Shire ups 2013 forecast after new chief executive tackles cost base

 
City A.M. Reporter
BRITISH drugmaker Shire raised its full-year earnings forecast yesterday after lower-than-expected costs and accelerating sales helped it to beat forecasts for the third quarter.

Chief executive Flemming Ornskov said Shire, which makes drugs to treat hyperactivity and expensive medicines for rare diseases, was resetting its cost base.

That, combined with faster product sales growth, enabled it to upgrade its 2013 earnings forecast for the second time this year, to mid-to-high teens growth from the double-digit growth it predicted in July.

Analysts were predicting annual profits – in Shire’s preferred measure of non-GAAP earnings per American Depositary Share – of $6.87, up 13 per cent on 2012.

Ornskov, who joined Shire in May, has simplified the company from three units into one, reducing overlap in its R&D and commercial operations.

“We now have a single R&D organisation in place and our pipeline has been prioritised,” he told reporters. “As a result, our operations are much more efficient.”

Shire reported a 12 per cent rise in third-quarter revenue to $1.24bn, and a rise of 30 per cent to $1.77 in earnings measured in non-GAAP earnings per American depositary share. Both beat average analyst expectations of $1.22bn and $1.63 respectively, according to a poll of 20 brokers compiled by Shire.

The company reported 13 per cent growth in product sales, compared to the seven per cent growth seen in the second quarter.

Vyvanse, Shire’s top-selling drug to treat ADHD (attention deficit hyperactivity disorder), posted a 21 per cent rise in sales to £299.2m.