Shire Pharmaceuticals has reported a hefty drop in profits in the first quarter of 2005, as it absorbed the cost of launching and acquiring new products.
The UK-based company said its net income came in at 73% to $20.5 million dollars – a little lower than analysts expected - while revenues climbed 3% to $334 million.
Shire has launched three new products so far this year, including Fosrenol (lanthanum carbonate) for kidney disease [[27/10/04b]], Xagrid (anagrelide) for essential thrombocythemia [[19/11/04e]] in Europe and Equetro (extended release carbamazepine) for bipolar disorder [[13/12/04f]], which was launched in the US this month. Marketing and other costs related to these drugs came in at around $30 million. In addition, the company’s R&D spend nearly tripled compared to the first quarter of 2004, reaching $111.5 million, including a $50 million milestone payment to New River Pharmaceutical for NRP104, a compound in Phase III for the treatment of attention deficit hyperactivity disorder (ADHD).
Shire’s CEO, Matthew Emmens, said the rise in revenues was supported by underlying growth of 18% for the company’s flagship ADHD treatment Adderall XR (amphetamine salts extended release) in the USA. Sales of the product grew 4% to $145.5 million, but ‘significant wholesaler de-stocking’ masked its true performance, he added.
Adderall XR’s growth was also likely held back by the withdrawal of the drug in Canada last year, amid fears it was linked to cases of sudden death and stroke [[04/03/05c]]. It also faces its first patent challenge from Barr Laboratories and IMPAX Laboratories, in lawsuits due to come to court early next year [[12/04/05d]].
Another negative for Shire was the onset of generic competition to anagrelide in the US, where it is sold as Agrylin. Although the generic approvals came after the quarter ended, Agrylin sales fell 17% to $32 million on wholesaler de-stocking and returns.
Emmens said that the underlying performance of Shire is robust and that the new product launches, while expensive in the near-term, are key to reducing its reliance on Adderall XR, which accounts for half of its revenues. The same strategy is behind the company’s planned acquisition of US biotechnology company Transkaryotic Therapies for $1.6 billion, a move that brings in two approved products, the Fabry disease therapy Replagal (agalsidase alfa) and the anti-anaemia treatment, Dynepo (epoetin delta) [[25/04/05b]] [[22/04/05d]].