Industry Trend Analysis - Baxalta Integration Delivering Impressive Revenue Gains For Shire - JAN 2018

BMI View : Strong performances from Baxalta ' s legacy products, particularly the Immunology franchise, compensated for the impact of supply chain disruptions and generic competition on some of Shire ' s organic product portfolio in Q317. Shire remains on track to deliver cost-related synergies as progress towards a solid execution of the Baxalta integration remains positive. Key regulatory milestones , further expansion into fast-growing emerging markets, and a strategic review of the Neuroscience franchise will be key developments for Shire over the coming quarters.

Shire reported revenues of USD3.69bn in Q317, representing a 7.1% y-o-y increase from Q316 revenues of USD3.45bn. The increase was primarily the result of the inclusion of revenues of USD1.78bn from Baxalta legacy sales, with robust growth coming from the Immunology franchise in particular. This proved substantial enough to overcome below-consensus revenue growth for two of Shire's important legacy franchises, namely Cinryze (C1 esterase inhibitor) and Lialda (mesalazine), with Q317 sales being negatively affected by a manufacturing supply disruption and generic competition, respectively.

Shire's net income reached USD551mn in Q317, following a loss in the same quarter last year as a consequence of costs attributed to the Baxalta takeover. The drugmaker remains confident that the integration of Baxalta will bring cost savings of at least USD700mn by the third year. As part of this target, Shire completed a manufacturing network review in Q317, which identified more than USD100mn in projected additional annual savings from 2019, as well as an expected increase to USD300mn in savings annually by 2023.

Legacy Baxalta Franchise Driving Growth
Shire: Financial Snapshot (USDbn)
Source: Shire

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