Shire has reported strong third quarter earnings growth along with a 7% rise in product sales to $3.5bn (Q3 2016: $3.3bn), mainly driven by rapid growth in its Immunology franchise.
Non GAAP operating income was up 19% at $1,498m.
Generated Non GAAP earnings per ADS were $3.81 (Q3 2016: $3.17), due to higher Non GAAP operating income primarily related to higher revenues and higher gross margin.
In addition, strong operating cash flow enabled a $920m reduction in Non GAAP net debt since June 30, 2017 and the group said it remains on-track to achieve its year-end debt target.
The group reiterated its full year guidance.
Flemming Ornskov, M.D., M.P.H., Chief Executive Officer, commented:
"We delivered strong growth this quarter with product sales up 7% to $3.5 billion despite a CINRYZE supply shortage and a LIALDA generic entry. The Immunology franchise grew by 32%, and we saw significant contributions across our broad and diverse portfolio, evidencing our continued focus on commercial execution. We delivered strong Non GAAP EPS growth of 20%, and operating cash flow more than doubled to $1.1 billion, which enabled us to further reduce our debt.
"We experienced a product shortage of CINRYZE during the quarter due to a manufacturing interruption at a third-party manufacturer. The issue has been addressed and production of CINRYZE has resumed. Product was shipped to customers in early October. To enhance reliability of supply, we plan to start in-house production of CINRYZE by Q1 2018, subject to FDA approval, as sustainable and unconstrained CINRYZE supply is a top priority.
"We are reiterating our 2017 full year guidance, and I look forward to updating you on the Neuroscience strategic review by year end. I continue to be highly confident in the strength and durability of our business."
- Reported Non GAAP EBITDA margin of 44% for the quarter; on-track to achieve at least $700m in synergies by Year 3 as it continued to progress the Baxalta integration.
- Completed manufacturing network review; identified more than $100m in projected additional annual savings beginning in 2019. Expected to increase to $300m annually by 2023.
Product sales highlights:
- Delivered product sales growth of 7%, including robust demand for our Immunology franchise, up 32%.
- Successful early trajectory of MYDAYIS since U.S. launch on August 28, 2017, with over 3,000 physicians prescribing to over 11,000 patients as of October 17, 2017.
- Genetic Diseases was impacted by lower product sales for CINRYZE due to a product shortage resulting from a manufacturing interruption. The manufacturing issue has been addressed and production of CINRYZE resumed. Approximately $100 million of product was shipped to customers in early October.
- Increasing demand for XIIDRA; 9% script growth since Q2 2017.
- Net cash provided by operating activities increased 101% to $1,055 million (Q3 2016: $526 million), primarily due to strong cash receipts from higher sales and operating profitability, and lower Baxalta acquisition and integration payments. Also, Q3 2016 net cash provided by operating activities was negatively impacted by a payment associated with the termination of a biosimilar collaboration acquired with Baxalta.
- Non GAAP free cash flow increased 128% to $901 million (Q3 2016: $395 million), driven by the growth in net cash provided by operating activities noted above, combined with a decrease in capital expenditures of $46 million.
At 1:04pm: (LON:SHP) Shire PLC share price was +31.75p at 3554.75p