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Annual Report 2015

SHAPING WHAT’S NEXT

Annual Report 2015

Chairman's review

LEADING THE WAY

Chairman's review

LEADING THE WAY

We’ve had a remarkable year at Shire. We have been successful in driving the business forward through original research, creative acquisitions and novel licensing agreements.

Susan Kilsby, Chairman

Chief Executive Officer’s review

DRIVING CHANGE

2015 has been a year of transformation. With our streamlined One Shire organization in place, we advanced our ambition to become a leading global biotechnology company.

Flemming Ornskov, MD, MPH, CEO

Our Purpose

Is to enable people with life-altering conditions to lead better lives.

Our Vision

We aspire to be a leading global biotech delivering innovative medicines to patients with rare diseases and other specialty conditions.

Our Goal

We seek to achieve product sales of $10 billion by 2020.

Our Patients

WHAT'S NEXT

7,000+

Short Bowel Syndrome (“SBS”) is a rare condition in which a large portion of the intestine has been removed by surgery. It can also be caused by disease or injury that prevents the small intestine from functioning properly despite normal length. As a result, people can’t absorb enough nutrients or fluids from food and liquids to stay healthy. In the US, an estimated 7,000 patients have SBS requiring parenteral support, and a similar number in Europe.

In some cases, patients may be prescribed intravenous (IV) feeding (parenteral support) to help them take in additional nutrients or fluids.

Roy
Short Bowel Syndrome patient

Roy is a music director and performer who, until a year ago, was dependent upon parenteral support. He is passionate about theatre, music and soccer and is active in keeping arts part of education.

What’s next for
GATTEX

GATTEX is a classic example of how we help improve lives by providing innovative treatments to patients with rare conditions where there is a high unmet need. We will continue to look for ways to maximize access to GATTEX for patients around the world.

I perform all over the east coast, so travel a lot. Packing all the supplies for my parenteral support infusions and having to spend time every night getting infused was really limiting.

ADVANCING FURTHER

30-40%

Hereditary Angioedema (“HAE”) is a rare genetic disorder characterized by spontaneous and recurring attacks of swelling (oedema) in various parts of the body.

An estimated 1 in 10,000 to 1 in 50,000 people have HAE. An estimated 30-40% of patients with HAE in the US and EU remain undiagnosed.

Tyler
HAE patient

Tyler is a lab technician and a full time student who was diagnosed with HAE when he was a young teenager. Tyler is an avid video game player and enjoys the little things in life.

What’s next for
SHP643

Assuming regulatory approval, we expect a US launch in 2018. If approved for the prophylaxis of HAE, SHP643 could generate estimated annual global sales of up to $2 billion.

HAE runs in my family, so for me diagnosis was less of a mystery than for some. My symptoms vary a lot – from my hands swelling to my stomach swelling.

MAKING BREAKTHROUGHS

70,000

Hypoparathyroidism (“HPT”) is a rare condition where not enough parathyroid hormone is released by the parathyroid glands or the parathyroid hormone that is released does not work properly.

Estimates suggest that chronic Hypoparathyroidism affects approximately 70,000 patients in the US.

Jen
Hypoparathyroidism patient

Jen was diagnosed with hypoparathyroidism in 2004. She loves to be outside and enjoys hiking. Jen also loves cooking, baking, photography, and her children are the highlight of her life.

What’s next for
NATPARA

With NAPTARA, we are proud to be meeting a highly focused therapeutic need for this rare condition. It is the first FDA-approved parathyroid hormone to help treat hypocalcemia in patients with hypoparathyroidism. Looking ahead, we will work to ensure the widest access to NATPARA for patients in the US and beyond. In Europe, the European Medicines Agency (EMA) has validated and initiated its review of our marketing authorization application for NatparTM.

I developed hypoparathyroidism in 2004 after surgery to remove my thyroid due to Hashimoto’s Disease. I was diagnosed that same year after developing hypocalcemia.

PIONEERING INNOVATION

2x +

Binge Eating Disorder (“BED”) is a real medical condition that was formally recognized by the American Psychiatric Association in 2013. BED is the most common eating disorder among US adults and more than twice as prevalent as bulimia nervosa and anorexia nervosa combined.

Joanna
Patient with BED

Joanna loves anything and everything that has to do with art. She is an Art Ambassador for a Boston charity and her favorite place is the Boston Museum of Fine Arts.

Joanna had been concerned for more than three years about her eating behaviors. Eventually she went to talk about it with her doctor, who was able to diagnose her with BED.

What’s next for
VYVANSE

The strength of our intellectual property surrounding VYVANSE has been upheld in the US Court of Appeals for the Federal Circuit. As a result, we will not face competition from generics until patents expire in 2023, and we can concentrate on making the most of both existing and new VYVANSE-based treatments for patients around the world.

It was a great relief to be diagnosed. I knew something was wrong but had no idea what until my clinician diagnosed BED. I was reassured that there was a name to my challenges and there was help available.

IDENTIFYING OPPORTUNITIES

29m

Dry Eye Disease (“DED”) is a very common complaint to eye care specialists in the US, with approximately 29 million adults living with the symptoms. It varies in severity, with symptoms most commonly being eye discomfort and dryness and may include episodes of blurred vision. This multifactorial disease of the tears and ocular surface is associated with inflammation that may eventually lead to damage to the surface of the eye.

Christine
Dry Eye Disease sufferer

Christine is an avid walker and loves spending time outdoors with her family and their pet dog. She also enjoys reading, travel, concerts and yoga, and she is a registered nurse and writer. She was diagnosed with Sjogren’s syndrome in 2011, which is a risk factor for Dry Eye Disease.

What’s next for
Lifitegrast

Building on the strong trial results, we resubmitted an application to the FDA on January 22, 2016 with PDUFA date of July 22, 2016. If approved by the FDA, this will keep us on track to launch the product in the US later in 2016. This in turn will lead the way for regulatory filings for lifitegrast in other markets outside the US.

My symptoms make vision-related things in life really challenging. Dryness and photophobia (extreme sensitivity to light) make it difficult when I spend time outside doing the things I love to do like gardening and travelling.

Roy

Tyler

Jen

Joanna

Christine

Financial Highlights

Total revenue

$billions

$6.4bn

Product sales

+5%

$6.1bn

Non GAAP EBITDA margin4

-1pps5

43%

Non GAAP EBITDA1

$billions

$2.9bn

Non GAAP cash generation3

+1%

$2.4bn

Countries medicines available

+6%

72

Non GAAP adjusted ROIC2

%

10.3%

People

+11%

5548

Non GAAP operating income6

+7%

$2.8bn

1 This is a Non GAAP financial measure. The most directly comparable measure under US GAAP is Net Income (FY 2015; $1,303m, FY 2014: $3,406m).

2 This is a Non GAAP financial measure.

3 This is a Non GAAP financial measure. The most directly comparable measure under US GAAP is Net Cash provided by operating activities (FY 2015: $2,337m, FY 2014: $4,228m).

4 This is a Non GAAP financial measure. The most directly comparable measure under US GAAP is Net Income margin (FY 2015: 20%, FY 2014: 57%).

5 Percentage point change (“pps”).

6 This is a Non GAAP financial measure. The most directly comparable measure under US GAAP is Operating Income (FY 2015: $1,420m, FY 2014: $1,698m).

For a reconciliation of Non GAAP financial measures to the most directly comparable measure under US GAAP, see pages 159 to 163.

Business Model

Organized for success

In pursuing our purpose of enabling people with life-altering conditions to lead better lives, we are transforming ourselves into a leading global biotech developing and delivering best-in-class therapies for patients with rare and specialty conditions.

Our culture plays a key part in our success. We have a strong patient-focused, performance-based culture:

  • We have the courage to lead the way – to anticipate and act on what’s next.
  • We are agile and adaptable, shaping a better future for patients.
  • We keep our promises.
  • We fearlessly innovate to address unmet patient needs.
  • We do the right thing in the right way.

Our business model is also fundamental – supporting our focus on our four strategic drivers: growth, innovation, efficiency and people.

Inputs

  • Our talented, passionate and committed people.
  • Our unique high performance, patient-focused culture.
  • Our experienced, dynamic leadership.
  • Our nimble and efficient manufacturing and sales networks.
  • Our ongoing reinvestment.
  • Our strong governance.

Investment in Non GAAP R&D1 in 2015

$884m

Our in-house R&D focuses on advancing our pipeline of innovative treatments for unmet needs with a strong emphasis on rare diseases.

1 This is a Non GAAP financial measure. The most directly comparable measure under US GAAP is R&D (FY 2015: $1,564m, FY 2014: $1,068m).

Our business model

  • Acquire and in-license products that address high unmet needs.
  • Reinvest in targeted in-house R&D.
  • Partner with leading research hospitals, academic and non-profit organizations.
  • Use innovative, state-of-the-art manufacturing and partner with manufacturing organizations.
  • Apply a tailored go-to-market model.
  • Provide dedicated support to physicians and caregivers.

Acquisitions in 2015

3complete
acquisitions

2 proposed
acquisitions

We fuel our growth and value creation through the targeted acquisition of new companies, licensing agreements and partnerships.

Value created

  • Reinvestment in R&D.
  • Rewarding careers for employees.
  • Significant returns to shareholders.
  • Greater awareness and understanding of rare diseases.
  • Life-changing therapies for patients, their families and treating physicians.
  • Wider benefits to society.

Non GAAP EBITDA1

$2.9bn

Our business unit teams focus on commercial excellence across Rare Diseases, Neuroscience, Gastrointestinal & Internal Medicine and Ophthalmics.

1 This is a Non GAAP financial measure. The most directly comparable measure under US GAAP is Net Income (FY 2015: $1,303m, FY 2014: $3,046m).

Strategy

Growth

We drive performance from our currently marketed products to optimize revenue growth and cash generation.

Innovation

We build our future assets through both R&D and business development to deliver innovation and value for the future.

Efficiency

We operate a lean and agile organization and reinvest for growth.

People

We foster a high-performance, patient-focused culture where we attract, retain and promote the best talent.

Global Footprint

North America
employees

70%

Latin America
employees

4%

Europe
employees

23%

Other regions
employees

3%

We have offices in 50 countries and employ more than 5,500 talented people.

Our products are available in 72 countries around the world.

US Operational
Headquarters

Lexington, MA

International
Operational
Headquarters

Zug, Switzerland

Product Sales

VYVANSE

$1,722m

+19%

LIALDA/MEZAVANT

$684m

+8%

CINRYZE

$618m

+23%

ELAPRASE

$553m

-7%

FIRAZYR

$445m

+22%

REPLAGAL

$441m

-12%

ADDERALL XR

$363m

-5%

VPRIV

$342m

-7%

PENTASA

$306m

+6%

GATTEX

$142m

n/a

INTUNIV

$65m

-80%

NATPARA

$24m

n/a

Pipeline Programs

View Details
Preclinical33
Phase 16
Phase 26
Phase 314
Registration3
62Total

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