

1.    Product sales

For the three months to September 30, 2011 product sales increased by 28% to $1,018.4 million (Q3 2010: $794.3 million) and represented 94% of total revenues (Q3 2010: 91%).

Product Highlights

                                                                 US Exit
                                                                 Market
                                       Year on year growth      Share(1)
                         Sales $M   Sales       CER     US Rx(1)
    Product
    VYVANSE               199.7      +32%       +32%       +20%       16%
    ADDERALL XR           149.9      +50%       +50%        +8%        7%
    REPLAGAL              129.0      +40%       +31%       n/a(3)    n/a(3)
    ELAPRASE(R)           109.6      +13%        +7%       n/a(2)    n/a(2)
    LIALDA/MEZAVANT(R)     89.7      +18%       +17%        +7%       21%
    VPRIV                  64.6      +31%       +27%       n/a(2)    n/a(2)
    INTUNIV(R)             56.1      +50%       +50%       +59%        4%
    PENTASA(R)             55.9       -2%        -2%        -4%       15%
    DERMAGRAFT             50.0       n/a        n/a       n/a(2)    n/a(2)
    FOSRENOL(R)            40.5      -10%       -14%       -17%        5%
    FIRAZYR                 7.2     +148%      +129%       n/a(2)    n/a(2)
    RESOLOR(R)              1.5       n/a        n/a       n/a(3)    n/a(3)
    OTHER                  64.7      -25%(4)    -29%       n/a       n/a
    Total product sales 1,018.4      +28%       +25%

(1)      Data provided by IMS Health National Prescription Audit (”IMS NPA”). Exit market share represents the average monthly US market share in the month ended September 30, 2011.

(2)          IMS NPA Data not available.

(3)    Not sold in the US in Q3 2011.

(4)    Q3 2010 included DAYTRANA product sales of $14.7 million.

VYVANSE - ADHD

The growth in VYVANSE product sales resulted from higher prescription demand, due to growth in the US ADHD market and increases to VYVANSE’s share of that market, in addition to the effect of a price increase taken since Q3 2010. These positive factors were partially offset by higher sales deductions in Q3 2011 compared to Q3 2010.

ADDERALL XR - ADHD

Product sales for ADDERALL XR increased due to higher prescription demand, due primarily to growth in the US ADHD market and lower sales deductions. Sales deductions as a percentage of gross product sales (47% for the quarter) were significantly lower than Q3 2010 (60%) and the first half of 2011 (61%), due primarily to a lowering of the estimate of inventory in the US retail pipeline, and the related sales deduction reserve. We expect that sales deductions will be between 60-65% of gross product sales for the fourth quarter.

REPLAGAL - Fabry disease

The growth in REPLAGAL product sales was driven by the treatment of new patients, being both naïve patients and switches from FABRAZYME. Reported REPLAGAL sales also benefited from favorable foreign exchange, due to the weaker US dollar in Q3 2011 compared to Q3 2010.

ELAPRASE- Hunter syndrome

Product sales for ELAPRASE increased as a result of increased patients on therapy across all regions in which ELAPRASE is sold. Reported ELAPRASE sales also benefited from favorable foreign exchange.

LIALDA/MEZAVANT - Ulcerative colitis

LIALDA/MEZAVANT product sales continued to grow in Q3 2011, driven primarily by increased US prescription demand due to higher US market share and the effect of price increases taken since Q3 2010, partially offset by customer destocking in Q3 2011.

VPRIV - Gaucher disease

VPRIV product sales growth was driven by the treatment of new patients, being both naïve patients and switches from CEREZYME. Reported VPRIV sales also benefited from favorable foreign exchange.

INTUNIV - ADHD

INTUNIV product sales were up 50% compared to Q3 2010 primarily driven by strong growth in prescription demand compared to Q3 2010. The growth in product sales was marginally less than the increase in US prescription demand due to de-stocking in Q3 2011 compared to stocking in Q3 2010 and slightly higher sales deductions as a percentage of product sales in Q3 2011.

PENTASA - Ulcerative colitis

The decrease in PENTASA product sales was driven by a decrease in US prescription demand as well as higher destocking in Q3 2011 as compared to Q3 2010. This decrease was partially offset by price increases and lower sales deductions as compared to Q3 2010.

DERMAGRAFT - Diabetic Foot Ulcers (”DFU”)

DERMAGRAFT(1) continues to see strong revenue growth in the US, up 27% compared to Q3 2010. The growth resulted from a combination of an expanding US diabetic population, continued adoption of DERMAGRAFT as an efficacious, cost-effective treatment for DFU, and the continued addition of sales representatives to market the product.

(1) Shire acquired DERMAGRAFT through its acquisition of ABH in Q2 2011.

FOSRENOL - Hyperphosphatemia

Product sales of FOSRENOL decreased due to the combined effect of lower US prescription demand resulting from a fall in market share and higher sales deductions in Q3 2011 as compared to Q3 2010.

2.    Royalties

                                                         Year on year
                                                            growth
                          Royalties to
    Product                 Shire $M          Royalties             CER

    ADDERALL XR   1.00        22.9               27%                27%
    3TC and
    ZEFFIX        1.00        17.3              -57%               -58%
    FOSRENOL      1.00        10.9               56%                56%
    Other         1.00        11.7                7%                 0%
    Total         1.00        62.8              -18%               -19%

Royalty income decreased in Q3 2011 compared to Q3 2010 as higher royalties on ADDERALL XR and FOSRENOL were more than offset by lower royalties from 3TC and ZEFFIX.

Royalty income from 3TC and ZEFFIX continues to be adversely impacted by increased competition from other products. Additionally, in Q3 2011 Shire has continued to not recognize royalty income for 3TC for certain territories due to a disagreement between GSK and Shire about how the relevant royalty rate should be applied given the expiry dates of certain patents. In Q3 2011 this disagreement extended to ZEFFIX, and accordingly Shire has not recognized ZEFFIX royalty income for the affected territories. GSK and Shire continue to hold discussions in order to clarify this issue.

3.    Financial details

Cost of product sales

                                     % of                 % of
                                  product              product
                      Q3 2011       sales  Q3 2010       sales
                           $M                   $M
    Cost of product
    sales (US GAAP)     166.5         16%    112.7         14%
    Unwind of
    DERMAGRAFT
    inventory fair
    value step-up on
    acquisition          (9.0)                   -
    Transfer of
    manufacturing
    from Owings Mills    (3.4)                (7.3)
    Depreciation         (8.6)                (2.3)
    Cost of product
    sales (Non GAAP)    145.5         14%    103.1         13%

Non GAAP cost of product sales as a percentage of product sales increased in Q3 2011 compared to the same period in 2010 due to the inclusion of DERMAGRAFT and the impact of a $10.0 million inventory write down of expired ELAPRASE unpurified bulk material, which was not prioritised for purification as capacity was directed towards meeting demand for REPLAGAL and VPRIV.

US GAAP cost of product sales as a percentage of product sales was two percentage points higher than the same period in 2010 due to the ELAPRASE write down and the inclusion of DERMAGRAFT, including the fair value adjustment for DERMAGRAFT inventories in Q3 2011.

R&D

                                % of              % of
                             product           product
                    Q3 2011    sales  Q3 2010    sales
                         $M                $M

    R&D (US GAAP)     201.5      20%    197.9      25%
    Impairment of
    intangible
    assets            (16.0)                -
    Up-front
    payment to
    Acceleron             -             (45.0)
    Depreciation       (5.6)             (4.4)
    R&D (Non GAAP)    179.9      18%    148.5      19%

Non GAAP R&D was up $31.4 million, or 21%, due to growing investment in a number of targeted R&D programs, including Sanfilippo A and other early stage development programs, in addition to increased investment in new uses for VYVANSE. Non GAAP R&D in Q3 2011 also included expenditure on the development programs acquired with Movetis and ABH, neither of which were incurred in Q3 2010.

On a US GAAP basis, R&D costs in Q3 2011 also include an intangible asset impairment charge, and Q3 2010 included the up-front payment to Acceleron.

SG&A

                                % of              % of
                             product           product
                    Q3 2011    sales  Q3 2010    sales
                         $M                $M
    SG&A (US GAAP)    452.1      44%    392.4      49%
    Intangible
    asset
    amortization      (46.4)            (31.2)
    Impairment of
    intangible
    assets                -             (42.7)
    Depreciation      (16.7)            (16.1)
    SG&A (Non GAAP)   389.0      38%    302.4      38%

Non GAAP SG&A increased by $86.6 million, or 29% as we continue to support the growth of our existing and newly launched products. Non GAAP SG&A in Q3 2011 included expenditure for ABH and Movetis which was not incurred in the same period in 2010.

On a US GAAP basis, SG&A costs in Q3 2010 included an impairment charge to write down the DAYTRANA intangible asset to its fair value less costs to sell following agreement to divest the product to Noven Pharmaceuticals Inc. (”Noven”).

Reorganization costs

For the three months to September 30, 2011 Shire recorded reorganization costs of $5.0 million (Q3 2010: $9.7 million) relating to the transfer of manufacturing from its Owings Mills facility and the establishment of an international commercial hub in Switzerland.

Integration and acquisition costs

For the three months to September 30, 2011 Shire recorded integration and acquisition costs of $5.3 million (Q3 2010: $5.8 million), which related to the acquisition and integration of ABH ($3.6 million) and the integration of Movetis ($1.7 million). In 2010 integration and acquisition costs solely related to the acquisition of Movetis.

Interest expense

For the three months to September 30, 2011 Shire incurred interest expense of $9.7 million (Q3 2010: $8.3 million). Interest expense principally relates to the coupon and amortization of issue costs on Shire’s $1,100 million 2.75% convertible bonds due 2014.

Other (expense)/income, net

                                 Q3 2011   Q3 2010
                                      $M        $M
    Other income, net (US GAAP)     15.6      0.8
    Gain on sale of investments    (23.5)       -
    Other (expense)/income, net
    (Non GAAP)                      (7.9)     0.8

On a US GAAP basis, for the three months to September 30, 2011, Shire recognized $15.6 million of Other income, net (2010: $0.8 million) which includes a gain of $23.5 million arising on the disposal of substantially all of Shire’s holding in Vertex (Shire received these shares as partial consideration for its investment in ViroChem Pharma, Inc following ViroChem Pharma, Inc being acquired by Vertex).

Non GAAP Other expense, net in Q3 2011 (which excludes the gain on disposal of shares held in Vertex) included the impact of increased foreign exchange losses arising in the quarter, reflecting volatility in a number of currencies to which Shire has exposure.

Taxation

The Non GAAP effective tax rate in Q3 2011 of 25% was higher than Q3 2010 (24%) due to unfavourable changes in the profit mix in the quarter. We anticipate our Non GAAP effective tax rate to be between 22 and 24% for the full year.

The US GAAP effective rate of tax in Q3 2011 of 27% was lower than Q3 2010 (35%) as Q3 2010 included the up-front payment to Acceleron and the intangible asset impairment charges for DAYTRANA. Taken together, these costs increased the US GAAP tax rate in Q3 2010 as they were either incurred in territories with tax rates lower than Shire’s effective rate or in territories where the establishment of valuation allowances precluded the recognition of any tax benefit. Were the impact of these items excluded the effective tax rate in Q3 2010 would have been 24%.

FINANCIAL INFORMATION

TABLE OF CONTENTS

                                              Page

    Unaudited US GAAP Consolidated
    Balance Sheets                              11

    Unaudited US GAAP Consolidated
    Statements of Income                        12

    Unaudited US GAAP Consolidated
    Statements of Cash Flows                    14

    Selected Notes to the Unaudited US
    GAAP Financial Statements
    (1) Earnings per share                      16
    (2) Analysis of revenues                    17

    Non GAAP reconciliation                     19

Unaudited US GAAP financial position as of September 30, 2011
Consolidated Balance Sheets

                             September 30,  December 31,
                                      2011          2010
                                        $M            $M
    ASSETS
    Current assets:
    Cash and cash
    equivalents                      276.4         550.6
    Restricted cash                   21.0          26.8
    Accounts receivable, net         844.7         692.5
    Inventories                      325.9         260.0
    Deferred tax asset               179.0         182.0
    Prepaid expenses and
    other current assets             159.3         168.4

    Total current assets           1,806.3       1,880.3

    Non-current assets:
    Investments                       30.1         101.6
    Property, plant and
    equipment, net                   918.8         853.4
    Goodwill                         596.2         402.5
    Other intangible assets,
    net                            2,561.7       1,978.9
    Deferred tax asset               109.5         110.4
    Other non-current assets          43.0          60.5

    Total assets                   6,065.6       5,387.6

    LIABILITIES AND EQUITY
    Current liabilities:
    Accounts payable and
    accrued expenses               1,312.7       1,239.3
    Convertible bonds              1,100.0             -
    Deferred tax liability             4.3           4.4
    Other current
    liabilities                       56.0          49.6

    Total current
    liabilities                    2,473.0       1,293.3

    Non-current liabilities:
    Convertible bonds                    -       1,100.0
    Deferred tax liability           540.4         352.1
    Other non-current
    liabilities                       97.5         190.8

    Total liabilities              3,110.9       2,936.2

    Equity:
    Common stock of 5p par
    value; 1,000 million
    shares authorized; and
    562.5 million shares
    issued and outstanding
    (2010: 1,000 million
    shares authorized; and
    562.2 million shares
    issued and outstanding)           55.7          55.7
    Additional paid-in
    capital                        2,824.5       2,746.4
    Treasury stock: 12.5
    million shares (2010:
    14.0 million)                   (293.1)       (276.1)
    Accumulated other
    comprehensive income              88.5          85.7
    Retained
    earnings/(accumulated
    deficit)                         279.1        (160.3)

    Total equity                   2,954.7       2,451.4

    Total liabilities and
    equity                         6,065.6       5,387.6

Unaudited US GAAP results for the three months and nine months to September 30, 2011
Consolidated Statements of Income

                                                                 9 months
                       3 months to   3 months to   9 months to         to
                         September     September     September  September
                               30,           30,           30,        30,
                              2011          2010          2011       2010
                                $M            $M            $M         $M
    Revenues:
    Product sales          1,018.4         794.3       2,901.0    2,276.8
    Royalties                 62.8          76.5         199.8      254.5
    Other revenues             4.9           3.5          20.4        8.6
    Total revenues         1,086.1         874.3       3,121.2    2,539.9

    Costs and
    expenses:
    Cost of product
    sales(1)                 166.5         112.7         434.7      333.7
    Research and
    development(1)           201.5         197.9         556.3      475.9
    Selling, general
    and
    administrative(1)        452.1         392.4       1,295.3    1,106.7
    Loss/(gain) on
    sale of product
    rights                     0.3             -           3.8       (4.1)
    Reorganization
    costs                      5.0           9.7          18.0       23.3
    Integration and
    acquisition costs          5.3           5.8           7.9        6.4
    Total operating
    expenses                 830.7         718.5       2,316.0    1,941.9

    Operating income         255.4         155.8         805.2      598.0

    Interest income            0.3           1.0           1.5        1.9
    Interest expense          (9.7)         (8.3)        (28.8)     (25.6)
    Other income, net         15.6           0.8          15.9        9.0
    Total other
    income/(expense),
    net                        6.2          (6.5)        (11.4)     (14.7)

    Income before
    income taxes and
    equity in
    earnings/(losses)
    of equity method
    investees                261.6         149.3         793.8      583.3
    Income taxes             (69.5)        (52.7)       (187.3)    (160.8)
    Equity in
    earnings/(losses)
    of equity method
    investees, net of
    taxes                      0.8          (0.3)           3.2       0.2
    Net income               192.9          96.3         609.7      422.7

(1) Cost of product sales includes amortization of intangible assets relating to favorable manufacturing contracts of $0.5 million for the three months to September 30, 2011 (2010: $0.4 million) and $1.4 million for the nine months to September 30, 2011 (2010: $1.3 million). R&D costs include intangible assets impairment charges of $16.0 million for the three months and nine months to September 30, 2011 (2010: $nil). SG&A costs include amortization and impairment charges of intangible assets relating to intellectual property rights acquired of $46.4 million for the three months to September 30, 2011 (2010: $73.9 million) and $119.1 million for the nine months to September 30, 2011 (2010: $142.3 million).

Unaudited US GAAP results for the three months and nine months to September 30, 2011
Consolidated Statements of Income (continued)

                      3 months to   3 months to   9 months to   9 months to
                                      September     September     September
                    September 30,           30,           30,           30,
                             2011          2010          2011          2010

    Earnings per
    ordinary share
    - basic                 35.0c         17.6c        110.6c         77.4c

    Earnings per
    ADS - basic            105.0c         52.8c        331.8c        232.2c

    Earnings per
    ordinary share
    - diluted               33.9c         17.3c        106.7c         76.0c

    Earnings per
    ADS - diluted          101.7c         51.9c        320.1c        228.0c

    Weighted
    average number
    of shares:
                         Millions      Millions      Millions      Millions
    Basic                   551.3         547.0         551.2         546.1
    Diluted                 593.8         556.7         595.0         589.7

Unaudited US GAAP results for the three months and nine months to September 30, 2011
Consolidated Statements of Cash Flows

                                       3 months to          9 months to
                                      September 30,        September 30,
                                       2011       2010     2011        2010
                                         $M         $M       $M          $M
    CASH FLOWS FROM OPERATING
    ACTIVITIES:

    Net income                        192.9       96.3    609.7       422.7
    Adjustments to reconcile net
    income to net cash provided by
    operating activities:
                Depreciation and
                amortization           80.0       60.0    212.3       189.2
                Share based
                compensation           19.8       17.5     54.7        44.2
                Impairment of
                intangible assets      16.0       42.7     16.0        42.7
                Gain on sale of
                non-current
                investments           (23.5)         -    (23.5)      (11.1)
                Loss/(gain) on sale
                of product rights       0.3          -      3.8        (4.1)
                Other                  11.7       (5.7)     5.9         5.2
    Movement in deferred taxes        (30.9)     (10.0)   (13.2)       48.7
    Equity in (earnings)/losses of
    equity method investees            (0.8)       0.3     (3.2)       (0.2)
    Changes in operating assets
    and liabilities:
                Increase in
                accounts receivable   (66.7)     (94.1)  (122.8)     (138.0)
                (Decrease)/increase
                in sales deduction
                accrual               (19.9)      14.8     46.2       169.0
                Increase in
                inventory             (12.2)      (4.1)   (42.8)      (54.1)
                Decrease/(increase)
                in prepayments and
                other assets           31.1       16.2     17.3       (67.0)
                (Decrease)/increase
                in accounts payable
                and other
                liabilities           (24.3)       2.3   (101.4)      (41.0)
    Returns on investment from
    joint venture                       5.2        5.8      5.2         5.8
    Net cash provided by operating
    activities(A)                     178.7      142.0    664.2       612.0

Unaudited US GAAP results for the three months and nine months to September 30, 2011
Consolidated Statements of Cash Flows (continued)

                          3 months to September     9 months to September
                                   30,                       30,
                               2011          2010        2011          2010
                                 $M            $M          $M            $M

    CASH FLOWS FROM
    INVESTING
    ACTIVITIES:

    Movements in
    restricted cash             0.9       (553.0)         5.7       (547.0)
    Purchases of
    subsidiary
    undertakings, net
    of cash acquired           (3.8)           -       (723.5)           -
    Payments on foreign
    exchange contracts
    related to Movetis            -        (21.2)           -        (21.2)
    Purchases of
    non-current
    investments                (3.8)        (1.0)        (8.3)        (1.0)
    Purchases of
    property, plant and
    equipment ("PP&E")        (40.9)       (53.5)      (135.9)      (261.7)
    Purchases of
    intangible assets          (5.2)           -         (5.2)        (2.7)
    Proceeds from
    disposal of
    non-current
    investments and
    PP&E                       94.7            -         94.7          2.1
    Proceeds/deposits
    received on sales
    of product rights           1.9            -          8.8            -
    Returns of equity
    investments and
    proceeds from short
    term investments            0.1            -          1.7            -
    Net cash provided
    by/(used in)
    investing
    activities(B)              43.9       (628.7)      (762.0)      (831.5)

    CASH FLOWS FROM
    FINANCING
    ACTIVITIES:

    Proceeds from
    drawing of
    revolving credit
    facility                      -             -        30.0            -
    Repayment of
    revolving credit
    facility                  (30.0)             -      (30.0)           -
    Repayment of debt
    acquired with ABH             -             -       (13.1)           -
    Payment under
    building finance
    obligation                 (0.6)         (0.4)       (1.0)        (1.8)
    Extinguishment of
    building finance
    obligation                    -             -           -        (43.1)
    Tax benefit of
    stock based
    compensation                4.9           5.2        23.7          9.6
    Proceeds from
    exercise of options         0.1           0.2         0.9          2.1
    Payment of dividend           -             -       (60.5)       (49.8)
    Payments to acquire
    shares by Employee
    Share Ownership
    Trust ("ESOT")            (62.9)             -     (126.8)        (1.7)
    Net cash (used
    in)/provided by
    financing
    activities(C)             (88.5)           5.0     (176.8)       (84.7)
    Effect of foreign
    exchange rate
    changes on cash and
    cash equivalents
    (D)                        (2.3)         (7.5)        0.4         (1.4)
    Net
    increase/(decrease)
    in cash and cash
    equivalents(A) +(B)
    +(C) +(D)                 131.8        (489.2)     (274.2)      (305.6)

    Cash and cash
    equivalents at
    beginning of period       144.6         682.5       550.6        498.9
    Cash and cash
    equivalents at end
    of period                 276.4         193.3       276.4        193.3

Unaudited US GAAP results for the three months and nine months to September 30, 2011

Selected Notes to the Financial Statements

(1)  Earnings Per Share (”EPS”)

                   3 months to   3 months to   9 months to   9 months to
                     September     September     September     September
                           30,           30,           30,           30,
                          2011          2010          2011          2010
                            $M            $M            $M            $M

    Numerator for
    basic EPS            192.9          96.3         609.7         422.7
    Interest on
    convertible
    bonds, net of
    tax (1)                8.4             -          25.2          25.2

    Numerator for
    diluted EPS          201.3          96.3         634.9         447.9

    Weighted
    average
    number of
    shares:
                      Millions      Millions      Millions      Millions
    Basic(2)             551.3         547.0         551.2         546.1
    Effect of
    dilutive
    shares:
    Stock
    options(3)             9.0           9.7          10.4          10.4
    Convertible
    bonds 2.75%
    due 2014(4)           33.5             -          33.4          33.2

    Diluted              593.8         556.7         595.0         589.7
  1. For the three month period ended September 30, 2010 interest on the convertible bond has not been added back as the effect would be anti-dilutive.
  2. Excludes shares purchased by ESOT and presented by Shire as treasury stock.
  3. Calculated using the treasury stock method.
  4. Calculated using the “if converted” method.

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

                     3 months to   3 months to   9 months to   9 months to
                       September     September     September     September
                             30,           30,           30,           30,
                            2011          2010          2011          2010
                        Millions      Millions      Millions      Millions
    Share awards(1)          3.2           3.6           3.9           8.9
    Convertible
    bonds 2.75% due
    2014(2)                    -          33.2             -             -
  1. Certain stock options have been excluded from the calculation of diluted EPS because (a) their exercise prices exceeded Shire plc’s average share price during the calculation period or (b) satisfaction of the required performance/market conditions cannot be measured until the conclusion of the performance period.
  2. For the three month period ended September 30, 2010 the ordinary shares underlying the convertible bonds have not been included in the calculation of the diluted weighted average number of shares, as the effect of their inclusion would be anti-dilutive.

Unaudited US GAAP results for the three months to September 30, 2011

Selected Notes to the Financial Statements

(2)  Analysis of revenues

    3 months to
    September 30,         2011    2010     2011        2011
                                              %  % of total
                            $M      $M   change     Revenue
    Net product
    sales:
    Specialty Pharmaceutical
    ("SP")
    ADHD
    VYVANSE              199.7   151.2      32%         18%
    ADDERALL XR          149.9    99.7      50%         14%
    INTUNIV               56.1    37.3      50%          5%
    EQUASYM                5.1     5.7     -11%         <1%
    DAYTRANA                 -    14.7      n/a         n/a
                         410.8   308.6      33%         38%
    GI
    LIALDA/MEZAVANT       89.7    76.0      18%          8%
    PENTASA               55.9    57.1      -2%          5%
    RESOLOR                1.5       -      n/a         <1%
                         147.1   133.1      11%         14%
    General
    products
    FOSRENOL              40.5    45.2     -10%          4%
    XAGRID(R)             23.3    20.5      14%          2%
    CARBATROL(R)          12.3    20.3     -39%          1%
                          76.1    86.0     -12%          7%

    Other product
    sales                 24.0    25.3      -5%          2%
    Total SP
    product sales        658.0   553.0      19%         61%

    Human Genetic
    Therapies
    ("HGT")
    REPLAGAL             129.0    92.1      40%         12%
    ELAPRASE             109.6    96.8      13%         10%
    VPRIV                 64.6    49.5      31%          6%
    FIRAZYR                7.2     2.9     148%         <1%
    Total HGT
    product sales        310.4   241.3      29%         28%

    Regenerative
    Medicine ("RM")
    DERMAGRAFT            50.0       -      n/a          5%
    Total RM
    product sales         50.0       -      n/a          5%

    Total product
    sales              1,018.4   794.3      28%         94%

    Royalties:
    ADDERALL XR           22.9    18.0      27%          2%
    3TC and ZEFFIX        17.3    40.6     -57%          2%
    FOSRENOL              10.9     7.0      56%          1%
    Other                 11.7    10.9       7%          1%
    Total royalties       62.8    76.5     -18%          6%

    Other revenues         4.9     3.5      40%         <1%

    Total Revenues     1,086.1   874.3      24%        100%

Unaudited US GAAP results for the nine months to September 30, 2011

Selected Notes to the Financial Statements

(2)  Analysis of revenues

    9 months to
    September 30,       2011      2010      2011        2011
                                               %  % of total
                          $M        $M    change     Revenue
    Net product
    sales:
    SP
    ADHD
    VYVANSE            587.9     453.6       30%         19%
    ADDERALL XR        408.0     271.9       50%         13%
    INTUNIV            157.6     123.0       28%          5%
    EQUASYM             15.6      16.3       -4%         <1%
    DAYTRANA               -      49.4       n/a         n/a
                     1,169.1     914.2       28%         37%
    GI
    LIALDA/MEZAVANT    276.0     209.2       32%          9%
    PENTASA            186.2     175.9        6%          6%
    RESOLOR              4.0         -       n/a         <1%
                       466.2     385.1       21%         15%
    General
    products
    FOSRENOL           127.0     137.4       -8%          4%
    XAGRID              69.2      65.4        6%          2%
    CARBATROL           45.6      63.4      -28%          2%
                       241.8     266.2       -9%          8%

    Other product
    sales               71.7      80.2      -11%          2%
    Total SP
    product sales    1,948.8   1,645.7       18%         62%

    HGT
    REPLAGAL           354.3     242.0       46%         11%
    ELAPRASE           340.9     297.4       15%         11%
    VPRIV              186.9      84.0      123%          6%
    FIRAZYR             18.1       7.7      135%          1%
    Total HGT
    product sales      900.2     631.1       43%         29%

    RM
    DERMAGRAFT          52.0         -       n/a          2%
    Total RM
    product sales       52.0         -       n/a          2%

    Total product
    sales            2,901.0   2,276.8       27%         93%

    Royalties:
    ADDERALL XR         66.6      86.3      -23%          2%
    3TC and ZEFFIX      64.1     115.3      -44%          2%
    FOSRENOL            31.4      18.0       74%          1%
    Other               37.7      34.9        8%          1%
    Total royalties    199.8     254.5      -21%          6%

    Other revenues      20.4       8.6      137%          1%

    Total Revenues   3,121.2   2,539.9       23%        100%

Unaudited results for the three months to September 30, 2011

Non GAAP reconciliation

                     US GAAP             Adjustments                 Non GAAP
                                  Acquisitions Divestments,
                       Amortization   &      reorganizations
                     Sept & asset integration & discontinued Reclas September
    3 months to,      30, impair   activities  operations    -sify      30,
                     2011 -ments                           depreciation 2011
                             (a)      (b)          (c)      (d)
                     $M      $M       $M           $M       $M        $M
    Total revenues   1,086.1     -        -            -        -    1,086.1

    Costs and
    expenses:
    Cost of product
    sales              166.5     -     (9.0)       (3.4)     (8.6)     145.5
    Research and
    development        201.5 (16.0)       -           -      (5.6)     179.9
    Selling, general
    and
    administrative     452.1 (46.4)       -                 (16.7)     389.0
    Loss on sale of
    product rights       0.3     -        -        (0.3)        -          -
    Reorganization
    costs                5.0     -        -        (5.0)        -          -
    Integration and
    acquisition costs    5.3     -     (5.3)          -         -          -
    Depreciation           -     -        -           -      30.9       30.9
    Total operating
    expenses           830.7 (62.4)   (14.3)       (8.7)        -      745.3

    Operating income   255.4  62.4     14.3         8.7         -      340.8

    Interest income      0.3     -        -           -         -        0.3
    Interest expense    (9.7)    -        -           -         -       (9.7)
    Other
    income/(expense),
    net                 15.6     -        -       (23.5)        -       (7.9)
    Total other
    income/(expense),
    net                  6.2     -        -       (23.5)        -      (17.3)
    Income before
    income taxes and
    equity in
    earnings of
    equity method
    investees          261.6  62.4     14.3       (14.8)        -      323.5
    Income taxes       (69.5)(16.4)    (2.9)        9.2                (79.6)
    Equity in
    earnings of
    equity method
    investees, net of
    tax                  0.8     -        -           -         -        0.8
    Net income         192.9  46.0     11.4        (5.6)        -      244.7
    Impact of
    convertible debt,
    net of tax           8.4     -        -               -     -        8.4
    Numerator for
    diluted EPS        201.3  46.0     11.4           (5.6)     -      253.1
    Weighted average
    number of shares
    (millions) -
    diluted            593.8     -        -               -     -      593.8
    Diluted earnings
    per ADS            101.7c 23.2c     5.8c          (2.8c)    -      127.9c

The following items are included in Adjustments:

a)Amortization and asset impairments: Impairment of intangible assets ($16.0 million), amortization of intangible assets relating to intellectual property rights acquired ($46.4 million), and tax effect of adjustments;

b)Acquisition and integration activities: Unwind of ABH inventory step-up ($9.0 million), costs associated with the acquisition and integration of ABH ($3.6 million) and integration of Movetis ($1.7 million), and tax effect of adjustments;

c)Divestments, reorganizations and discontinued operations: Accelerated depreciation ($2.2 million) and dual running costs ($1.2 million) on the transfer of manufacturing from Owings Mills to a third party, re-measurement of DAYTRANA contingent consideration to fair value ($0.3 million), reorganization costs ($5.0 million) on the transfer of manufacturing from Owings Mills to a third party and establishment of an international commercial hub in Switzerland, gain on disposal of investment in Vertex ($23.5 million), and tax effect of adjustments; and

d)Depreciation: Depreciation of $30.9 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.

Unaudited results for the three months to September 30, 2010

Non GAAP reconciliation

                 US GAAP                 Adjustments          Non GAAP

                                   Acquis   Divestments,
                           Amorti  itions & reorgan
                 September -zation integr  -izations & Reclas September
    3 months to,    30,   & asset  -ation  discontinued -sify    30,
                   2010  impairments activ operations   deprec  2010
                                    -ities              -iation
                                      (a)     (b)       (c)      (d)
                    $M        $M      $M      $M        $M        $M
    Total revenues 874.3       -       -       -         -      874.3

    Costs and
    expenses:
    Cost of
    product sales  112.7       -       -    (7.3)     (2.3)     103.1
    Research and
    development    197.9       -   (45.0)      -      (4.4)     148.5
    Selling,
    general and
    administrative 392.4   (73.9)      -       -     (16.1)     302.4
    Reorganization
    costs            9.7       -       -    (9.7)        -          -
    Integration
    and
    acquisition
    costs            5.8       -    (5.8)      -         -          -
    Depreciation       -       -       -       -      22.8       22.8
    Total
    operating
    expenses       718.5   (73.9)  (50.8)  (17.0)        -      576.8

    Operating
    income         155.8    73.9    50.8    17.0         -      297.5

    Interest
    income           1.0       -       -       -         -        1.0
    Interest
    expense         (8.3)      -       -       -         -       (8.3)
    Other income,
    net              0.8       -       -       -         -        0.8
    Total other
    expense, net    (6.5)      -       -       -         -       (6.5)
    Income before
    income taxes
    and equity in
    losses of
    equity method
    investees      149.3    73.9    50.8    17.0         -      291.0
    Income taxes   (52.7)  (10.1)   (3.5)   (4.1)        -      (70.4)
    Equity in
    losses of
    equity method
    investees, net
    of tax          (0.3)      -       -       -         -       (0.3)
    Net income      96.3    63.8    47.3    12.9         -      220.3
    Impact of
    convertible
    debt, net of
    tax (1)            -     8.4       -       -         -        8.4
    Numerator for
    diluted EPS     96.3    72.2    47.3    12.9         -      228.7
    Weighted
    average number
    of shares
    (millions) -
    diluted        556.7    33.2       -       -         -      589.9
    Diluted
    earnings per
    ADS             51.9c   33.8c   24.0c    6.6c        -      116.3c

(1)    The impact of convertible debt, net of tax has a dilutive effect on Non GAAP basis.

The following items are included in Adjustments:

a)Amortization and asset impairments: Amortization of intangible assets relating to intellectual property rights acquired ($31.2 million), impairment charges to record DAYTRANA assets at fair value less costs to sell ($42.7 million) and tax effect of adjustments;

b)Acquisitions and integration activities: Upfront payment to Acceleron ($45.0 million), acquisition costs are principally costs associated with the acquisition of Movetis ($5.8 million) and tax effect of adjustments;

c)Divestments, reorganizations and discontinued operations: Accelerated depreciation ($6.2 million) and dual running costs ($1.1 million) on the transfer of manufacturing from Owings Mills and reorganization costs ($9.7 million) on the transfer of manufacturing from Owings Mills and establishment of an international commercial hub in Switzerland, and tax effect of adjustments; and

d)Depreciation: Depreciation of $22.8 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.

Unaudited results for the nine months to September 30, 2011

Non GAAP reconciliation

                 US GAAP                 Adjustments          Non GAAP

                                   Acquis   Divestments,
                           Amorti  itions & reorgan
                 September -zation integr  -izations & Reclas September
    9 months to,    30,   & asset  -ation  discontinued -sify    30,
                   2011  impairments activ operations   deprec  2011
                                    -ities              -iation
                                         (a)      (b)       (c)      (d)
                        $M       $M      $M        $M       $M        $M
    Total revenues   3,121.2      -       -         -        -   3,121.2
    Costs and
    expenses:
    Cost of product
    sales              434.7      -    (9.0)     (9.0)   (22.4)     394.3
    Research and
    development        556.3  (16.0)      -         -    (16.4)     523.9
    Selling, general
    and
    administrative   1,295.3 (119.1)      -         -    (46.4)   1,129.8
    Loss on sale of
    product rights       3.8      -       -      (3.8)       -          -
    Reorganization
    costs               18.0      -       -     (18.0)       -          -
    Integration &
    acquisition costs    7.9      -    (7.9)        -        -          -
    Depreciation           -      -       -         -     85.2       85.2
    Total operating
    expenses         2,316.0 (135.1)  (16.9)    (30.8)       -    2,133.2

    Operating income   805.2  135.1    16.9      30.8        -      988.0

    Interest income      1.5      -       -         -        -        1.5
    Interest expense   (28.8)     -       -         -        -      (28.8)
    Other
    income/(expense),
    net                 15.9    2.4       -     (23.5)       -       (5.2)
    Total other
    expense, net       (11.4)   2.4       -     (23.5)       -      (32.5)
    Income before
    income taxes and
    equity in
    earnings of
    equity method
    investees          793.8  137.5    16.9       7.3        -      955.5
    Income taxes      (187.3) (35.6)   (4.2)      4.5              (222.6)
    Equity in
    earnings of
    equity method
    investees, net of
    tax                  3.2      -       -         -        -        3.2
    Net income         609.7  101.9    12.7      11.8        -      736.1
    Impact of
    convertible debt,
    net of tax          25.2      -       -         -        -       25.2
    Numerator for
    diluted EPS        634.9  101.9    12.7      11.8        -      761.3
    Weighted average
    number of shares
    (millions) -
    diluted            595.0      -       -         -        -      595.0
    Diluted earnings
    per ADS            320.1c  51.4c    6.4c      5.9c       -      383.8c

The following items are included in Adjustments:

a)Amortization and asset impairments: Impairment of intangible assets ($16.0 million), amortization of intangible assets relating to intellectual property rights acquired ($119.1 million), impairment of available for sale securities ($2.4 million), and tax effect of adjustments;

b)Acquisitions and integration activities: Unwind of ABH inventory step-up ($9.0 million), costs associated with acquisition and integration of ABH ($10.5 million) and integration of Movetis ($5.6 million), less adjustment to contingent consideration payable for EQUASYM ($8.2 million), and tax effect of adjustments;

c)Divestments, reorganizations and discontinued operations: Accelerated depreciation ($6.6 million) and dual running costs ($2.4 million) on the transfer of manufacturing from Owings Mills to a third party, re-measurement of DAYTRANA contingent consideration to fair value ($3.8 million), reorganization costs ($18.0 million) on the transfer of manufacturing from Owings Mills to a third party and the establishment of an international commercial hub in Switzerland, gain on disposal of investment in Vertex ($23.5 million), and tax effect of adjustments; and

d)Depreciation: Depreciation of $85.2 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.

Unaudited results for the nine months to September 30, 2010

Non GAAP reconciliation

                 US GAAP                 Adjustments          Non GAAP

                                   Acquis   Divestments,
                           Amorti  itions & reorgan
                 September -zation integr  -izations & Reclas September
    9 months to,    30,   & asset  -ation  discontinued -sify    30,
                   2010  impairments activ operations   deprec  2010
                                    -ities              -iation
                                      (a)       (b)       (c)      (d)
                     $M         $M    $M        $M        $M        $M
    Total revenues  2,539.9      -     -        -          -   2,539.9
    Costs and
    expenses:
    Cost of product
    sales             333.7      -     -    (21.9)      (8.6)    303.2
    Research and
    development       475.9      - (45.0)       -      (11.6)    419.3
    Selling, general
    and
    administrative  1,106.7 (142.3)    -        -      (49.0)    915.4
    Gain on sale of
    product rights     (4.1)     -     -      4.1          -         -
    Reorganization
    costs              23.3      -     -    (23.3)         -         -
    Integration and
    acquisition costs   6.4      -  (6.4)       -          -         -
    Depreciation          -      -     -        -       69.2      69.2
    Total operating
    expenses        1,941.9 (142.3)(51.4)   (41.1)         -   1,707.1

    Operating income  598.0  142.3  51.4     41.1          -     832.8

    Interest income     1.9      -     -        -          -       1.9
    Interest expense  (25.6)     -     -        -          -     (25.6)
    Other
    income/(expense),
    net                 9.0      -     -    (11.1)         -      (2.1)
    Total other
    expense, net      (14.7)     -     -    (11.1)         -     (25.8)
    Income before
    income taxes and
    equity in
    earnings of
    equity method
    investees         583.3  142.3  51.4     30.0          -     807.0
    Income taxes     (160.8) (29.4) (3.6)    (9.1)         -    (202.9)
    Equity in
    earnings of
    equity method
    investees, net of
    tax                 0.2      -     -        -          -        0.2
    Net income        422.7  112.9  47.8     20.9          -      604.3
    Impact of
    convertible debt,
    net of tax         25.2      -     -        -          -       25.2
    Numerator for
    diluted EPS       447.9  112.9  47.8     20.9          -      629.5
    Weighted average
    number of shares
    (millions) -
    diluted           589.7      -     -        -          -      589.7
    Diluted earnings
    per ADS           228.0c  57.3c 24.3c    10.6c         -      320.2c

The following items are included in Adjustments:

a)Amortization and asset impairments: Amortization of intangible assets relating to intellectual property rights acquired ($99.6 million), impairment charges to record DAYTRANA assets at fair value less costs to sell ($42.7 million) and tax effect of adjustments;

b)Acquisitions and integration activities: Up-front payment to Acceleron ($45.0 million), acquisition costs are principally costs associated with the acquisition of Movetis ($6.4 million) and tax effect of adjustments;

c)Divestments, reorganizations and discontinued operations: Accelerated depreciation ($18.3 million) and dual running costs ($3.6 million) on the transfer of manufacturing from Owings Mills, gain on sale of product rights relating to the disposal of non core products to Laboratorios Almirall S.A. ($4.1 million), reorganization costs ($23.3 million) on the transfer of manufacturing from Owings Mills and the establishment of an international commercial hub in Switzerland, gain on disposal of the investment in Virochem ($11.1 million) and tax effect of adjustments; and

d)Depreciation: Depreciation of $69.2 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.

Unaudited results for the three months and nine months to September 30, 2011

Non GAAP reconciliation

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

                  3 months to September 30,    9 months to September 30,
                         2011           2010         2011            2010
                           $M             $M           $M              $M
    Net cash
    provided by
    operating
    activities          178.7          142.0        664.2           612.0
    Tax and
    interest
    payments,
    net                 117.2           83.6        280.0           301.6
    Payments for
    acquired and
    in-licensed
    products                -           45.0            -            45.0
    Non GAAP
    cash
    generation          295.9          270.6        944.2           958.6

The following table reconciles US GAAP net cash provided by operating activities to Non GAAP free cashflow:

                           3 months to September     9 months to September
                                   30,                       30,
                                 2011       2010        2011          2010
                                   $M        $M          $M            $M
    Net cash provided by
    operating activities       178.7       142.0       664.2         612.0
    Capital expenditure (1)    (40.9)      (53.5)     (135.9)       (139.7)
    Non GAAP free cash flow    137.8        88.5       528.3         472.3

(1) Capital expenditure for the nine months ended September 30, 2010 excludes capital expenditure relating to the acquisition of Lexington Technology Park.

Non GAAP net debt comprises:

                       September 30,  December 31,
                                2011          2010
                                  $M            $M
    Cash and cash
    equivalents                276.4         550.6
    Restricted cash             21.0          26.8

    Convertible bonds       (1,100.0)     (1,100.0)
    Building finance
    obligation                  (8.3)         (8.4)
    Non GAAP net debt         (810.9)       (531.0)

NOTES TO EDITORS

THE “SAFEHARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Statements included herein that are not historical facts are forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties materialize, Shire’s results could be materially adversely affected. The risks and uncertainties include, but are not limited to, risks associated with: the inherent uncertainty of research, development, approval, reimbursement, manufacturing and commercialization of Shire’s Specialty Pharmaceuticals, Human Genetic Therapies and Regenerative Medicines products, as well as the ability to secure new products for commercialization and/or development; government regulation of Shire’s products; Shire’s ability to manufacture its products in sufficient quantities to meet demand; the impact of competitive therapies on Shire’s products; Shire’s ability to register, maintain and enforce patents and other intellectual property rights relating to its products; Shire’s ability to obtain and maintain government and other third-party reimbursement for its products; and other risks and uncertainties detailed from time to time in Shire’s filings with the Securities and Exchange Commission.

Non GAAP Measures

This press release contains financial measures not prepared in accordance with US GAAP.)These measures are referred to as “Non GAAP” measures and include: Non GAAP operating income; Non GAAP net income; Non GAAP diluted earnings per ADS; effectivetax rate on Non GAAP income before income taxes and earnings of equity method investees (Effective tax rate on Non GAAP income); Non GAAP cost of product sales; Non GAAP research and development; Non GAAP selling, general and administrative; Non GAAP other income; Non GAAP cash generation; Non GAAP free cashflow and Non GAAP net debt. These Non GAAP measures exclude the effect of certain cash and non-cash items, that Shire’s management believes are not related to the core performance of Shire’s business.

These Non GAAP financial measures are used by Shire’s management to make operating decisions because they facilitate internal comparisons of Shire’s performance to historical results and to competitors’ results.)Shire’s Remuneration Committee uses certain key Non GAAP measures when assessing the performance and compensation of employees, including Shire’s executive directors.

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

These Non GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with US GAAP.

Where applicable the following items, including their tax effect, have been excluded from both 2011 and 2010 Non GAAP earnings, and from our 2011 Outlook:

Amortization and asset impairments:

  • Intangible asset amortization and impairment charges; and
  • Other than temporary impairment of investments.

Acquisitions and integration activities:

  • Upfront payments and milestones in respect of in-licensed and acquired products;
  • Costs associated with acquisitions, including transaction costs, fair value adjustments on contingent consideration and acquired inventory;
  • Costs associated with the integration of companies; and
  • Noncontrolling interests in consolidated variable interest entities.

Divestments, re-organizations and discontinued operations:

  • Gains and losses on the sale of non-core assets;
  • Costs associated with restructuring and re-organization activities;
  • Termination costs; and
  • Income/(losses) from discontinued operations.

Depreciation, which is included in Cost of product sales, R&D and SG&A costs in our US GAAP results, has been separately disclosed for the presentation of 2010 and 2011 Non GAAP earnings.

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

Free cashflow represents net cash provided by operating activities, excluding up-front and milestone payments for in-licensed and acquired products, but including capital expenditure in the ordinary course of business.

A reconciliation of Non GAAP financial measures to the most directly comparable measure under US GAAP is presented on pages 19 to 23.

Sales growth at CER, which is a Non GAAP measure, is computed by restating 2011 results using average 2010 foreign exchange rates for the relevant period.

Average exchange rates for the nine months to September 30, 2011 were $1.61:£1.00 and $1.41:€1.00 (2010: $1.54:£1.00 and $1.32:€1.00). Average exchange rates for Q3 2011 were $1.61:£1.00 and $1.41:€1.00 (2010: $1.55:£1.00 and $1.29:€1.00).

TRADEMARKS

All trademarks designated ® and ™ used in this press release are trademarks of Shire plc or companies within the Shire group except for 3TC® and ZEFFIX® which are trademarks of GSK, PENTASA® which is a registered trademark of FERRING B.V., CONCERTA® which is a trademark of ALZA Corporation, FABRAZYME® and CEREZYME® which are trademarks of GENZYME Therapeutic Products Limited Partnership and DAYTRANA® which is a trade mark of Noven Pharmaceuticals Inc. Certain trademarks of Shire plc or companies within the Shire group are set out in Shire’s Annual Report on Form 10-K for the year ended December 31, 2010 and the Quarterly Report on Form 10-Q for the three months ended June 30, 2011.

For further information please contact:

Investor Relations
Eric Rojas, erojas@shire.com, +1-781-482-0999
Sarah Elton-Farr, seltonfarr@shire.com, +44-1256-894-157
Media

Jessica Mann (Corporate), jmann@shire.com, +44-1256-894-280
Matthew Cabrey (Specialty Pharma), mcabrey@shire.com, +1-484-595-8248
Jessica Cotrone (Human Genetic Therapies), jcotrone@shire.com, +1-781-482-9538
Lindsey Hart (Regenerative Medicine), lhart@abh.com, +1-615-250-3311

Dial in details for the live conference call for investors 14:00 BST/9:00 EDT on October 28, 2011:

UK dial in: 0800-077-8492 or 0844-335-0351
US dial in: 1-866-804-8688 or 1-718-3541175
International dial in: +44-208-996-3900
Password/Conf ID: 280117
Live Webcast: www.shire.com/shireplc/en/investors

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