Executing Our Growth Strategy Flemming Ornskov, MD, MPH - CEO Jeff Poulton - CFO Full Year 2016 Financial Results February 16, 2017
“Safe Harbor” Statement Under The Private Securities Litigation Reform Act Of 1995 Statements included herein that are not historical facts, including without limitation statements concerning • inability to successfully compete for highly qualified personnel from other companies and organizations; future strategy, plans, objectives, expectations and intentions, the anticipated timing of clinical trials and • failure to achieve the strategic objectives, including expected operating efficiencies, cost savings, approvals for, and the commercial potential of, inline or pipeline products, are forward-looking statements. revenue enhancements, synergies or other benefits at the time anticipated or at all with respect to Shire’s Such forward-looking statements involve a number of risks and uncertainties and are subject to change at acquisition of NPS Pharmaceuticals Inc., Dyax Corp. or Baxalta Incorporated may adversely affect any time. In the event such risks or uncertainties materialize, Shire’s results could be materially adversely Shire’s financial condition and results of operations; affected. The risks and uncertainties include, but are not limited to, the following: • Shire’s growth strategy depends in part upon its ability to expand its product portfolio through external collaborations, which, if unsuccessful, may adversely affect the development and sale of its products; • Shire’s products may not be a commercial success; • a slowdown of global economic growth, or economic instability of countries in which Shire does • increased pricing pressures and limits on patient access as a result of governmental regulations and business, as well as changes in foreign currency exchange rates and interest rates, that adversely market developments may affect Shire’s future revenues, financial condition and results of operations; impact the availability and cost of credit and customer purchasing and payment patterns, including the • Shire conducts its own manufacturing operations for certain of its products and is reliant on third party collectability of customer accounts receivable; contract manufacturers to manufacture other products and to provide goods and services. Some of • failure of a marketed product to work effectively or if such a product is the cause of adverse side effects Shire’s products or ingredients are only available from a single approved source for manufacture. Any could result in damage to Shire’s reputation, the withdrawal of the product and legal action against Shire; disruption to the supply chain for any of Shire’s products may result in Shire being unable to continue marketing or developing a product or may result in Shire being unable to do so on a commercially viable • investigations or enforcement action by regulatory authorities or law enforcement agencies relating to basis for some period of time; Shire’s activities in the highly regulated markets in which it operates may result in significant legal costs and the payment of substantial compensation or fines; • the manufacture of Shire’s products is subject to extensive oversight by various regulatory agencies. Regulatory approvals or interventions associated with changes to manufacturing sites, ingredients or • Shire is dependent on information technology and its systems and infrastructure face certain risks, manufacturing processes could lead to, among other things, significant delays, an increase in operating including from service disruptions, the loss of sensitive or confidential information, cyber-attacks and costs, lost product sales, an interruption of research activities or the delay of new product launches; other security breaches or data leakages that could have a material adverse effect on Shire’s revenues, financial condition or results of operations; • certain of Shire’s therapies involve lengthy and complex processes, which may prevent Shire from timely responding to market forces and effectively managing its production capacity; • Shire incurred substantial additional indebtedness to finance the Baxalta acquisition, which may decrease its business flexibility and increase borrowing costs; and • Shire has a portfolio of products in various stages of research and development. The successful development of these products is highly uncertain and requires significant expenditures and time, and a further list and description of risks, uncertainties and other matters can be found in Shire’s most recent there is no guarantee that these products will receive regulatory approval; Annual Report on Form 10-K and in Shire’s subsequent Quarterly Reports on Form 10-Q, in each case • the actions of certain customers could affect Shire’s ability to sell or market products profitably. including those risks outlined in “ITEM 1A: Risk Factors”, and in subsequent reports on Form 8-K and Fluctuations in buying or distribution patterns by such customers can adversely affect Shire’s revenues, other Securities and Exchange Commission filings, all of which are available on Shire’s website. financial conditions or results of operations; All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified • Shire’s products and product candidates face substantial competition in the product markets in which it in their entirety by this cautionary statement. Readers are cautioned not to place undue reliance on these operates, including competition from generics; forward-looking statements that speak only as of the date hereof. Except to the extent otherwise required • adverse outcomes in legal matters, tax audits and other disputes, including Shire’s ability to enforce and by applicable law, we do not undertake any obligation to update or revise forward-looking statements, defend patents and other intellectual property rights required for its business, could have a material whether as a result of new information, future events or otherwise. adverse effect on the combined company’s revenues, financial condition or results of operations; 2
Agenda 1. Business update Flemming Ornskov, MD, MPH Rare diseases leader fueling growth 2. Financial review Jeff Poulton 3. Summary Flemming Ornskov, MD, MPH 4. Q & A 3
2016 was a transformational year for Shire RARE DISEASE EXECUTION GROWTH LEADERSHIP • Completed the integration of Dyax • Pipeline advancing across all • Product sales CER (1)(2) growth of and acquisition of Baxalta therapeutic areas and stages of 79%, including YoY CER growth of development 15% from Shire legacy products • Solidified our leadership position in and 8% from legacy Baxalta rare diseases and specialty • Key products launched, including products on a pro forma basis conditions with a unique business XIIDRA in the U.S. model • Key new product approvals across • Baxalta integration proceeding multiple therapeutic areas • Achieved record product sales and ahead of relevant benchmarks Non GAAP earnings performance • Most innovative clinical pipeline in • Synergy targets ahead of plan Shire’s history with numerous • Delivered Non GAAP EPS at top since deal close, and on-track for promising late-stage programs end of our previously stated 2016 Year 3 guidance guidance (1) Growth rates are at Constant exchange rates (“CER”), a Non GAAP financial measure. CER performance is determined by comparing 2016 performance 4 (restated using 2015 exchange rates for the relevant period) to actual 2015 reported performance. (2) See slide 44 for a list of items excluded from the US GAAP equivalent used to calculate all Non GAAP measures detailed above. See slides 37 to 43 for a reconciliation of Non GAAP financial measures to the most directly comparable measure under US GAAP.
Rare Diseases is an attractive segment of the market that is both RARE DISEASE LEADERSHIP large and growing faster than the broader market ACTUAL AND PROJECTED REVENUES FOR Incredible opportunity for innovation RARE DISEASES DRUGS (1) Debilitating, often life-threatening conditions with substantial impact on patients and their caregivers ~$80B +10% Focused patient groups actively looking for solutions ~10% annual • Affect fewer than 5 in 10,000 people (or under 200,000 in the U.S.) projected growth • Over 7,000 diseases, of which only 5% have treatments vs. 6% overall ~$50B • Often pediatric indications for pharma through 2020 (1) R&D incentives like Orphan Drug Status, Breakthrough Therapy Designation, Fast Track approvals Growing interest and engagement by regulatory authorities Immunoglobulin • Approx. 23% of new US drug approvals since 2014 Orphan Extraordinary impact for patients and health systems 2015 2020E Source: EvaluatePharma Orphan Drug Report, 2015. 5 (1) EvaluatePharma accessed February 6, 2017. Rare Diseases market includes all orphan drugs . Limited to drugs where the FDA Orphan designation is for primary indication. Excludes sales in oncology and multiple sclerosis.
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