Shire slips on poor sales of haemophilia drugs

LONDON (Reuters) - Shire SHP.L reported a fall in third-quarter sales of haemophilia drugs acquired in its $32 billion (£26.13 billion) Baxalta deal in June, resulting in a rare miss on both the top and bottom lines and sending its shares lower.

Vitamins made by Shire are displayed at a chemist's in northwest London July 11, 2014. REUTERS/Suzanne Plunkett

Sales of Baxalta’s haematology products fell by 6 percent to $884 million (£721.87 million), Shire said, adding that the number was hit by the timing of large orders outside the United States.

Weakness in the category resulted in total product sales of $3.32 billion, 3 percent short of market consensus, analysts at Jefferies said.

Third-quarter earnings of $3.17 per American Depositary Share (ADS), down 2 percent on a year ago due to extra shares issued when Shire bought Baxalta, were 4 percent short of consensus.

Shares in Shire, which had fallen on Tuesday after U.S. pharmacy benefit manager (PBM) Express Scripts said it was looking at ways to manage the rising costs of haemophilia medicines, slid as much as 7 percent after the results.

Shire Chief Executive Flemming Ornskov said that PBMs, which administer drug programmes for insurers, wanted to manage a number of categories more tightly, including haemophilia.

“We live in an environment, certainly during a presidential campaign, where price is in high focus,” he said.

“We can expect for all our categories, not just hemophilia, tighter management, but we have the programmes in place to make sure this does not affect our patients and has limited impact on our overall business.

“I remain incredibly confident about the outlook for haemophilia.”

Chief Financial Officer Jeff Poulton added that price increases are not in Shire’s plan for Baxalta, noting that price of its Advate drug had risen by only 2 percent this year.

Shire’s shares recovered to trade down 1.5 percent at 45.80 pounds at 1532 GMT, with broker Liberum saying that the initial fall was an overreaction to a “slightly weak” quarter.

“We continue to be confident of strong earnings for the balance of the year,” the broker said, adding that there had been little time for savings from the Baxalta acquisition to feed through.

Aside from Baxalta, CEO Ornskov said that Xiidra, Shire’s medicine for dry eye disease, had a “very strong” launch.

The London-listed group, which also makes drugs to treat hyperactivity and rare diseases, reiterated its guidance for full-year non-GAAP diluted earnings per ADS to rise to $12.70-$13.10, the midpoint of which represents 10 percent growth.

Editing by Mark Potter and David Goodman