Shire's Newer Products Balance Adderall Generics

If midstage data on Vyvanse in depression and schizophrenia are positive, we could slightly boost our fair value estimate

Karen Andersen, CFA 30 April, 2010 | 4:50PM
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Shire's core portfolio experienced strong growth in the first quarter, with a minimal hit from U.S. health-care reform and a boost from Genzyme's continued manufacturing problems. The firm is on track to meet our expectations for the full year, and we're maintaining our fair value estimate.

Revenue of $816 million was flat with the first quarter of 2009, as the negative impact from the entrance of generic Adderall XR competition in April 2009 was balanced by strong sales performance of newer attention-deficit hyperactivity disorder drugs Vyvanse and Intuniv, as well as royalties on an Adderall XR authorised generic. Intuniv sales should benefit from data on co-administration with stimulants in May, and management said it has already seen some combination use. We should also see data applying Vyvanse's abuse-resistant technology to Intuniv in the second half of the year, which could be particularly important for success in Europe. Also in the second half of the year, if midstage data on Vyvanse in depression and schizophrenia are positive, we could slightly boost our fair value estimate.

In the human genetic therapies segment, Elaprase sales continue to grow steadily, up 22% to $101 million in the first quarter. Replagal sales grew 69% to $68 million, and Shire now has a 60% share of the European market as Genzyme struggles to supply its competing drug Fabrazyme. Shire added almost 200 patients to Replagal therapy in each of the past two quarters. We continue to believe that most of these patients will gradually switch back to Fabrazyme once supply is restored, which should limit Replagal's growth beyond 2011. Shire recorded only $5.8 million in Vpriv sales in the first quarter, but with 13% of US Gaucher disease patients now on the therapy and approval in Europe expected in the second half of the year, we think Shire will report sales north of $100 million for the year.

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About Author

Karen Andersen, CFA  Karen Andersen, CFA, is a senior stock analyst with Morningstar.

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