Full Year and Fourth Quarter Results ended 31 December 2002 Shire Pharmaceuticals Group plc
THE “SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Statements included herein that are not historical facts, are forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties materialize, Shire’s results could be materially affected. The risks and uncertainties include, but are not limited to, risks associated with the inherent uncertainty of pharmaceutical research, product development and commercialization, patents, government regulation and approval, including but not limited to the expected product approval date of lanthanum carbonate (FOSRENOL ), the impact of competitive products, including but not limited to the impact of same on Shire’s ADHD franchise, and other risks and uncertainties detailed from time to time in our filings, including the Annual Report filed on Form 10-K by Shire with the Securities and Exchange Commission. Trademark Information: Unless otherwise indicated, certain product names set out in this document are trademarks of the Shire Group, many of which are the subject of trademark registrations in certain territories. These names include, but are not limited to, Adderall, Adderall XR, Agrylin, Colazide, Carbatrol, DextroStat, Fluviral S/F, Fosrenol, Pacis, Pentasa, ProAmatine, Solaraze, Troxatyl, EnSoTrol, Microtrol, OptiScreen, ProScreen, Solutrol, and Xagrid. 3TC, Epivir, Combivir, Trizivir, and Zeffix are trademarks of GlaxoSmithKline. Reminyl and Concerta are trademarks of Johnson & Johnson. Aricept is a trademark of Pfizer / Eisai. Exelon is a trademark of Novartis. NeisVac-C is a trademark of Baxter International. Adept is a trademark of ML Laboratories. MethyPatch is a trademark of Noven Pharmaceuticals. 2
Agenda Full Year 2002 Achievements Rolf Stahel Fourth Quarter and Full Year 2002 Financial Review Angus Russell R&D Overview Wilson Totten 2003 Outlook and Summary Rolf Stahel Questions & Answers All 3
Rolf Stahel Stahel – – Chief Executive Chief Executive Rolf Full Year 2002 Achievements Full Year 2002 Achievements Shire Pharmaceuticals Group plc Shire Pharmaceuticals Group plc
Full Year 2002 Achievements Context: First Adderall generic launched mid-February 2002 Total of three generics in market by end 2002 Outcome: Culmination of five years of planning Good earnings growth Strong revenue growth Driven by both US and international businesses Strong royalty flow Outstanding Adderall to Adderall XR switch Continued progression of pipeline of 22 projects 5
Financial Highlights – FY 2002 Millions of USD, except per share amounts Most Recent 2002 2002 Growth Growth Guidance FY 02* FY 02* FY 02* Mid to high teens Revenues 1,037.3 Revenues Revenues 1,037.3 1,037.3 22% growth Operating income 327.0 Operating income Operating income 327.0 327.0 Income before tax 329.1 Income before tax Income before tax 329.1 329.1 Net income 250.6 Net income Net income 250.6 250.6 EPS (diluted): EPS (diluted): EPS (diluted): Ordinary shares 49.0c Ordinary shares Ordinary shares 49.0c 49.0c Mid to high single 11%** ADS 147.1c ADS ADS 147.1c 147.1c digit growth * Results for all periods are restated for the OTC divestment, accounted for as a discontinued operation ** Growth calculation is based on a 2002 EPS number, which excludes the gain on the disposal of the OTC business (impact of 1.2c per ADS). The 2001 EPS number adds back the impact of the merger charges and stock compensation costs (impact of 108.6c per ADS in total) 6
Analysis of Revenues – FY 2002 Millions of USD FY 02 FY 01 Growth (%) Product Sales 859.4 699.4 + 23 United States 714.7 587.5 + 22 International 144.7 111.9 + 29 Royalties 174.8 145.1 + 20 Licensing* 3.1 5.5 - 44 Other** -- 3.0 n/a Total Revenues 1,037.3 853.0 + 22 * 2001 figures include one-time milestones paid to Shire Laboratories ** 2001 figures include revenues from contract manufacturing. The facility has since been divested. 7
Product Sales – FY 2002 Millions of USD CNS Franchise FY 02 FY 01 Growth (%) Adderall XR 317.9 32.6 + 874 Adderall 109.8 317.7 - 65 Adderall Brand 427.7 350.3 + 22 Carbatrol 45.3 36.8 + 23 8
Product Sales – FY 2002 Millions of USD Other Franchises FY 02 FY 01 Growth (%) Agrylin 119.2 85.5 + 39 Pentasa 87.2 75.5 + 15 ProAmatine 50.9 38.0 + 34 9
Royalty Income – FY 2002 Millions of USD FY 02 Reported Underlying Royalties Growth (%) Growth (%)* 3TC 132.5 + 10 + 8 Zeffix 21.2 + 25 + 23 Other** 21.1 + 160 -- Total 174.8 + 20 -- * Underlying sales growth expressed in constant exchange rates ** Includes Reminyl 10
2002 ADHD Franchise Conversion Retention of Business – Invoices based on volume, not market share TRx Volume (000s)* Average Market Share (MS)* + 0.6% - 4 MS points 7000 35% 30% 6000 25% 5000 20% 4000 2001 2001 15% 3000 2002 2002 10% 2000 5% 1000 0% 0 Adderall Adderall Adderall Adderall Adderall Adderall XR Franchise XR Franchise * Source: IMS Monthly Data 11
2002 ADHD Franchise Conversion Impact on Financial Results Actual Sales (Millions of USD) + 22% 450 400 350 300 250 2001 200 150 2002 100 50 0 Adderall Adderall Adderall XR Franchise 12
Growing with the Market US ADHD Market – Recent Trends* 700000 140000 600000 120000 TRX Prescription Volume (000s) TRx Prescription Volume (000s) Adderall XR and atomoxetine 500000 100000 Total ADHD Market 400000 80000 300000 60000 200000 40000 100000 20000 0 0 20/12/2002 27/12/2002 03/01/2003 10/01/2003 17/01/2003 24/01/2003 31/01/2003 07/02/2003 14/02/2003 Week ADHD Market Adderall XR atomoxetine * Source: IMS Weekly Data 13
Intellectual Property Rights Legal suit launched against Barr Laboratories regarding ANDA filed against Adderall XR Shire intends to vigorously defend its intellectual property rights 14
MethyPatch Acquisition Leverages Shire ADHD expertise and sales efforts Broadens and diversifies ADHD portfolio beyond Adderall XR Provides Shire access to: 53% of ADHD market* which currently uses methylphenidate The first once-daily ADHD product to use a transdermal delivery system * Source: IMS Monthly Data (January 2003) 15
Angus Russell – Group Finance Director Fourth Quarter and Full Year 2002 Financial Review Shire Pharmaceuticals Group plc
Accounting Presentation Non GAAP measures SEC guidance published Jan 2003 OTC divestment Discontinued operation NO IMPACT Results for all periods restated ON PREVIOUSLY Equity method investees REPORTED Separate caption in income statement NET INCOME Previously in other income Investment write-downs Presented in other expense 2001: $55.7m reclassified from other charges to other expense 17
Financial Highlights* Millions of USD, except per share amounts Q4 02 FY 02 Revenues 302.5 1,037.3 Revenue Growth + 16% + 22% Operating income 100.6 327.0 Income before tax 93.6 329.1 EPS (diluted): - Ordinary shares 13.8c 49.0c - ADS 41.5c 147.1c * Results and growth rates for all periods are restated for the OTC divestment, accounted for as a discontinued operation. 18
Components of reported EPS in 2001 Diluted EPS per ADS EPS for 2001 as reported 23.0 cents Shire BioChem merger costs 104.5 cents Stock option compensation 4.1 cents 19
Product Sales – Q4 2002 Millions of USD CNS Franchise Q4 02 Q4 01 Growth (%) US Rx Growth (%)* Adderall XR 102.2 32.6** + 213 + 638 Adderall 17.2 91.5 - 81 - 79 Adderall Brand 119.4 124.1 - 4 - 2 Carbatrol 10.2 9.4 + 8 -- * Source: IMS Data ** Includes $11.0m of launch stock 20
Product Sales – Q4 2002 Millions of USD Other Franchises Q4 02 Q4 01 Growth (%) US Rx Growth (%)* Agrylin 37.6 22.8 + 65 + 15 Pentasa 26.5 22.0 + 20 - 1 ProAmatine 16.1 11.0 + 47 + 12 * Source: IMS Data 21
Royalty Income – Q4 2002 Millions of USD Q4 02 Reported Underlying Royalties Growth (%) Growth (%)* 3TC 38.7 + 35 + 10 Zeffix 5.9 + 49 + 29 Other** 6.6 + 141 -- Total 51.2 + 45 -- * Underlying sales growth expressed in constant exchange rates, and excluding Emory settlement both in 2001 and 2002 ** Includes Reminyl 22
Financial Ratios FY 02 FY 01 Q4 02 Q4 01 COGS : Product sales 16 16 19 16 Gross margin 84 84 81 84 R&D : Revenues 18 20 17 19 S,G&A (excl. D&A) : 38 37 33 38 Product sales Operating margin 32 17 33 31 Includes $121.3m in BioChem merger charges and $6.8m in stock option compensation charges 23
Cash Flow – FY 2002 Millions of USD Cash generation + $437 Tax / interest - $78 Products / equity investments - $26 - $22 Fixed assets Acquisitions and disposals + $54 Financing + $6 Net cash surplus for FY 2002 : $371 24
Balance Sheet Millions of USD 31.12.02 30.09.02 31.12.01 Net assets 1,573 1,485 1,263 Net cash 806 554 435 Gross cash* 1,214 963 842 * Cash, cash equivalents, and marketable securities 25
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