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Investors raced back into Shire after chief executive Matthew Emmens said he expected sales of Vyvanse, for attention deficit hyperactivity disorder (ADHD), to reach $350m-$400m for 2008. That's well above many analysts' expectations.
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One of the keys to that growth potential is Vyvanse's attractions to adults. Indeed, that adult section of the market is growing at 15 per cent a year compared to overall ADHD market growth - which is dominated by child treatment - of 6 per cent. Management expects to begin marketing the drug to adults in the second half, pending US regulatory approval.
Shire's share price had suffered this year, on concerns that doctors were failing to switch from its blockbuster Adderall XR. In response, the company said Vyvanse has accumulated a 6 per cent market share since last July's launch. The group's sales were also boosted by the introduction last year of Dynepo for chronic kidney failure, Lialda for ulcerative colitis and Daytrana for ADHD.
Morgan Stanley upgraded its forecasts slightly and expects $2.89bn of revenues for 2008 with EPS of $110c.
| SHIRE PHARMACEUTICALS (SHP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 978p | MARKET VALUE: | £ 5,469.8m | |
| TOUCH: | 978-979p | 12-MONTH HIGH: | 1,315p | LOW: 860p |
| DIVIDEND YIELD: | 0.4% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 219c* | NET DEBT: | 30% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (c) | Dividend per share (c) |
|---|---|---|---|---|
| 2003 | 1.24 | 384 | 55.4 | nil |
| 2004 | 1.36 | 302 | 19.4 | 5.67 |
| 2005 | 1.60 | -492 | -116.2 | 6.24 |
| 2006 | 1.80 | 362 | 71.0 | 7.18 |
| 2007 | 2.44 | 551 | 98.2 | 8.62 |
| % change | +36 | +52 | +38 | +20 |
*Includes intangible assets of $1.98bn, or 355c a share £1=$1.96 Ex-div: 12 Mar Payment: 3 Apr |
||||
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Shire, as a speciality pharmaceutical business, offers good defensive characteristics and progress on Vyvanse looks good, too. So, despite surging back towards the level of our buy tip (1,132p, 4 May 2007) and trading on a hardly-cheap forward PE of 17 - they still rate long-term good value.
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