Document_and_Entity_Informatio
Document and Entity Information (USD $) | 9 Months Ended | ||
In Billions, except Share data in Millions, unless otherwise specified | Sep. 30, 2013 | Oct. 18, 2013 | Jun. 30, 2013 |
Document and Entity Information [Abstract] | |||
Document Type | 10-Q | ||
Document Period End Date | 30-Sep-13 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Central Index Key | 936402 | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Registrant Name | Shire plc | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Common Stock, Shares Outstanding | 562.9 | ||
Document Fiscal Year Focus | 2013 | ||
Document Fiscal Period Focus | Q3 | ||
Entity Public Float | $17.40 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $1,686.10 | $1,482.20 |
Restricted cash | 16.6 | 17.1 |
Accounts receivable, net | 1,037.80 | 824.2 |
Inventories | 480.5 | 436.9 |
Deferred tax asset | 210.6 | 229.9 |
Prepaid expenses and other current assets | 282.3 | 221.8 |
Total current assets | 3,713.90 | 3,212.10 |
Non-current assets: | ||
Investments | 36.7 | 38.7 |
Property, plant and equipment, net | 965.1 | 955.8 |
Goodwill | 621.3 | 644.5 |
Other intangible assets, net | 2,976 | 2,388.10 |
Deferred tax asset | 40.4 | 46.5 |
Other non-current assets | 34.5 | 31.5 |
Total assets | 8,387.90 | 7,317.20 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,581.60 | 1,501.50 |
Convertible bonds | 1,100 | 0 |
Other current liabilities | 163.2 | 144.1 |
Total current liabilities | 2,844.80 | 1,645.60 |
Non-current liabilities | ||
Convertible bonds | 0 | 1,100 |
Deferred tax liability | 722 | 520.8 |
Other non-current liabilities | 652.3 | 241.6 |
Total liabilities | 4,219.10 | 3,508 |
Commitments and contingencies | ||
Equity: | ||
Common stock of 5p par value; 1,000 million shares authorized; and 562.9 million shares issued and outstanding (2012: 1,000 million shares authorized; and 562.5 million shares issued and outstanding) | 55.8 | 55.7 |
Additional paid-in capital | 3,045.60 | 2,981.50 |
Treasury stock: 14.5 million shares (2012: 10.7 million shares) | -466.6 | -310.4 |
Accumulated other comprehensive income | 101.3 | 86.9 |
Retained earnings | 1,432.70 | 995.5 |
Total equity | 4,168.80 | 3,809.20 |
Total liabilities and equity | $8,387.90 | $7,317.20 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (GBP £) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, except Per Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ||
Common Stock, Par Value | £ 0.05 | £ 0.05 |
Common Stock, Shares Authorized | 1,000 | 1,000 |
Common Stock, Shares, Issued | 562.9 | 562.5 |
Common Stock, Shares, Outstanding | 562.9 | 562.5 |
Treasury Stock, Shares | 14.5 | 10.7 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | ||||
Revenues: | ||||||||
Product sales | $1,194.90 | $1,054.50 | $3,541.80 | $3,309.10 | ||||
Royalties | 37.6 | 41.8 | 112.4 | 154.4 | ||||
Other revenues | 4.1 | 4.1 | 18.8 | 16.5 | ||||
Total revenues | 1,236.60 | 1,100.40 | 3,673 | 3,480 | ||||
Costs and expenses: | ||||||||
Cost of product sales | 197.1 | 167.9 | 528.7 | 478.8 | ||||
Research and development | 229.1 | [1] | 224.7 | [1] | 713.4 | [1] | 683.6 | [1] |
Selling, general and administrative | 441.1 | [1] | 437.4 | [1] | 1,337.40 | [1] | 1,448.40 | [1] |
Goodwill Impairment charge | 0 | 0 | 198.9 | 0 | ||||
Gain on sale of product rights | -3.6 | -5.7 | -14.6 | -16.5 | ||||
Reorganization costs | 13.7 | 0 | 57.6 | 0 | ||||
Integration and acquisition costs | 18.4 | 2.7 | 39.9 | 15.1 | ||||
Total operating expenses | 895.8 | 827 | 2,861.30 | 2,609.40 | ||||
Operating income | 340.8 | 273.4 | 811.7 | 870.6 | ||||
Interest income | 0.4 | 0.9 | 1.6 | 2.3 | ||||
Interest expense | -9 | -9.2 | -27 | -29 | ||||
Other income/(expense), net | 0.6 | 3.5 | -1.9 | 3.6 | ||||
Total other expense, net | -8 | -4.8 | -27.3 | -23.1 | ||||
Income before income taxes and equity in (losses)/earnings of equity method investees | 332.8 | 268.6 | 784.4 | 847.5 | ||||
Income taxes | -54.3 | -41.6 | -183.9 | -144.6 | ||||
Equity in (losses)/earnings of equity method investees, net of taxes | -0.3 | 0.2 | 0.6 | 0.5 | ||||
Net income | $278.20 | $227.20 | $601.10 | $703.40 | ||||
Earnings per ordinary share - basic | $0.51 | $0.41 | $1.09 | $1.27 | ||||
Earnings per ordinary share - diluted | $0.49 | $0.40 | $1.06 | $1.22 | ||||
Weighted average number of shares: | ||||||||
Basic | 548.4 | [2] | 555.9 | [2] | 549.8 | [2] | 555.5 | [2] |
Diluted | 585.7 | 593.1 | 587.5 | 594 | ||||
[1] | Research and development (bR&Db) includes intangible asset impairment charges of $19.9 million (2012: $27.0 million) for the nine months to September 30, 2013. Selling, general and administrative (bSG&Ab) costs include amortization of intangible assets relating to intellectual property rights acquired of $44.4 million for the three months to September 30, 2013 (2012: $50.0 million) and $136.1 million for the nine months to September 30, 2013 (2012: $146.6 million). | |||||||
[2] | Excludes shares purchased by the EBT and under the share buy-back program and presented by Shire as treasury stock. |
Consolidated_Statements_of_Inc1
Consolidated Statements of Income (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Intangible Assets (Excluding Goodwill) [Line Items] | ||||
Amortization of intangible assets | $136.10 | $147.30 | ||
Impairment charges | 19.9 | 27 | 19.9 | 27 |
Acquired Intellectual Property Rights | ||||
Intangible Assets (Excluding Goodwill) [Line Items] | ||||
Amortization of intangible assets | $44.40 | $50 | $136.10 | $146.60 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | |||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Statement of Income and Comprehensive Income [Abstract] | |||||
Net income | $278.20 | $227.20 | $601.10 | $703.40 | |
Other comprehensive income: | |||||
Foreign currency translation adjustments | 48.9 | 22.7 | 14.4 | 5 | |
Unrealized holding gain/(loss) on available-for-sale securities (net of taxes of $0.1 million, $0.8 million, $1.2 million and $3.7 million) | 0.2 | 1.2 | 7.2 | ||
Comprehensive income | 327.3 | 251.1 | 615.5 | 715.6 | |
Components of accumulated other comprehensive income | |||||
Foreign currency translation adjustments | 99.5 | 99.5 | 85.1 | ||
Unrealized holding gain/(loss) on available-for-sale securities, net of taxes | 1.8 | 1.8 | 1.8 | ||
Accumulated other comprehensive income | $101.30 | $101.30 | $86.90 |
Consolidated_Statements_of_Com1
Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Statement of Income and Comprehensive Income [Abstract] | ||||
Unrealized holding gain (loss) on available-for-sale securities, tax | $0.10 | $0.80 | $1.20 | $3.70 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Equity (USD $) | Total | EBT | Share Buy-back Program | Common stock | Additional paid-in capital | Treasury stock | Treasury stock | Treasury stock | Accumulated other comprehensive income | Retained earnings/(accumulated deficit) | |
In Millions | EBT | Share Buy-back Program | |||||||||
As at Dec. 31, 2012 | $3,809.20 | $55.70 | $2,981.50 | ($310.40) | $86.90 | $995.50 | |||||
Shares as at Dec. 31, 2012 | 562.5 | 562.5 | |||||||||
Net income | 601.1 | 601.1 | |||||||||
Net current period other comprehensive income | 14.4 | 14.4 | |||||||||
Options exercised | 0.1 | 0.1 | 0 | ||||||||
Option exercised (in shares) | 0.4 | ||||||||||
Share-based compensation | 56 | 56 | |||||||||
Tax benefit associated with exercise of stock options | 8.1 | 8.1 | |||||||||
Shares repurchased | -50.3 | -190.8 | -50.3 | -190.8 | |||||||
Shares released by EBT to satisfy exercise of stock options | 0.2 | 84.9 | -84.7 | ||||||||
Dividends | [1] | -79.2 | -79.2 | ||||||||
As at Sep. 30, 2013 | $4,168.80 | $55.80 | $3,045.60 | ($466.60) | $101.30 | $1,432.70 | |||||
Shares as at Sep. 30, 2013 | 562.9 | 562.9 | |||||||||
[1] | Dividends per share During the nine months to September 30, 2013 Shire plc declared and paid dividends of 14.60 US cents per ordinary share (equivalent to 43.80 US cents per ADS) totalling $79.2 million. |
Consolidated_Statements_of_Cha1
Consolidated Statements of Changes in Equity (Parenthetical) (USD $) | 9 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2013 | |
Dividends paid | $79.20 | [1] |
Ordinary Shares | ||
Dividends per share declared | $0.15 | |
Dividends per share paid | $0.15 | |
ADS | ||
Dividends per share declared | $0.44 | |
Dividends per share paid | $0.44 | |
[1] | Dividends per share During the nine months to September 30, 2013 Shire plc declared and paid dividends of 14.60 US cents per ordinary share (equivalent to 43.80 US cents per ADS) totalling $79.2 million. |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $601.10 | $703.40 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 229.4 | 231.5 |
Share based compensation | 55.2 | 65 |
Change in fair value of contingent consideration | 28.4 | 3.3 |
Goodwill Impairment charge | 198.9 | 0 |
Impairment of intangible assets | 19.9 | 27 |
Gain on sale of product rights | -14.6 | -16.5 |
Other, net | 4.4 | 1.8 |
Movement in deferred taxes | 16.1 | -30.4 |
Equity in earnings of equity method investees | -0.6 | -0.5 |
Changes in operating assets and liabilities: | ||
Increase in accounts receivable | -215.2 | -23 |
Increase in sales deduction accrual | 108.7 | 36.1 |
Increase in inventory | -39.9 | -81.9 |
(Increase)/decrease in prepayments and other assets | -70.9 | 17.8 |
(Decrease)/increase in accounts payable and other liabilities | -71.4 | 72.7 |
Returns on investment from joint venture | 3.2 | 4.9 |
Net cash provided by operating activities | 852.7 | 1,011.20 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Movements in restricted cash | 0.5 | 1.7 |
Purchases of subsidiary undertakings and businesses, net of cash acquired | -227.8 | -97 |
Purchases of non-current investments | -9.9 | -12.1 |
Purchases of property, plant and equipment ("PPE") | -110.3 | -91.6 |
Purchases of intangible assets | 0 | -43.5 |
Proceeds received on sale of product rights | 15 | 13.7 |
Other, net | 11.5 | 13.2 |
Net cash used in investing activities | -321 | -215.6 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Excess tax benefit associated with exercise of stock options | 9.5 | 38.6 |
Payments to acquire shares | -240.8 | -50.9 |
Contingent consideration payments | -11.3 | -3 |
Payment of dividend | -79.2 | -70.7 |
Other, net | -5.5 | -2.6 |
Net cash used in financing activities | -327.3 | -88.6 |
Effect of foreign exchange rate changes on cash and cash equivalents | -0.5 | -5.1 |
Net increase in cash and cash equivalents | 203.9 | 701.9 |
Cash and cash equivalents at beginning of period | 1,482.20 | 620 |
Cash and cash equivalents at end of period | 1,686.10 | 1,321.90 |
Supplemental information associated with continuing operations: | ||
Interest paid | -17.6 | -18.6 |
Income taxes paid | -244.7 | -134.6 |
EBT | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments to acquire shares | -50.3 | -50.9 |
Share Buy-back Program | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments to acquire shares | ($190.50) | $0 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2013 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies |
(a) Basis of preparation | |
These interim financial statements of Shire plc and its subsidiaries (collectively “Shire” or the “Company”) and other financial information included in this Form 10-Q, are unaudited. They have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and US Securities and Exchange Commission (“SEC”) regulations for interim reporting. | |
The balance sheet as at December 31, 2012 was derived from audited financial statements but does not include all disclosures required by US GAAP. | |
These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year to December 31, 2012. | |
Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim period and the Company believes that the disclosures are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results to be expected for the full year. | |
(b) Use of estimates in interim financial statements | |
The preparation of interim financial statements, in conformity with US GAAP and SEC regulations, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are primarily made in relation to the valuation of intangible assets, the valuation of equity investments, sales deductions, income taxes (including provisions for uncertain tax positions and the realization of deferred tax assets), provisions for litigation and legal proceedings, contingent consideration receivable from product divestments and contingent consideration payable in respect of business combinations and asset purchases. If actual results differ from the Company's estimates, or to the extent these estimates are adjusted in future periods, the Company's results of operations could either benefit from, or be adversely affected by, any such change in estimate. | |
(c) New accounting pronouncements | |
Adopted during the period | |
Indefinite-Lived Intangible Assets (Other than Goodwill) Impairment Testing | |
In July 2012 the Financial Accounting Standard Board (“FASB”) issued guidance on the testing of indefinite-lived intangible assets for impairment. The guidance permits an entity to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, performing the impairment test is unnecessary. The more-likely-than-not threshold is defined as a likelihood of more than 50 percent. An entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the impairment test and may resume performing the qualitative assessment in any subsequent period. The guidance has been adopted prospectively from January 1, 2013. The adoption of the guidance did not impact the Company's consolidated financial position, results of operations or cash flows. | |
Disclosure about offsetting assets and liabilities | |
In December 2011 the FASB issued guidance on disclosures about offsetting assets and liabilities. In January 2013 the FASB amended the previous guidance to clarify the scope of guidance issued in December 2011. The amended guidance requires entities to disclose both gross and net information about derivatives including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with FASB guidance on topics “Balance Sheet” and “Derivatives and Hedging” or subject to an enforceable master netting arrangement or similar agreement; to enable users of financial statements to understand the effects or potential effects of those arrangements on its financial position. The guidance has been adopted prospectively from January 1, 2013. The adoption of the guidance did not impact the Company's consolidated financial position, results of operations or cash flows. Enhanced disclosure of balance sheet offsetting as required by this guidance is included in Note 15. | |
Amounts reclassified out of Comprehensive Income | |
In February 2013 the FASB issued guidance on reporting amounts reclassified out of accumulated other comprehensive income. The guidance requires entities to provide information about the amount reclassified out of comprehensive income by component and presents either on the face of the financial statements or in the notes, significant amounts reclassified out of other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under US GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under US GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under US GAAP that provide additional detail about those amounts. The guidance has been adopted prospectively from January 1, 2013. The adoption of the guidance did not impact the Company's consolidated financial position, results of operations or cash flows. | |
To be adopted in future periods | |
Presentation of an unrecognized tax benefit | |
In July 2013 the FASB issued guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carry forward, a similar tax loss, or a tax credit carry forward exists. The guidance requires entities to present an unrecognized tax benefit or a portion of an unrecognized tax benefit in the financial statements as a reduction to a deferred tax asset for a net operating loss carry forward, a similar tax loss, or a tax credit carry forward, except as follows: to the extent a net operating loss carry forward, a similar tax loss, or a tax credit carry forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. The guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, with early adoption permitted. The Company has not adopted this guidance in the period. The Company is assessing the impact that this guidance will have on its consolidated financial position, results of operations or cash flows. |
Business_Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2013 | |
Business Combinations [Abstract] | |
Business Combination Disclosure | 2. Business combinations |
Acquisition of SARcode Bioscience Inc. (“SARcode”) | |
On April 17, 2013 Shire completed the acquisition of 100% of the outstanding share capital of SARcode. The acquisition date fair value of the consideration totaled $368 million, comprising cash consideration paid on closing of $151 million and the fair value of contingent consideration payable of $217 million. The maximum amount of contingent cash consideration which may be payable by Shire in future periods is $525 million dependent upon achievement of certain clinical, regulatory and net sales milestones. | |
This acquisition brings the new Phase 3 compound, Lifitegrast, currently under development for the signs and symptoms of dry eye disease, into Shire's portfolio. Shire anticipates launching Lifitegrast in the United States as early as 2016 pending a positive outcome of the Phase 3 clinical development program and regulatory approvals. Shire is acquiring the global rights to Lifitegrast and will evaluate an appropriate regulatory filing strategy for markets outside of the United States. | |
The acquisition of SARcode has been accounted as a business combination using the acquisition method. The assets and liabilities assumed from SARcode have been recorded at their preliminary fair values at the date of acquisition, being April 17, 2013. The Company's consolidated financial statements and results of operations include the results of SARcode from April 17, 2013. In the nine months to September 30, 2013 the Company's consolidated income statement includes pre-tax losses of $17.4 million in relation to the post acquisition results of SARcode. | |
The purchase price allocation is preliminary pending the determination of the fair values of certain assets and liabilities assumed. The purchase price has been allocated on a preliminary basis to acquired in process research and development (“IPR&D”) in respect of Lifitegrast ($412 million), net current liabilities assumed ($8.2 million), net non-current liabilities assumed, including deferred tax liabilities ($122.4 million) and goodwill ($86.6 million). The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. This acquisition resulted in goodwill of $86.6 million, which is not deductible for tax purposes. Goodwill includes the value of the assembled workforce and the related scientific expertise in ophthalmology which allows for potential expansion into a new therapeutic area. | |
In the nine months to September 30, 2013 the Company expensed costs of $14.7 million (2012: $nil) relating to the acquisition of SARcode (including charges related to the change in fair value of contingent consideration payable), which have been recorded within integration and acquisition costs in the Company's consolidated income statement. | |
Acquisition of Premacure AB (“Premacure”) | |
On March 8, 2013 Shire completed the acquisition of 100% of the outstanding share capital of Premacure. The acquisition date fair value of the consideration totaled $140.2 million, comprising cash consideration paid on closing of $30.6 million, and the fair value of contingent consideration payable of $109.6 million. The maximum amount of contingent cash consideration which may be payable by Shire in future periods, dependent upon the successful completion of certain development and commercial milestones, is $169 million. Shire will also pay royalties on relevant net sales. | |
Premacure is developing a protein replacement therapy (“PREMIPLEX”), currently in Phase 2 development, for the prevention of Retinopathy of Prematurity (“ROP”). ROP is a rare and potentially blinding eye disorder that primarily affects premature infants and is one of the most common causes of visual loss in childhood. Together, the acquisitions of SARcode and Premacure build Shire's presence in the ophthalmology therapeutic area. | |
The acquisition of Premacure has been accounted for as a business combination using the acquisition method. The assets and the liabilities assumed from Premacure have been recorded at their preliminary fair values at the date of acquisition, being March 8, 2013. The Company's consolidated financial statements and results of operations include the results of Premacure from March 8, 2013. | |
The purchase price allocation is preliminary pending final determination of the fair values of certain assets acquired and liabilities assumed. The purchase price has been allocated on a preliminary basis to acquired IPR&D in respect of PREMIPLEX ($151.8 million), net current liabilities assumed ($11.7 million), net non-current liabilities assumed, including deferred tax liabilities ($29.5 million) and goodwill ($29.6 million). The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. This acquisition resulted in goodwill of $29.6 million, which is not deductible for tax purposes. | |
In the nine months to September 30, 2013 the Company expensed costs of $9.8 million (2012: nil) relating to the acquisition of Premacure (including charges related to the change in fair value of contingent consideration payable), which have been recorded within integration and acquisition costs in the Company's consolidated income statement. | |
Acquisition of Lotus Tissue Repair, Inc (“Lotus”) | |
On February 12, 2013 Shire completed the acquisition of 100% of the outstanding share capital of Lotus. The acquisition date fair value of consideration totaled $174.2 million, comprising cash consideration paid on closing of $49.4 million, and the fair value of contingent consideration payable of $124.8 million. The maximum amount of contingent cash consideration which may be payable by Shire in future periods is $275 million. The amount of contingent cash consideration ultimately payable by Shire is dependent upon achievement of certain pre-clinical and clinical development milestones. | |
Lotus is developing a proprietary recombinant form of human collagen Type VII (“rC7”) as the first and only intravenous protein replacement therapy currently being investigated for the treatment of Dystrophic Epidermolysis Bullosa (“DEB”). DEB is a devastating orphan disease for which there is no currently approved treatment option other than palliative care. The acquisition adds to Shire's pipeline a late stage pre-clinical product for the treatment of DEB with global rights. | |
The acquisition of Lotus has been accounted for as a business combination using the acquisition method. The assets and the liabilities assumed from Lotus have been recorded at their preliminary fair values at the date of acquisition, being February 12, 2013. The Company's consolidated financial statements and results of operations include the results of Lotus from February 12, 2013. | |
The purchase price allocation is preliminary pending final determination of the fair values of certain assets acquired and liabilities assumed. The purchase price has been allocated on a preliminary basis to acquired IPR&D in respect of rC7 ($176.7 million), net current assets assumed ($6.8 million), net non-current liabilities assumed, including deferred tax liabilities ($63.4 million) and goodwill ($54.1 million). The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. This acquisition resulted in goodwill of $54.1 million, which is not deductible for tax purposes. | |
In the nine months to September 30, 2013 the Company expensed costs of $4.6 million (2012: $nil) relating to the acquisition of Lotus, which have been recorded within integration and acquisition costs in the Company's consolidated income statement. | |
Supplemental disclosure of pro forma information | |
The unaudited pro forma financial information to present the combined results of the operations of Shire, SARcode Premacure and Lotus are not provided as the collective impacts of these acquisitions were not material to the Company's results of operations for any period presented. | |
Reorganization_Costs
Reorganization Costs | 9 Months Ended |
Sep. 30, 2013 | |
Restructuring and Related Activities [Abstract] | |
Reorganization Costs Disclosure | 3. Reorganization costs |
Turnhout, Belgium Site Closure | |
On January 23, 2013 Shire announced that it had decided to proceed with a collective dismissal and business closure at its site in Turnhout, Belgium. This decision follows the conclusion of an information and consultation process. Shire will continue to sell RESOLOR in Europe and the supply of RESOLOR for patients in Europe who rely on the medicine will not be affected. In the three and nine months to September 30, 2013 the Company incurred reorganization costs totaling $1.8 million and $21.0 million, respectively relating to employee involuntary termination benefits and other re-organization costs. The closure of the Turnhout site is expected to be completed by the end of 2013. | |
“One Shire” business reorganization | |
On May 2, 2013, the Company announced that there would be a reorganization of the business to integrate the three divisions into a simplified “One Shire” organization in order to drive future growth and innovation. In the three and nine months to September 30, 2013, the Company incurred reorganization costs totaling $11.9 million and $36.6 million respectively, relating to contract termination and other reorganization costs (of which $10.6 million is accrued at September 30, 2013). The Company is continuing to evaluate both the total costs expected to be incurred and the timeframe for completion of this reorganization. | |
Decision to discontinue the construction of the new manufacturing facility in San Diego | |
On October 22, 2013 Shire announced that it had decided to discontinue the construction of its new manufacturing facility in San Diego. Shire will continue to manufacture DERMAGRAFT in its existing facility in La Jolla, and Shire's ability to meet expected future demand for DERMAGRAFT is not impacted by this decision. Shire is currently assessing possible disposal opportunities in relation to this facility. It is reasonably possible that charges to write down the carrying value of the assets related to this manufacturing facility may be required in future periods. |
Accounts_Receivable_Net
Accounts Receivable, Net | 9 Months Ended | ||
Sep. 30, 2013 | |||
Receivables [Abstract] | |||
Accounts Receivable Disclosure | 4. Accounts receivable, net | ||
Accounts receivable at September 30, 2013 of $1,037.8 million (December 31, 2012: $824.2 million), are stated net of a provision for discounts and doubtful accounts of $51.6 million (December 31, 2012: $41.7 million). | |||
Provision for discounts and doubtful accounts: | |||
2013 | 2012 | ||
$’M | $’M | ||
_____________ | _____________ | ||
As at January 1, | 41.7 | 31.1 | |
Provision charged to operations | 225.3 | 214.9 | |
Provision utilization | -215.4 | -196.5 | |
_____________ | _____________ | ||
As at September 30, | 51.6 | 49.5 | |
_____________ | _____________ | ||
At September 30, 2013 accounts receivable included $36.9 million (December 31, 2012: $38.5 million) related to royalty income. | |||
Inventories
Inventories | 9 Months Ended | ||
Sep. 30, 2013 | |||
Inventory Disclosure [Abstract] | |||
Inventory Disclosure | 5. Inventories | ||
Inventories are stated at the lower of cost or market and comprise: | |||
September 30, | December 31, | ||
2013 | 2012 | ||
$’M | $’M | ||
____________ | ____________ | ||
Finished goods | 170.6 | 124.4 | |
Work-in-progress | 241 | 220.6 | |
Raw materials | 68.9 | 91.9 | |
____________ | ____________ | ||
480.5 | 436.9 | ||
____________ | ____________ |
Prepaid_Expenses_and_Other_Cur
Prepaid Expenses and Other Current Assets | 9 Months Ended | ||
Sep. 30, 2013 | |||
Prepaid Expense and Other Assets, Current [Abstract] | |||
Prepaid Expense and Other Assets, Current | 6. Prepaid expenses and other current assets | ||
September 30, | December 31, | ||
2013 | 2012 | ||
$’M | $’M | ||
______________ | ____________ | ||
Prepaid expenses | 39.1 | 31.7 | |
Income tax receivable | 179.9 | 130.6 | |
Value added taxes receivable | 18.7 | 20.9 | |
Other current assets | 44.6 | 38.6 | |
______________ | ______________ | ||
282.3 | 221.8 | ||
______________ | ______________ |
Goodwill
Goodwill | 9 Months Ended | ||
Sep. 30, 2013 | |||
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill Disclosure | 7. Goodwill | ||
September 30, | December 31, | ||
2013 | 2012 | ||
$’M | $’M | ||
____________ | ____________ | ||
Goodwill arising on businesses acquired | 621.3 | 644.5 | |
____________ | ____________ | ||
In the nine months to September 30, 2013 the Company completed the acquisitions of SARcode, Premacure and Lotus, which resulted in goodwill of $86.6 million, $29.6 million and $54.1 million, respectively (see Note 2 for details). | |||
As a result of the re-alignment of the business into a simplified “One Shire” organization, the Company now comprises one operating and one reportable segment (see note 18 for further details). | |||
2013 | 2012 | ||
$’M | $’M | ||
____________ | ____________ | ||
As at January 1, | 644.5 | 592.6 | |
Acquisitions | 170.3 | 48.1 | |
Goodwill impairment charge | -198.9 | - | |
Foreign currency translation | 5.4 | -1.5 | |
____________ | ____________ | ||
As at September 30, | 621.3 | 639.2 | |
____________ | ____________ | ||
Goodwill is tested for impairment at least annually as at October 1 each year. This assessment is also performed whenever there is a change in circumstances that indicates the carrying value of these assets may not be recoverable. | |||
In the first quarter of 2013 the Company identified circumstances which indicated that the carrying value of goodwill in the Regenerative Medicine (“RM”) reporting unit may not be recoverable, which triggered an impairment test in advance of the annual testing date. | |||
These circumstances included the results of an independent market research study of the DERMAGRAFT sales potential, commissioned by the Company, which was finalized late in the first quarter of 2013. In addition, while the Company still expects DERMAGRAFT to return to growth over coming quarters, the recently completed restructuring of the RM sales and marketing organization and the implementation of a new commercial model had a more pronounced impact than previously expected. As a result of these and other factors forecast future sales are now lower than at the time of acquisition. | |||
The results of the Company's March 31, 2013 impairment test showed that the carrying amount of the RM reporting unit exceeded its fair value and the implied value of the goodwill was $nil. As a result the Company recorded an impairment charge of $198.9 million related to the goodwill allocated to the RM reporting unit. The RM goodwill impairment charge is not deductible for tax purposes. This is the primary reason for the effective rate of tax in the nine months to September 30, 2013 (23%) being higher than the same period in 2012 (17%). Accumulated goodwill impairment as at September 30, 2013 was $198.9 million (December 31, 2012: $nil). | |||
Key assumptions used to determine the fair value of the RM reporting unit included expected cash flows for the period from March 31, 2013 to December 31, 2023 and the associated discount rate of 15.1%, which was derived from management's best estimate of the after-tax weighted average cost of capital for the RM reporting unit. | |||
The Company determined the estimated fair value of the RM reporting unit using discounted cash flow analyses. Discounted cash flow analyses are dependent upon a number of quantitative and qualitative factors including estimates of forecasted revenue, profitability, earnings before interest, taxes, depreciation and amortization, and terminal values. The discount rates applied in the discounted cash flow analyses also have an impact on the estimates of fair value, as use of a higher rate will result in a lower estimate of fair value. |
Other_Intangible_Assets_Net
Other Intangible Assets, Net | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||||
Other Intangible Assets Disclosure | 8. Other intangible assets, net | |||
September 30, | December 31, | |||
2013 | 2012 | |||
$’M | $’M | |||
________________ | ________________ | |||
Amortized intangible assets | ||||
Intellectual property rights acquired for currently marketed products | 2,467.90 | 2,462.00 | ||
Acquired product technology | 710 | 710 | ||
Other intangible assets | 45.3 | 44.5 | ||
________________ | ________________ | |||
3,223.20 | 3,216.50 | |||
Unamortized intangible assets | ||||
Intellectual property rights acquired for IPR&D | 952.8 | 231 | ||
________________ | ________________ | |||
4,176.00 | 3,447.50 | |||
Less: Accumulated amortization | -1,200.00 | -1,059.40 | ||
________________ | ________________ | |||
2,976.00 | 2,388.10 | |||
________________ | ________________ | |||
The change in the net book value of other intangible assets for the nine months to September 30, 2013 and 2012 is shown in the table below: | ||||
Other intangible assets | ||||
2013 | 2012 | |||
$’M | $’M | |||
________________ | ________________ | |||
As at January 1, | 2,388.10 | 2,493.00 | ||
Acquisitions | 733.2 | 281.5 | ||
Amortization charged | -136.1 | -147.3 | ||
Impairment charges | -19.9 | -27 | ||
Foreign currency translation | 10.7 | -6.6 | ||
________________ | ________________ | |||
As at September 30, | 2,976.00 | 2,593.60 | ||
________________ | ________________ | |||
In the nine months to September 30, 2013 the Company acquired intangible assets totaling $733.2 million, relating to intangible assets acquired with SARcode, Premacure and Lotus (see Note 2 for further details). | ||||
In the second quarter of 2013 the Company reviewed certain IPR&D intangible assets acquired through Movetis N.V. (“Movetis”) for impairment and recognized an impairment charge of $19.9 million (2012: $27.0 million) recorded within R&D in the consolidated income statement, to write-down these IPR&D assets to their fair value. The fair values of these assets were determined using the income approach, which used significant unobservable (Level 3) inputs (see Note 16 for further details). | ||||
Management estimates that the annual amortization charge in respect of intangible assets held at September 30, 2013 will be approximately $170 million for each of the five years to September 30, 2018. Estimated amortization expense can be affected by various factors including future acquisitions, disposals of product rights, regulatory approval and subsequent amortization of acquired IPR&D projects, foreign exchange movements and the technological advancement and regulatory approval of competitor products. |
Accounts_Payable_and_Accrued_E
Accounts Payable and Accrued Expenses | 9 Months Ended | ||
Sep. 30, 2013 | |||
Accounts Payable and Accrued Liabilities, Current [Abstract] | |||
Accounts Payable and Accrued Expenses Disclosure | 9. Accounts payable and accrued expenses | ||
September 30, | December 31, | ||
2013 | 2012 | ||
$’M | $’M | ||
________________ | ________________ | ||
Trade accounts payable and accrued purchases | 187.8 | 208.1 | |
Accrued rebates – Medicaid | 511.7 | 455.6 | |
Accrued rebates – Managed care | 235.4 | 184.9 | |
Sales return reserve | 95.3 | 90.5 | |
Accrued bonuses | 101.6 | 109 | |
Accrued employee compensation and benefits payable | 89.1 | 64.5 | |
R&D accruals | 79.4 | 73.5 | |
Provisions for litigation losses and other claims | 78.3 | 118.2 | |
Other accrued expenses | 203 | 197.2 | |
________________ | ________________ | ||
1,581.60 | 1,501.50 | ||
________________ | ________________ |
Convertible_Bonds
Convertible Bonds | 9 Months Ended |
Sep. 30, 2013 | |
Convertible Debt [Abstract] | |
Convertible Bonds Disclosure | 10. Convertible Bonds |
Shire 2.75% Convertible Bonds due 2014 | |
On May 9, 2007 Shire issued $1,100 million in principal amount of 2.75% convertible bonds due in 2014 and convertible into fully paid ordinary shares of Shire plc (the “Bonds”). The Bonds were issued at 100% of their principal amount, and unless previously purchased and cancelled, redeemed or converted, will be redeemed on May 9, 2014 (the “Final Maturity Date”) at their principal amount. | |
The Bonds may be redeemed at the option of the Company, at their principal amount together with accrued and unpaid interest if: (i) at any time after May 23, 2012 if on no less than 20 dealing days in any period of 30 consecutive dealing days the value of Shire's ordinary shares underlying each Bond in the principal amount of $100,000 would exceed $130,000; or (ii) at any time conversion rights have been exercised, and/or purchases and corresponding cancellations, and/or redemptions effected in respect of 85% or more in principal amount of Bonds originally issued | |
The Bonds are repayable in US dollars, but also contain provisions entitling the Company to settle redemption amounts in Pounds sterling or in the case of Final Maturity Date by delivery of the underlying ordinary shares and, if necessary, a cash top-up amount. As the Bonds will be redeemed within twelve months of the balance sheet date, the Bonds have been presented as a current liability at September 30, 2013. |
Other_Current_Liabilities
Other Current Liabilities | 9 Months Ended | ||
Sep. 30, 2013 | |||
Other Liabilities, Current [Abstract] | |||
Other Current Liabilities | 11. Other current liabilities | ||
September 30, | December 31, | ||
2013 | 2012 | ||
$’M | $’M | ||
_____________ | _____________ | ||
Income taxes payable | 19.4 | 78.4 | |
Value added taxes | 28.7 | 23.6 | |
Contingent consideration payable | 86 | 16 | |
Other current liabilities | 29.1 | 26.1 | |
_____________ | _____________ | ||
163.2 | 144.1 | ||
_____________ | _____________ |
Other_Noncurrent_Liabilities
Other Non-current Liabilities | 9 Months Ended | ||
Sep. 30, 2013 | |||
Other Liabilities, Noncurrent [Abstract] | |||
Other Noncurrent Liabilities Disclosure | 12. Other non-current liabilities | ||
September 30, | December 31, | ||
2013 | 2012 | ||
$’M | $’M | ||
____________ | ____________ | ||
Income taxes payable | 81.5 | 58.9 | |
Deferred revenue | 10.3 | 11.4 | |
Deferred rent | 11.3 | 11.9 | |
Insurance provisions | 7.9 | 12.3 | |
Contingent consideration payable | 511.8 | 120.4 | |
Other non-current liabilities | 29.5 | 26.7 | |
____________ | ____________ | ||
652.3 | 241.6 | ||
____________ | ____________ |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | ||
Sep. 30, 2013 | |||
Commitments and Contingencies Disclosure [Abstract] | |||
Commitments and Contingencies Disclosure | 13. Commitments and contingencies | ||
(a) Leases | |||
Future minimum lease payments under operating leases at September 30, 2013 are presented below: | |||
Operating | |||
leases | |||
$’M | |||
_____________ | |||
2013 | 11.4 | ||
2014 | 42.5 | ||
2015 | 31.8 | ||
2016 | 23.4 | ||
2017 | 17.8 | ||
2018 | 12.1 | ||
Thereafter | 83.2 | ||
_____________ | |||
222.2 | |||
_____________ | |||
The Company leases land, facilities, motor vehicles and certain equipment under operating leases expiring through 2032. Lease and rental expense amounted to $35.5 million and $31.4 million for the nine months to September 30, 2013 and 2012 respectively, which is predominately included in SG&A expenses in the Company's consolidated income statement. | |||
(b) Letters of credit and guarantees | |||
At September 30, 2013 the Company had irrevocable standby letters of credit and guarantees with various banks and insurance companies totaling $54 million, providing security for the Company's performance of various obligations. These obligations are primarily in respect of the recoverability of insurance claims, lease obligations and supply commitments. | |||
(c) Collaborative arrangements | |||
Details of significant updates in collaborative arrangements are included below: | |||
In-licensing arrangements | |||
Collaboration with Acceleron Pharma Inc. (“Acceleron”) for activin receptor type IIB class of molecules | |||
In April 2013, following the results of toxicology studies, Shire discontinued development of HGT4510, returned Shire's rights in the asset to Acceleron and discontinued the collaboration. | |||
Out-licensing arrangements | |||
Shire has entered into various collaborative arrangements under which the Company has out-licensed certain product or intellectual property rights for consideration such as up-front payments, development milestones, sales milestones and/or royalty payments. In some of these arrangements Shire and the licensee are both actively involved in the development and commercialization of the licensed product and have exposure to risks and rewards dependent on its commercial success. Under the terms of these arrangements, the Company may receive development milestone payments up to an aggregate amount of $39.0 million and sales milestones up to an aggregate amount of $71.5 million. The receipt of these substantive milestones is uncertain and contingent on the achievement of certain development milestones or the achievement of a specified level of annual net sales by the licensee. In the nine months to September 30, 2013 Shire received up-front and milestone payments totaling $3.0 million (2012: $6.0 million). In the nine months to September 30, 2013 Shire recognized milestone income of $4.5 million (2012: $6.7 million) in other revenues and $43.8 million (2012: $57.6 million) in product sales for shipment of product to the relevant licensee. | |||
(d) Commitments | |||
(i) Clinical testing | |||
At September 30, 2013 the Company had committed to pay approximately $ 332 million (December 31, 2012: $ 425 million) to contract vendors for administering and executing clinical trials. The timing of these payments is dependent upon actual services performed by the organizations as determined by patient enrollment levels and related activities. | |||
(ii) Contract manufacturing | |||
At September 30, 2013 the Company had committed to pay approximately $ 84 million (December 31, 2012: $ 125 million) in respect of contract manufacturing. The Company expects to pay $ 46 million of these commitments in 2013. | |||
(iii) Other purchasing commitments | |||
At September 30, 2013 the Company had committed to pay approximately $ 101 million (December 31, 2012: $ 145 million) for future purchases of goods and services, predominantly relating to active pharmaceutical ingredients sourcing. The Company expects to pay $ 89 million of these commitments in 2013. | |||
(iv) Investment commitments | |||
At September 30, 2013 the Company had outstanding commitments to subscribe for interests in companies and partnerships for amounts totaling $ 15 million (December 31, 2012: $ 15 million) which may all be payable in 2013, depending on the timing of capital calls. | |||
(v) Capital commitments | |||
At September 30, 2013 the Company had committed to spend $ 109 million (December 31, 2012: $ 97 million) on capital projects. | |||
(e) Legal and other proceedings | |||
The Company expenses legal costs as they are incurred. | |||
The Company recognizes loss contingency provisions for probable losses when management is able to reasonably estimate the loss. When the estimated loss lies within a range, the Company records a loss contingency provision based on its best estimate of the probable loss. If no particular amount within that range is a better estimate than any other amount, the minimum amount is recorded. Estimates of losses may be developed substantially before the ultimate loss is known, and are therefore refined each accounting period as additional information becomes known. In instances where the Company is unable to develop a reasonable estimate of loss, no loss contingency provision is recorded at that time. As information becomes known a loss contingency provision is recorded when a reasonable estimate can be made. The estimates are reviewed quarterly and the estimates are changed when expectations are revised. An outcome that deviates from the Company's estimate may result in an additional expense or release in a future accounting period. At September 30, 2013 provisions for litigation losses, insurance claims and other disputes totaled $86.2 million (December 31, 2012: $130.5 million). | |||
The Company's principal pending legal and other proceedings are disclosed below. The outcomes of these proceedings are not always predictable and can be affected by various factors. For those legal and other proceedings for which it is considered at least reasonably possible that a loss has been incurred, the Company discloses the possible loss or range of possible loss in excess of the recorded loss contingency provision, if any, where such excess is both material and estimable. | |||
VYVANSE | |||
In May and June 2011, Shire was notified that six separate Abbreviated New Drug Applications ("ANDAs") were submitted under the Hatch-Waxman Act seeking permission to market generic versions of all approved strengths of VYVANSE. The notices were from Sandoz, Inc. ("Sandoz"); Amneal Pharmaceuticals LLC ("Amneal"); Watson Laboratories, Inc.; Roxane Laboratories, Inc. ("Roxane"); Mylan Pharmaceuticals, Inc.; and Actavis Elizabeth LLC and Actavis Inc. (collectively, "Actavis"). Within the requisite 45 day period, Shire filed lawsuits for infringement of certain of Shire's VYVANSE patents in the US District Court for the District of New Jersey against each of Sandoz, Roxane, Amneal and Actavis; in the US District Court for the Central District of California against Watson Laboratories, Inc.; and in the US District Court for the Eastern District of New York against Mylan Pharmaceuticals, Inc. and Mylan Inc. (collectively "Mylan"). In February 2013, Shire withdrew its lawsuit against Watson following Watson's withdrawal of its ANDA. On December 9, 2011, the District Court of New Jersey consolidated the Sandoz, Roxane, Amneal and Actavis cases. The filing of the lawsuits triggered a stay of approval of all six ANDAs for up to 30 months from the expiration of the new chemical entity exclusivity, which will expire on August 23, 2014. In December 2011 and February 2012, Shire received additional notifications that Mylan had filed further certifications challenging other VYVANSE patents listed in the Orange Book. Within the requisite 45 day period, Shire filed a new lawsuit against Mylan, Johnson Matthey Pharmaceutical Materials and Johnson Matthey Inc. in New Jersey. In May 2012, the Mylan case that was filed in the Eastern District of New York was transferred and consolidated with the Mylan, Sandoz, Roxane, Amneal and Actavis cases in New Jersey. In December 2012, the parties completed a Markman briefing. A Markman hearing took place on August 5, 2013 and a ruling was rendered on August 8, 2013. No trial dates have been set. | |||
INTUNIV | |||
Between March 2010 and March 2011, Shire was notified that seven separate ANDAs had been submitted to the FDA under the Hatch-Waxman Act seeking permission to market generic versions of all approved strengths of INTUNIV. The ANDA filers were Actavis Inc., Teva Pharmaceuticals USA, Inc., Anchen, Inc., Watson Pharmaceuticals, Inc., Impax Laboratories, Inc., Mylan Pharmaceuticals, Inc., Sandoz, Inc., and certain of their respective affiliates. Shire filed lawsuits against each of these ANDA filers. All of the lawsuits have now been settled. Under the terms of the Actavis settlement, Actavis has a license to make and market Actavis' generic versions of INTUNIV in the United States on December 1, 2014. Such sales will require the payment of a royalty of 25% of gross profits to Shire during the 180 day period of Actavis' exclusivity. All other parties with whom Shire has settled will be able to enter the market with their respective ANDA-approved products after Actavis' 180 day exclusivity period has expired. Each of the settlements included a consent judgment confirming that the proposed ANDA products infringe the patents-in-suit, U.S. Patents 6,287,599 and 6,811,794, and that those patents are valid and enforceable with respect to their respective proposed ANDA products. U.S. Patent 5,854,290, which was originally asserted in some of the litigations, has been dedicated to the public. | |||
FOSRENOL | |||
Between February 2009 and December 2010 Shire was notified that four separate ANDAs had been submitted to the FDA under the Hatch-Waxman Act seeking permission to market generic versions of all approved strengths of FOSRENOL. The ANDA filers were Barr Laboratories, Inc.; Mylan, Inc.; Natco Pharma Limited and Alkem Laboratories Ltd., and certain of their respective affiliates. Shire filed lawsuits against each of these ANDA filers. In April 2011, Shire and Barr reached a settlement and the lawsuit against Barr was dismissed. The settlement provides Barr with a license to market its own generic version of FOSRENOL upon receiving FDA approval in the US on the earlier of the date of entry of another company's generic version of FOSRENOL to the US market, or October 1, 2021. Shire's lawsuits against Mylan, Alkem and Natco have each been dismissed, and consequently, each of Mylan, Alkem and Natco may enter the US market upon FDA approval of their respective ANDA products. | |||
LIALDA | |||
In May 2010 Shire was notified that Zydus Pharmaceuticals USA, Inc. (“Zydus”) had submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of LIALDA. Within the requisite 45 day period, Shire filed a lawsuit in the US District Court for the District of Delaware against Zydus and Cadila Healthcare Limited, doing business as Zydus Cadila. As of February 22, 2013, the case has been administratively closed. No further activity will take place until after one of the parties files a motion to reopen the case. | |||
In February 2012, Shire was notified that Osmotica Pharmaceutical Corporation ("Osmotica") had submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of LIALDA. Within the requisite 45 day period, Shire filed a lawsuit in the US District Court for the Northern District of Georgia against Osmotica. The filing of the lawsuit triggered a stay of approval of the ANDA for up to 30 months. The court has appointed a special master to assist with a Markman hearing and to preside over any discovery disputes. A Markman hearing took place on August 22, 2013 but no ruling has been rendered. No trial date has been set. | |||
In March 2012, Shire was notified that Watson Laboratories Inc.-Florida had submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of LIALDA. Within the requisite 45 day period, Shire filed a lawsuit in the US District Court for the Southern District of Florida against Watson Laboratories Inc.-Florida and Watson Pharmaceuticals, Inc. The filing of the lawsuit triggered a stay of approval of the ANDA for up to 30 months. In August 2012, Shire filed an amended complaint adding Watson Pharma, Inc. and Watson Laboratories, Inc. as defendants. A Markman hearing was held on December 20, 2012 and a written Markman decision was given by the court on January 17, 2013. A trial took place in April, 2013 and on May 9, 2013 the trial court issued a decision finding that the proposed generic product infringes the patent-in-suit and that the patent is not invalid. Watson has appealed the trial court's ruling to the Court of Appeals of the Federal Circuit and a hearing is scheduled for December 2, 2013. | |||
In April 2012, Shire was notified that Mylan Pharmaceuticals, Inc. (“Mylan”) had submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of LIALDA. Within the requisite 45 day period, Shire filed a lawsuit in the US District Court for the Middle District of Florida against Mylan. The filing of the lawsuit triggered a stay of approval of the ANDA for up to 30 months. No date for a Markman hearing has been set. A trial is scheduled to occur in September, 2014. | |||
ADDERALL XR | |||
On November 1, 2010 Impax Laboratories, Inc. (“Impax”) filed suit against Shire in the US District Court for the Southern District of New York claiming that Shire was in breach of its supply contract for the authorized generic version of ADDERALL XR. On February 7, 2013 Shire and Impax settled this dispute and agreed to discontinue all court and related proceedings. Under the terms of the settlement Shire made a one-time cash payment to Impax of $48 million in the first quarter of 2013. Also as part of the settlement, the parties have entered into an amended supply agreement which will govern the supply of authorized generic ADDERALL XR from Shire to Impax until the end of the supply term on September 30, 2014. | |||
In February 2011, Shire was notified that Watson Laboratories, Inc.-Florida had submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of all approved strengths of ADDERALL XR. Shire filed a lawsuit in the U.S. District Court for the Southern District of New York against Watson Pharmaceuticals, Inc. and certain of its affiliates for infringement of certain of Shire's ADDERALL XR patents. Par Pharmaceutical, Inc. (the successor in interest to Watson's ANDA for ADDERALL XR) has withdrawn its ANDA, and the litigation was dismissed on January 23, 2013 by agreement between Shire, Watson and Par Pharmaceutical, Inc.. | |||
In February 2013, Shire was notified that Neos Therapeutics, Inc. had submitted a New Drug Application under section 505(b)(2) of the Hatch Waxman Act (“505(b)(2) Application”). The 505(b)(2) Application was submitted with a paragraph IV certification for U.S. Reissued Patent Nos. RE41,148 and 42,096 listed in the Orange Book. Within the requisite 45 day period, Shire filed a lawsuit in the Northern District of Texas against Neos Therapeutics, Inc. for infringement of those patents. The filing of the lawsuit triggered a stay of final approval of the 505(b)(2) Application for 30 months. No trial date has been set. | |||
Subpoena related to ADDERALL XR, DAYTRANA and VYVANSE | |||
On September 23, 2009 the Company received a civil subpoena from the US Department of Health and Human Services Office of Inspector General in coordination with the US Attorney for the Eastern District of Pennsylvania seeking production of documents related to the sales and marketing of ADDERALL XR, DAYTRANA and VYVANSE. The investigation covered whether Shire engaged in off-label promotion and other conduct that may implicate the civil False Claims Act. | |||
On February 1, 2013 the Company announced it had reached an agreement in principle to resolve this matter. The agreement also addresses sales and marketing practices relating to LIALDA and PENTASA pursuant to a subsequent voluntary disclosure made by the Company. Shire cooperated with the US Government throughout the process that led to this agreement in principle. | |||
The Company has recorded a $57.5 million charge comprised of the agreement in principle amount, interest and costs, which has been charged to SG&A in the fourth quarter of 2012. The agreement in principle is subject to change until this matter is finally resolved. Discussions between the Company and the US Government are ongoing to establish a final resolution to the investigation. | |||
Louisiana Complaint related to ADDERALL, ADDERALL XR, DAYTRANA, VYVANSE and INTUNIV | |||
On July 22 and July 23, 2013, the State of Louisiana served Shire LLC and Shire US Inc., respectively, with a civil complaint filed in the 19th Judicial District Court for the Parish of East Baton Rouge. The complaint alleges that Shire's sales, marketing, and promotion of ADDERALL, ADDERALL XR, DAYTRANA, VYVANSE and INTUNIV violated state law. The State is seeking monetary relief for its claims of fraud, redhibition, and unjust enrichment, as well as violations of Louisiana's Medical Assistance Programs Integrity Law, Unfair Trade Practices Act, and anti-trust laws. Shire intends vigorously to defend these claims. Shire is not in a position at this time to predict the timing, result or outcome of these claims. | |||
Investigation related to DERMAGRAFT | |||
Shire understands that the Department of Justice, including the US Attorney's Office for the Middle District of Florida, Tampa Division and the US Attorney's Office for Washington, DC, is conducting civil and criminal investigations into the sales and marketing practices of Advanced BioHealing Inc. (“ABH”) relating to DERMAGRAFT. Shire is cooperating fully with these investigations. Shire is not in a position at this time to predict the scope, duration or outcome of these investigations. | |||
Civil Investigative Demand for ADDERALL XR, ADDERALL XR Authorized Generics and VYVANSE | |||
On April 5, 2012 Shire received a Civil Investigative Demand (“CID”) from the United States Federal Trade Commission (“FTC”) requesting that Shire provide it with certain information regarding the supply and reported shortages of ADDERALL XR and its authorized generics and the marketing and sale of ADDERALL XR, its authorized generics and VYVANSE. Shire believes the CID was triggered by reports of product shortages of ADDERALL XR and the authorized generic products in 2011. Shire responded to the CID in 2012. On August 29, 2013, the FTC informed Shire that it was closing the investigation without taking any further action. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||
Accumulated Other Comprehensive Income (Loss) | 14. Accumulated Other Comprehensive Income | ||||||
The changes in accumulated other comprehensive income, net of their related tax effects, in the nine months to September 30, 2013 are included below: | |||||||
Foreign currency translation adjustment | Unrealized holding gain/(loss) on available-for-sale securities | Accumulated other comprehensive income | |||||
$M | $M | $M | |||||
As at January 1, 2013 | 85.1 | 1.8 | 86.9 | ||||
Current period change: | |||||||
Other Comprehensive income before reclassification | 14.4 | 2.2 | 16.6 | ||||
Gain transferred to the income statement (within Other (expense)/income, net) on disposal of available-for-sale securities | 0 | -2.2 | -2.2 | ||||
Net current period other comprehensive income | 14.4 | - | 14.4 | ||||
As at September 30, 2013 | 99.5 | 1.8 | 101.3 | ||||
Financial_Instruments
Financial Instruments | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Derivative Instrument Detail [Abstract] | ||||
Financial Instruments Disclosure | 15. Financial instruments | |||
Treasury policies and organization | ||||
The Company's principal treasury operations are coordinated by its corporate treasury function. All treasury operations are conducted within a framework of policies and procedures approved annually by the Board. As a matter of policy, the Company does not undertake speculative transactions that would increase its currency or interest rate exposure. | ||||
Interest rate risk | ||||
The Company is exposed to interest rate risk on restricted cash, cash and cash equivalents and on foreign exchange contracts on which interest is at floating rates. This exposure is primarily related to US dollar, Pounds sterling and Euro interest rates. As the Company maintains all of its cash, liquid investments and foreign exchange contracts on a short term basis for liquidity purposes, this risk is not actively managed. In the nine months to September 30, 2013 the average interest rate received on cash and liquid investments was less than 1% per annum. The largest proportion of these cash and liquid investments was in US dollar money market and liquidity funds. | ||||
The Company incurs interest at a fixed rate of 2.75% on its $1,100 million in principal amount convertible bonds due 2014. | ||||
No derivative instruments were entered into during the nine months to September 30, 2013 to manage interest rate exposure. The Company continues to review its interest rate risk and the policies in place to manage the risk. | ||||
Credit risk | ||||
Financial instruments that potentially expose Shire to concentrations of credit risk consist primarily of short-term cash investments, derivative contracts and trade accounts receivable (from product sales and from third parties from which the Company receives royalties). Cash is invested in short-term money market instruments, including money market and liquidity funds and bank term deposits. The money market and liquidity funds in which Shire invests are all triple A rated by both Standard and Poor's and by Moody's credit rating agencies. | ||||
The Company is exposed to the credit risk of the counterparties with which it enters into derivative instruments. The Company limits this exposure through a system of internal credit limits which vary according to ratings assigned to the counterparties by the major rating agencies. The internal credit limits are approved by the Board and exposure against these limits is monitored by the corporate treasury function. The counterparties to these derivatives contracts are major international financial institutions. | ||||
The Company's revenues from product sales in the US are mainly governed by agreements with major pharmaceutical wholesalers and relationships with other pharmaceutical distributors and retail pharmacy chains. For the year to December 31, 2012 there were three customers in the US that accounted for 50% of the Company's product sales. However, such customers typically have significant cash resources and as such the risk from concentration of credit is considered acceptable. The Company has taken positive steps to manage any credit risk associated with these transactions and operates clearly defined credit evaluation procedures. However, an inability of one or more of these wholesalers to honor their debts to the Company could have an adverse effect on the Company's financial condition and results of operations. | ||||
A substantial portion of the Company's accounts receivable in countries outside of the United States is derived from product sales to government-owned or government-supported healthcare providers. The Company's recovery of these accounts receivable is therefore dependent upon the financial stability and creditworthiness of the relevant governments. In recent years the creditworthiness and general economic condition of a number of Eurozone countries (including Greece, Ireland, Italy, Portugal and Spain (the “Relevant Countries”)) has deteriorated. As a result, in some of these countries the Company is experiencing delays in the remittance of receivables due from government-owned or government-supported healthcare providers. The Company continued to receive remittances in relation to government-owned or government-supported healthcare providers in all the Relevant Countries in the nine months to September 30, 2013, including receipts of $53.5 million and $90.2 million in respect of Spanish and Italian receivables, respectively. | ||||
To date the Company has not incurred significant losses on accounts receivable in the Relevant Countries, and continues to consider that such accounts receivable are recoverable. The Company will continue to evaluate all its accounts receivable for potential collection risks and has made provision for amounts where collection is considered to be doubtful. If the financial condition of the Relevant Countries or other Eurozone countries suffer significant deterioration, such that their ability to make payments becomes uncertain, or if one or more Eurozone member countries withdraws from the Euro, additional allowances for doubtful accounts may be required, and losses may be incurred, in future periods. Any such loss could have an adverse effect on the Company's financial condition and results of operations. | ||||
Foreign exchange risk | ||||
The Company trades in numerous countries and as a consequence has transactional and translational foreign exchange exposures. | ||||
Transactional exposure arises where transactions occur in currencies different to the functional currency of the relevant subsidiary. The main trading currencies of the Company are the US dollar, Pounds Sterling, Swiss Franc and the Euro. It is the Company's policy that these exposures are minimized to the extent practicable by denominating transactions in the subsidiary's functional currency. | ||||
Where significant exposures remain, the Company uses foreign exchange contracts (being spot, forward and swap contracts) to manage the exposure for balance sheet assets and liabilities that are denominated in currencies different to the functional currency of the relevant subsidiary. These assets and liabilities relate predominantly to intercompany financing and specific external receivables. The foreign exchange contracts have not been designated as hedging instruments. Cash flows from derivative instruments are presented within net cash provided by operating activities in the consolidated cash flow statement, unless the derivative instruments are economically hedging specific investing or financing activities. | ||||
Translational foreign exchange exposure arises on the translation into US dollars of the financial statements of non-US dollar functional subsidiaries. | ||||
At September 30, 2013 the Company had 25 swap and forward foreign exchange contracts outstanding to manage currency risk. The swap and forward contracts mature within 90 days. The Company did not have credit risk related contingent features or collateral linked to the derivatives. The Company has master netting agreements with a number of counterparties to these foreign exchange contracts and on the occurrence of specified events, the Company has the ability to terminate contracts and settle them with a net payment by one party to the other. The Company has elected to present derivative assets and derivative liabilities on a gross basis in the consolidated balance sheet. As at September 30, 2013 the potential effect of rights of set off associated with the foreign exchange contracts would be an offset to both assets and liabilities of $0.4 million, resulting in net derivative assets and derivative liabilities of $3.8 million and $3.5 million, respectively. Further details are included below: | ||||
Fair value | Fair value | |||
September 30, | December 31, | |||
2013 | 2012 | |||
$’M | $’M | |||
_____________ | _____________ | |||
Assets | Prepaid expenses and other current assets | 4.2 | 1.3 | |
Liabilities | Other current liabilities | 3.9 | 3 | |
_____________ | _____________ | |||
Net (losses)/ gains (both realized and unrealized) arising on foreign exchange contracts have been classified in the consolidated statements of income as follows: | ||||
Location of net (loss)/gain recognized in income | Amount of net (loss)/gain recognized in income | |||
__________________________________ | ____________ | ____________ | ||
In the nine months to | September 30, | September 30, | ||
2013 | 2012 | |||
$’M | $’M | |||
_____________ | _____________ | |||
Foreign exchange contracts | Other income, net | -3.2 | 9.5 | |
_____________ | _____________ | |||
These net foreign exchange (losses)/gains are offset within Other income, net by net foreign exchange gains/(losses) arising on the balance sheet items that these contracts were put in place to manage. |
Fair_Value_Measurement
Fair Value Measurement | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
Fair Value Disclosures [Abstract] | |||||||
Fair Value Disclosures | 16. Fair value measurement | ||||||
Assets and liabilities that are measured at fair value on a recurring basis | |||||||
As at September 30, 2013 and December 31, 2012 the following financial assets and liabilities are measured at fair value on a recurring basis using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3). | |||||||
Carrying | Fair value | ||||||
value | |||||||
Total | Level 1 | Level 2 | Level 3 | ||||
At September 30, 2013 | $'M | $'M | $'M | $'M | $'M | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Financial assets: | |||||||
Available-for-sale securities(1) | 12 | 12 | 12 | - | - | ||
Contingent consideration receivable (2) | 39.6 | 39.6 | - | - | 39.6 | ||
Foreign exchange contracts | 4.2 | 4.2 | - | 4.2 | - | ||
Financial liabilities: | |||||||
Foreign exchange contracts | 3.9 | 3.9 | - | 3.9 | - | ||
Contingent consideration payable(3) | 597.8 | 597.8 | - | - | 597.8 | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Total | Level 1 | Level 2 | Level 3 | ||||
At December 31, 2012 | $'M | $'M | $'M | $'M | $'M | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Financial assets: | |||||||
Available-for-sale securities(1) | 14.2 | 14.2 | 14.2 | - | - | ||
Contingent consideration receivable (2) | 38.3 | 38.3 | - | - | 38.3 | ||
Foreign exchange contracts | 1.3 | 1.3 | - | 1.3 | - | ||
Financial liabilities: | |||||||
Foreign exchange contracts | 3 | 3 | - | 3 | - | ||
Contingent consideration payable(3) | 1 | 136.4 | 136.4 | - | - | 136.4 | |
____________ | ____________ | ___________ | ___________ | ___________ | |||
(1) Available-for-sale securities are included within Investments in the consolidated balance sheet. | |||||||
(2) Contingent consideration receivable is included within Prepaid expenses and other current assets and Other non-current assets in the consolidated balance sheet. | |||||||
(3) Contingent consideration payable is included within Other current liabilities and Other non-current liabilities in the consolidated balance sheet. | |||||||
Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown above are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company's intent or ability to dispose of the financial instrument. | |||||||
The following methods and assumptions were used to estimate the fair value of each material class of financial instrument: | |||||||
Available-for-sale securities – the fair values of available-for-sale securities are estimated based on quoted market prices for those investments. | |||||||
Contingent consideration receivable – the fair value of the contingent consideration receivable has been estimated using the income approach (using a probability weighted discounted cash flow method). | |||||||
Foreign exchange contracts – the fair values of the swap and forward foreign exchange contracts have been determined using an income approach based on current market expectations about the future cash flows. | |||||||
Contingent consideration payable – the fair value of the contingent consideration payable has been estimated using the income approach (using a probability weighted discounted cash flow method). | |||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) | |||||||
The change in the fair value of the Company's contingent consideration receivable and payables, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3), are as follows: | |||||||
Contingent consideration receivable | |||||||
2013 | 2012 | ||||||
$'M | $'M | ||||||
____________ | ____________ | ||||||
Balance at January 1, | 38.3 | 37.8 | |||||
Gain recognized in the income statement (within Gain on sale of product rights) due to change in fair value during the period | 14.6 | 16.5 | |||||
Reclassification of amounts to Other receivables within Other current assets | -13.9 | -13.7 | |||||
Amounts recorded to other comprehensive income (within foreign currency translation adjustments) | 0.6 | 0.4 | |||||
Balance at September 30, | 39.6 | 41 | |||||
Contingent consideration payable | |||||||
2013 | 2012 | ||||||
$'M | $'M | ||||||
____________ | ____________ | ||||||
Balance at January 1, | 136.4 | - | |||||
Initial recognition of contingent consideration payable | 451.4 | 127.8 | |||||
Change in fair value during the period with the corresponding adjustment recognized as a loss in the income statement (within Integration and acquisition costs) | 28.4 | 3.3 | |||||
Reclassification of amounts to Other current liabilities | -11.1 | -6.7 | |||||
Change in fair value during the period with corresponding adjustment to the associated intangible asset | -7.3 | 9 | |||||
Balance at September 30, | 597.8 | 133.4 | |||||
Quantitative Information about Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) | |||||||
Quantitative information about the Company's recurring Level 3 fair value measurements is included below: | |||||||
Financial assets: | Fair Value at the Measurement Date | ||||||
At September 30, 2013 | Fair value | Valuation Technique | Significant unobservable Inputs | Range | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
Contingent consideration receivable ("CCR") | 39.6 | Income approach (probability weighted discounted cash flow) | • Probability weightings applied to different sales scenarios • Future forecast royalties receivable at relevant contractual royalty rates • Assumed market participant discount rate | • 10 to 45% • $5 million to $158 million • 5.9% | |||
____________ | ____________ | ____________ | ____________ | ||||
Financial liabilities: | Fair Value at the Measurement Date | ||||||
At September 30, 2013 | Fair value | Valuation Technique | Significant unobservable Inputs | Range | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
Contingent consideration payable | 597.8 | Income approach (probability weighted discounted cash flow) | • Cumulative probability of milestones being achieved • Assumed market participant discount rate • Periods in which milestones are expected to be achieved • Forecast quarterly royalties payable on net sales of relevant products | • 18 to 57% (Weighted average) • 2.1 to 8.8% (Weighted average) • 2014 to 2024 • $1.0 to $7.6 million | |||
____________ | ____________ | ____________ | ____________ | ||||
The Company re-measures the CCR (relating to contingent consideration due to the Company following divestment of one of the Company's products) at fair value at each balance sheet date, with the fair value measurement based on forecast cash flows, over a number of scenarios which vary depending on the expected performance outcome of the product following divestment. The forecast cash flows under each of these differing outcomes have been included in probability weighted estimates used by the Company in determining the fair value of the CCR. | |||||||
Contingent consideration payable represents future milestones the Company may be required to pay in conjunction with various business combinations and future royalties payable as a result of certain business combinations and licenses. The amount ultimately payable by Shire in relation to business combinations is dependent upon the achievement of specified future milestones, such as the achievement of certain future development, regulatory and sales milestones. The Company assesses the probability, and estimated timing, of these milestones being achieved and re-measures the related contingent consideration to fair value each balance sheet date. The amount of contingent consideration which may ultimately be payable by Shire in relation to future royalties is dependent upon future net sales of the relevant products over the life of the royalty term. The Company assesses the present value of forecast future net sales of the relevant products and re-measures the related contingent consideration to fair value each balance sheet date. | |||||||
The fair value of the Company's contingent consideration receivable and payable could significantly increase or decrease due to changes in certain assumptions which underpin the fair value measurements. Each set of assumptions and milestones are specific to the individual contingent consideration receivable or payable. The assumptions include, among other things, the probability and expected timing of certain milestones being achieved, the forecast future net sales of the relevant products and related future royalties payable, the probability weightings applied to different sales scenarios of one of the Company's divested products and forecast future royalties receivable under scenarios developed by the Company, and the discount rates used to determine the present value of contingent future cash flows. The Company regularly reviews these assumptions, and makes adjustments to the fair value measurements as required by facts and circumstances. | |||||||
Assets Measured At Fair Value on a Non-Recurring Basis in the period using Significant Unobservable Inputs (Level 3) | |||||||
In the second quarter of 2013 the Company reviewed certain IPR&D intangible assets acquired through Movetis for impairment and recognized an impairment charge of $19.9 million, recorded within R&D in the consolidated income statement, to write-down these assets to their fair value. The fair value of these assets was determined using the income approach, which used significant unobservable (Level 3) inputs. These unobservable inputs included, among other things, risk-adjusted forecast future cash flows to be generated by these assets and the determination of an appropriate discount rate to be applied in calculating the present value of forecast future cash flows. The fair value of these assets, determined at the time of the impairment review, was $20.3 million. | |||||||
Quantitative information about Non-Recurring Level 3 Fair Value Measurements which occurred in the period is included below: | |||||||
Fair Value at the Measurement Date | |||||||
At September 30, 2013 | Fair value | Valuation Technique | Significant unobservable Inputs | Rate used | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
Movetis-related IPR&D intangible assets | 20.3 | Income approach (discounted cash flow) | • Decline in forecast peak sales since last impairment test • Assumed market participant discount rate | • 50% • 8.9% | |||
____________ | ____________ | ____________ | ____________ | ||||
Financial assets and liabilities that are not measured at fair value on a recurring basis | |||||||
The carrying amounts and estimated fair values as at September 30, 2013 and December 31, 2012 of the Company's financial assets and liabilities which are not measured at fair value on a recurring basis are as follows: | |||||||
30-Sep-13 | 31-Dec-12 | ||||||
Carrying | Carrying | ||||||
amount | Fair value | amount | Fair value | ||||
$’M | $’M | $’M | $’M | ||||
____________ | ____________ | ____________ | ___________ | ||||
Financial liabilities: | |||||||
Convertible bonds (Level 1) | 1,100.00 | 1,382.90 | 1,100.00 | 1,228.20 | |||
Building financing obligation (Level 3) | 7.8 | 10.4 | 8 | 10.3 | |||
____________ | ____________ | ____________ | ___________ | ||||
Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown above are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company's intent or ability to dispose of the financial instrument. | |||||||
The following methods and assumptions were used to estimate the fair value of each material class of financial instrument: | |||||||
Convertible bonds – the fair value of Shire's $1,100 million 2.75% convertible bonds due 2014 is determined by reference to the market price of the instrument as the convertible bonds are publicly traded. | |||||||
Building finance obligations - the fair value of building finance obligations are estimated based on the present value of future cash flows, and an estimate of the residual value of the underlying property at the end of the lease term, associated with these obligations. | |||||||
The carrying amounts of other financial assets and liabilities materially approximate to their fair value because of the short-term maturity of these amounts. |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
Earnings Per Share [Abstract] | |||||||
Earnings Per Share Disclosure | 17. Earnings per share | ||||||
The following table reconciles net income and the weighted average ordinary shares outstanding for basic and diluted earnings per share for the periods presented: | |||||||
3 months to | 3 months to | 9 months to | 9 months to | ||||
September 30, | September 30, | September 30, | September 30, | ||||
2013 | 2012 | 2013 | 2012 | ||||
$’M | $’M | $’M | $’M | ||||
_________________ | _________________ | _________________ | _________________ | ||||
Numerator for basic earnings per share | 278.2 | 227.2 | 601.1 | 703.4 | |||
Interest on convertible bonds, net of tax | 7.6 | 7.5 | 22.7 | 23.7 | |||
_________________ | _________________ | _________________ | _________________ | ||||
Numerator for diluted earnings per share | 285.8 | 234.7 | 623.8 | 727.1 | |||
_________________ | _________________ | _________________ | _________________ | ||||
Weighted average number of shares: | |||||||
Millions | Millions | Millions | Millions | ||||
_________________ | _________________ | _________________ | _________________ | ||||
Basic 1 | 548.4 | 555.9 | 549.8 | 555.5 | |||
Effect of dilutive shares: | |||||||
Share based awards to employees 2 | 3.5 | 3.7 | 3.9 | 5 | |||
Convertible bonds 2.75% due 2014 3 | 33.8 | 33.5 | 33.8 | 33.5 | |||
_________________ | _________________ | _________________ | _________________ | ||||
Diluted | 585.7 | 593.1 | 587.5 | 594 | |||
_________________ | _________________ | _________________ | _________________ | ||||
1. Excludes shares purchased by the EBT and under the share buy-back program and presented by Shire as treasury stock. | |||||||
2. Calculated using the treasury stock method. | |||||||
3. Calculated using the 'if-converted' method. | |||||||
The share equivalents not included in the calculation of the diluted weighted average number of shares are shown below: | |||||||
3 months to | 3 months to | 9 months to | 9 months to | ||||
September 30, | September 30, | September 30, | September 30, | ||||
2013 | 2012 | 2013 | 2012 | ||||
No. of shares | No. of shares | No. of shares | No. of shares | ||||
Millions | Millions | Millions | Millions | ||||
_________________ | _________________ | _________________ | _________________ | ||||
Share based awards to employees1 | 0.5 | 6.6 | 4.5 | 4.9 | |||
_________________ | _________________ | _________________ | _________________ | ||||
Certain stock options have been excluded from the calculation of diluted EPS because (a) their exercise prices exceeded Shire plc's average share price during the calculation period or (b) the required performance conditions were not satisfied as at the balance sheet date. | |||||||
Segmental_Reporting
Segmental Reporting | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Segment Reporting [Abstract] | |||||
Segment Reporting Disclosure | 18. Segmental reporting | ||||
Historically the Company had three business units and three reportable segments: Specialty Pharmaceuticals (“SP”), Human Genetic Therapies (“HGT”) and RM. | |||||
On May 2, 2013 the Company announced that there would be a reorganization of the Company's business to integrate these business units into a simplified “One Shire” organization in order to drive future growth and innovation. Consequently the SP, HGT and RM segments no longer exist. | |||||
Shire now comprises a single operating and reportable segment, consistent with the “One Shire” approach that underpins the business simplification. This segment is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of innovative specialist medicines to meet significant unmet patient needs. This segment is supported by several key functions: a global research and development organization and a global supply chain organization, managed through the newly established pipeline group and technical operations group respectively, are utilized and responsible for the development and delivery of products to the market. Products are distributed and sold through the newly established in-line marketed products group which consists of five commercial units focused exclusively on commercial delivery to drive optimum performance of currently marketed products. The business is also supported by a simplified, centralized corporate function group. None of these functional groups meets all of the criteria to be an operating segment. | |||||
The reorganization to a single operating and reportable segment is consistent with the financial information regularly reviewed by the Executive Committee (which is Shire's chief operating decision maker) for the purposes of evaluating performance, allocating resources, and planning and forecasting future periods. | |||||
In the periods set out below, revenues by major product were as follows: | |||||
3 months to, | 3 months to, | 9 months to, | 9 months to, | ||
September 30, | September 30, | September 30, | September 30, | ||
2013 | 2012 | 2013 | 2012 | ||
$’M | $’M | $’M | $’M | ||
___________ | ___________ | ___________ | ___________ | ||
VYVANSE | 299.2 | 247.1 | 897.9 | 773.3 | |
LIALDA/MEZAVANT | 141.9 | 104.4 | 379.9 | 288.5 | |
ELAPRASE | 129.1 | 110.5 | 392.6 | 358.3 | |
REPLAGAL | 108.5 | 121.7 | 336.6 | 379.3 | |
VPRIV | 87.8 | 74.9 | 251.9 | 229.3 | |
ADDERALL XR | 81.4 | 102.2 | 293.5 | 347.5 | |
INTUNIV | 80.8 | 69 | 248.9 | 206.6 | |
PENTASA | 70.6 | 67 | 215.2 | 196.7 | |
FIRAZYR | 62.6 | 30.3 | 153.8 | 81.7 | |
FOSRENOL | 51.9 | 38.1 | 136.3 | 126.8 | |
XAGRID | 24.2 | 22 | 74.1 | 70.7 | |
DERMAGRAFT | 23.9 | 33.7 | 64.7 | 134.9 | |
Other product sales | 33 | 33.6 | 96.4 | 115.5 | |
____________ | ____________ | ____________ | ____________ | ||
Total product sales | 1,194.90 | 1,054.50 | 3,541.80 | 3,309.10 | |
____________ | ____________ | ____________ | ____________ | ||
Further segment disclosures related to geographic area and major customers will be included in the 2013 Annual Report on Form 10-K. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Basis of preparation | (a) Basis of preparation |
These interim financial statements of Shire plc and its subsidiaries (collectively “Shire” or the “Company”) and other financial information included in this Form 10-Q, are unaudited. They have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and US Securities and Exchange Commission (“SEC”) regulations for interim reporting. | |
The balance sheet as at December 31, 2012 was derived from audited financial statements but does not include all disclosures required by US GAAP. | |
These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year to December 31, 2012. | |
Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim period and the Company believes that the disclosures are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results to be expected for the full year. | |
Use of estimates in consolidated financial statements | (b) Use of estimates in interim financial statements |
The preparation of interim financial statements, in conformity with US GAAP and SEC regulations, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are primarily made in relation to the valuation of intangible assets, the valuation of equity investments, sales deductions, income taxes (including provisions for uncertain tax positions and the realization of deferred tax assets), provisions for litigation and legal proceedings, contingent consideration receivable from product divestments and contingent consideration payable in respect of business combinations and asset purchases. If actual results differ from the Company's estimates, or to the extent these estimates are adjusted in future periods, the Company's results of operations could either benefit from, or be adversely affected by, any such change in estimate. | |
New accounting pronouncements | (c) New accounting pronouncements |
Adopted during the period | |
Indefinite-Lived Intangible Assets (Other than Goodwill) Impairment Testing | |
In July 2012 the Financial Accounting Standard Board (“FASB”) issued guidance on the testing of indefinite-lived intangible assets for impairment. The guidance permits an entity to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, performing the impairment test is unnecessary. The more-likely-than-not threshold is defined as a likelihood of more than 50 percent. An entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the impairment test and may resume performing the qualitative assessment in any subsequent period. The guidance has been adopted prospectively from January 1, 2013. The adoption of the guidance did not impact the Company's consolidated financial position, results of operations or cash flows. | |
Disclosure about offsetting assets and liabilities | |
In December 2011 the FASB issued guidance on disclosures about offsetting assets and liabilities. In January 2013 the FASB amended the previous guidance to clarify the scope of guidance issued in December 2011. The amended guidance requires entities to disclose both gross and net information about derivatives including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with FASB guidance on topics “Balance Sheet” and “Derivatives and Hedging” or subject to an enforceable master netting arrangement or similar agreement; to enable users of financial statements to understand the effects or potential effects of those arrangements on its financial position. The guidance has been adopted prospectively from January 1, 2013. The adoption of the guidance did not impact the Company's consolidated financial position, results of operations or cash flows. Enhanced disclosure of balance sheet offsetting as required by this guidance is included in Note 15. | |
Amounts reclassified out of Comprehensive Income | |
In February 2013 the FASB issued guidance on reporting amounts reclassified out of accumulated other comprehensive income. The guidance requires entities to provide information about the amount reclassified out of comprehensive income by component and presents either on the face of the financial statements or in the notes, significant amounts reclassified out of other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under US GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under US GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under US GAAP that provide additional detail about those amounts. The guidance has been adopted prospectively from January 1, 2013. The adoption of the guidance did not impact the Company's consolidated financial position, results of operations or cash flows. | |
To be adopted in future periods | |
Presentation of an unrecognized tax benefit | |
In July 2013 the FASB issued guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carry forward, a similar tax loss, or a tax credit carry forward exists. The guidance requires entities to present an unrecognized tax benefit or a portion of an unrecognized tax benefit in the financial statements as a reduction to a deferred tax asset for a net operating loss carry forward, a similar tax loss, or a tax credit carry forward, except as follows: to the extent a net operating loss carry forward, a similar tax loss, or a tax credit carry forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. The guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, with early adoption permitted. The Company has not adopted this guidance in the period. The Company is assessing the impact that this guidance will have on its consolidated financial position, results of operations or cash flows. |
Accounts_Receivable_Net_Tables
Accounts Receivable, Net (Tables) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Receivables [Abstract] | |||
Provision for discounts and doubtful accounts | 2013 | 2012 | |
$’M | $’M | ||
_____________ | _____________ | ||
As at January 1, | 41.7 | 31.1 | |
Provision charged to operations | 225.3 | 214.9 | |
Provision utilization | -215.4 | -196.5 | |
_____________ | _____________ | ||
As at September 30, | 51.6 | 49.5 | |
_____________ | _____________ |
Inventories_Tables
Inventories (Tables) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Inventory Disclosure [Abstract] | |||
Schedule of Inventory | September 30, | December 31, | |
2013 | 2012 | ||
$’M | $’M | ||
____________ | ____________ | ||
Finished goods | 170.6 | 124.4 | |
Work-in-progress | 241 | 220.6 | |
Raw materials | 68.9 | 91.9 | |
____________ | ____________ | ||
480.5 | 436.9 | ||
____________ | ____________ |
Prepaid_Expenses_and_Other_Cur1
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Prepaid Expense and Other Assets, Current [Abstract] | |||
Prepaid Expense and Other Assets, Current | September 30, | December 31, | |
2013 | 2012 | ||
$’M | $’M | ||
______________ | ____________ | ||
Prepaid expenses | 39.1 | 31.7 | |
Income tax receivable | 179.9 | 130.6 | |
Value added taxes receivable | 18.7 | 20.9 | |
Other current assets | 44.6 | 38.6 | |
______________ | ______________ | ||
282.3 | 221.8 | ||
______________ | ______________ |
Goodwill_Tables
Goodwill (Tables) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Schedule of Acquired Goodwill | September 30, | December 31, | |
2013 | 2012 | ||
$’M | $’M | ||
____________ | ____________ | ||
Goodwill arising on businesses acquired | 621.3 | 644.5 | |
____________ | ____________ | ||
Schedule of Goodwill | 2013 | 2012 | |
$’M | $’M | ||
____________ | ____________ | ||
As at January 1, | 644.5 | 592.6 | |
Acquisitions | 170.3 | 48.1 | |
Goodwill impairment charge | -198.9 | - | |
Foreign currency translation | 5.4 | -1.5 | |
____________ | ____________ | ||
As at September 30, | 621.3 | 639.2 | |
____________ | ____________ |
Other_Intangible_Assets_Net_Ta
Other Intangible Assets, Net (Tables) | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||||
Schedule of Other Intangible Assets | September 30, | December 31, | ||
2013 | 2012 | |||
$’M | $’M | |||
________________ | ________________ | |||
Amortized intangible assets | ||||
Intellectual property rights acquired for currently marketed products | 2,467.90 | 2,462.00 | ||
Acquired product technology | 710 | 710 | ||
Other intangible assets | 45.3 | 44.5 | ||
________________ | ________________ | |||
3,223.20 | 3,216.50 | |||
Unamortized intangible assets | ||||
Intellectual property rights acquired for IPR&D | 952.8 | 231 | ||
________________ | ________________ | |||
4,176.00 | 3,447.50 | |||
Less: Accumulated amortization | -1,200.00 | -1,059.40 | ||
________________ | ________________ | |||
2,976.00 | 2,388.10 | |||
________________ | ________________ | |||
Intangible Assets (Excluding Goodwill) Roll Forward | Other intangible assets | |||
2013 | 2012 | |||
$’M | $’M | |||
________________ | ________________ | |||
As at January 1, | 2,388.10 | 2,493.00 | ||
Acquisitions | 733.2 | 281.5 | ||
Amortization charged | -136.1 | -147.3 | ||
Impairment charges | -19.9 | -27 | ||
Foreign currency translation | 10.7 | -6.6 | ||
________________ | ________________ | |||
As at September 30, | 2,976.00 | 2,593.60 | ||
________________ | ________________ |
Accounts_Payable_and_Accrued_E1
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Accounts Payable and Accrued Liabilities, Current [Abstract] | |||
Schedule of Accounts Payable and Accrued Expenses | September 30, | December 31, | |
2013 | 2012 | ||
$’M | $’M | ||
________________ | ________________ | ||
Trade accounts payable and accrued purchases | 187.8 | 208.1 | |
Accrued rebates – Medicaid | 511.7 | 455.6 | |
Accrued rebates – Managed care | 235.4 | 184.9 | |
Sales return reserve | 95.3 | 90.5 | |
Accrued bonuses | 101.6 | 109 | |
Accrued employee compensation and benefits payable | 89.1 | 64.5 | |
R&D accruals | 79.4 | 73.5 | |
Provisions for litigation losses and other claims | 78.3 | 118.2 | |
Other accrued expenses | 203 | 197.2 | |
________________ | ________________ | ||
1,581.60 | 1,501.50 | ||
________________ | ________________ |
Other_Current_Liabilities_Tabl
Other Current Liabilities (Tables) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Other Liabilities, Current [Abstract] | |||
Schedule of Other Current Liabilities | September 30, | December 31, | |
2013 | 2012 | ||
$’M | $’M | ||
_____________ | _____________ | ||
Income taxes payable | 19.4 | 78.4 | |
Value added taxes | 28.7 | 23.6 | |
Contingent consideration payable | 86 | 16 | |
Other current liabilities | 29.1 | 26.1 | |
_____________ | _____________ | ||
163.2 | 144.1 | ||
_____________ | _____________ |
Other_Noncurrent_Liabilities_T
Other Non-current Liabilities (Tables) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Other Liabilities, Noncurrent [Abstract] | |||
Schedule of Other Noncurrent Liabilities | September 30, | December 31, | |
2013 | 2012 | ||
$’M | $’M | ||
____________ | ____________ | ||
Income taxes payable | 81.5 | 58.9 | |
Deferred revenue | 10.3 | 11.4 | |
Deferred rent | 11.3 | 11.9 | |
Insurance provisions | 7.9 | 12.3 | |
Contingent consideration payable | 511.8 | 120.4 | |
Other non-current liabilities | 29.5 | 26.7 | |
____________ | ____________ | ||
652.3 | 241.6 | ||
____________ | ____________ |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Commitments and Contingencies Disclosure [Abstract] | |||
Future Minimum Lease Payments under Operating Leases | Operating | ||
leases | |||
$’M | |||
_____________ | |||
2013 | 11.4 | ||
2014 | 42.5 | ||
2015 | 31.8 | ||
2016 | 23.4 | ||
2017 | 17.8 | ||
2018 | 12.1 | ||
Thereafter | 83.2 | ||
_____________ | |||
222.2 | |||
_____________ |
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||
Changes in Accumulated Other Comprehensive Income, Net of Tax | Foreign currency translation adjustment | Unrealized holding gain/(loss) on available-for-sale securities | Accumulated other comprehensive income | ||||
$M | $M | $M | |||||
As at January 1, 2013 | 85.1 | 1.8 | 86.9 | ||||
Current period change: | |||||||
Other Comprehensive income before reclassification | 14.4 | 2.2 | 16.6 | ||||
Gain transferred to the income statement (within Other (expense)/income, net) on disposal of available-for-sale securities | 0 | -2.2 | -2.2 | ||||
Net current period other comprehensive income | 14.4 | - | 14.4 | ||||
As at September 30, 2013 | 99.5 | 1.8 | 101.3 | ||||
Financial_Instruments_Tables
Financial Instruments (Tables) | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Derivative Instrument Detail [Abstract] | ||||
Schedule of Foreign Exchange Contracts, Statement of Financial Position | Fair value | Fair value | ||
September 30, | December 31, | |||
2013 | 2012 | |||
$’M | $’M | |||
_____________ | _____________ | |||
Assets | Prepaid expenses and other current assets | 4.2 | 1.3 | |
Liabilities | Other current liabilities | 3.9 | 3 | |
_____________ | _____________ | |||
Schedule of Foreign Exchange Contracts, Gain (Loss) in Other Income (Expense) | Location of net (loss)/gain recognized in income | Amount of net (loss)/gain recognized in income | ||
__________________________________ | ____________ | ____________ | ||
In the nine months to | September 30, | September 30, | ||
2013 | 2012 | |||
$’M | $’M | |||
_____________ | _____________ | |||
Foreign exchange contracts | Other income, net | -3.2 | 9.5 | |
_____________ | _____________ |
Fair_Value_Measurement_Tables
Fair Value Measurement (Tables) | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
Fair Value Disclosures [Abstract] | |||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Carrying | Fair value | |||||
value | |||||||
Total | Level 1 | Level 2 | Level 3 | ||||
At September 30, 2013 | $'M | $'M | $'M | $'M | $'M | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Financial assets: | |||||||
Available-for-sale securities(1) | 12 | 12 | 12 | - | - | ||
Contingent consideration receivable (2) | 39.6 | 39.6 | - | - | 39.6 | ||
Foreign exchange contracts | 4.2 | 4.2 | - | 4.2 | - | ||
Financial liabilities: | |||||||
Foreign exchange contracts | 3.9 | 3.9 | - | 3.9 | - | ||
Contingent consideration payable(3) | 597.8 | 597.8 | - | - | 597.8 | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Total | Level 1 | Level 2 | Level 3 | ||||
At December 31, 2012 | $'M | $'M | $'M | $'M | $'M | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Financial assets: | |||||||
Available-for-sale securities(1) | 14.2 | 14.2 | 14.2 | - | - | ||
Contingent consideration receivable (2) | 38.3 | 38.3 | - | - | 38.3 | ||
Foreign exchange contracts | 1.3 | 1.3 | - | 1.3 | - | ||
Financial liabilities: | |||||||
Foreign exchange contracts | 3 | 3 | - | 3 | - | ||
Contingent consideration payable(3) | 1 | 136.4 | 136.4 | - | - | 136.4 | |
____________ | ____________ | ___________ | ___________ | ___________ | |||
(1) Available-for-sale securities are included within Investments in the consolidated balance sheet. | |||||||
(2) Contingent consideration receivable is included within Prepaid expenses and other current assets and Other non-current assets in the consolidated balance sheet. | |||||||
(3) Contingent consideration payable is included within Other current liabilities and Other non-current liabilities in the consolidated balance sheet. | |||||||
Assets Measured at Fair Value on a Recurring Basis Using Significant Unobervable Inputs (Level 3) | Contingent consideration receivable | ||||||
2013 | 2012 | ||||||
$'M | $'M | ||||||
____________ | ____________ | ||||||
Balance at January 1, | 38.3 | 37.8 | |||||
Gain recognized in the income statement (within Gain on sale of product rights) due to change in fair value during the period | 14.6 | 16.5 | |||||
Reclassification of amounts to Other receivables within Other current assets | -13.9 | -13.7 | |||||
Amounts recorded to other comprehensive income (within foreign currency translation adjustments) | 0.6 | 0.4 | |||||
Balance at September 30, | 39.6 | 41 | |||||
Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobervable Inputs (Level 3) | Contingent consideration payable | ||||||
2013 | 2012 | ||||||
$'M | $'M | ||||||
____________ | ____________ | ||||||
Balance at January 1, | 136.4 | - | |||||
Initial recognition of contingent consideration payable | 451.4 | 127.8 | |||||
Change in fair value during the period with the corresponding adjustment recognized as a loss in the income statement (within Integration and acquisition costs) | 28.4 | 3.3 | |||||
Reclassification of amounts to Other current liabilities | -11.1 | -6.7 | |||||
Change in fair value during the period with corresponding adjustment to the associated intangible asset | -7.3 | 9 | |||||
Balance at September 30, | 597.8 | 133.4 | |||||
Fair Value Inputs, Assets Quantitative Information Table | Financial assets: | Fair Value at the Measurement Date | |||||
At September 30, 2013 | Fair value | Valuation Technique | Significant unobservable Inputs | Range | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
Contingent consideration receivable ("CCR") | 39.6 | Income approach (probability weighted discounted cash flow) | • Probability weightings applied to different sales scenarios • Future forecast royalties receivable at relevant contractual royalty rates • Assumed market participant discount rate | • 10 to 45% • $5 million to $158 million • 5.9% | |||
____________ | ____________ | ____________ | ____________ | ||||
Fair Value at the Measurement Date | |||||||
At September 30, 2013 | Fair value | Valuation Technique | Significant unobservable Inputs | Rate used | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
Movetis-related IPR&D intangible assets | 20.3 | Income approach (discounted cash flow) | • Decline in forecast peak sales since last impairment test • Assumed market participant discount rate | • 50% • 8.9% | |||
____________ | ____________ | ____________ | ____________ | ||||
Fair Value Inputs, Liabilities Quantitative Information Table | Financial liabilities: | Fair Value at the Measurement Date | |||||
At September 30, 2013 | Fair value | Valuation Technique | Significant unobservable Inputs | Range | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
Contingent consideration payable | 597.8 | Income approach (probability weighted discounted cash flow) | • Cumulative probability of milestones being achieved • Assumed market participant discount rate • Periods in which milestones are expected to be achieved • Forecast quarterly royalties payable on net sales of relevant products | • 18 to 57% (Weighted average) • 2.1 to 8.8% (Weighted average) • 2014 to 2024 • $1.0 to $7.6 million | |||
____________ | ____________ | ____________ | ____________ | ||||
Schedule of Fair Value, Assets and Liabilities Not Measured at Fair Value on Recurring Basis | 30-Sep-13 | 31-Dec-12 | |||||
Carrying | Carrying | ||||||
amount | Fair value | amount | Fair value | ||||
$’M | $’M | $’M | $’M | ||||
____________ | ____________ | ____________ | ___________ | ||||
Financial liabilities: | |||||||
Convertible bonds (Level 1) | 1,100.00 | 1,382.90 | 1,100.00 | 1,228.20 | |||
Building financing obligation (Level 3) | 7.8 | 10.4 | 8 | 10.3 | |||
____________ | ____________ | ____________ | ___________ |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
Earnings Per Share [Abstract] | |||||||
Schedule of Calculation of Numerator and Denominator in Earnings Per Share | 2013 | 2012 | 2013 | 2012 | |||
$’M | $’M | $’M | $’M | ||||
_________________ | _________________ | _________________ | _________________ | ||||
Numerator for basic earnings per share | 278.2 | 227.2 | 601.1 | 703.4 | |||
Interest on convertible bonds, net of tax | 7.6 | 7.5 | 22.7 | 23.7 | |||
_________________ | _________________ | _________________ | _________________ | ||||
Numerator for diluted earnings per share | 285.8 | 234.7 | 623.8 | 727.1 | |||
_________________ | _________________ | _________________ | _________________ | ||||
Schedule of Weighted Average Number of Shares | Weighted average number of shares: | ||||||
Millions | Millions | Millions | Millions | ||||
_________________ | _________________ | _________________ | _________________ | ||||
Basic 1 | 548.4 | 555.9 | 549.8 | 555.5 | |||
Effect of dilutive shares: | |||||||
Share based awards to employees 2 | 3.5 | 3.7 | 3.9 | 5 | |||
Convertible bonds 2.75% due 2014 3 | 33.8 | 33.5 | 33.8 | 33.5 | |||
_________________ | _________________ | _________________ | _________________ | ||||
Diluted | 585.7 | 593.1 | 587.5 | 594 | |||
_________________ | _________________ | _________________ | _________________ | ||||
1. Excludes shares purchased by the EBT and under the share buy-back program and presented by Shire as treasury stock. | |||||||
2. Calculated using the treasury stock method. | |||||||
3. Calculated using the 'if-converted' method. | |||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | 3 months to | 3 months to | 9 months to | 9 months to | |||
September 30, | September 30, | September 30, | September 30, | ||||
2013 | 2012 | 2013 | 2012 | ||||
No. of shares | No. of shares | No. of shares | No. of shares | ||||
Millions | Millions | Millions | Millions | ||||
_________________ | _________________ | _________________ | _________________ | ||||
Share based awards to employees1 | 0.5 | 6.6 | 4.5 | 4.9 | |||
_________________ | _________________ | _________________ | _________________ | ||||
Certain stock options have been excluded from the calculation of diluted EPS because (a) their exercise prices exceeded Shire plc's average share price during the calculation period or (b) the required performance conditions were not satisfied as at the balance sheet date. | |||||||
Segmental_Reporting_Tables
Segmental Reporting (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Segment Reporting [Abstract] | |||||
Schedule of Segment Revenue from Major Products | 3 months to, | 3 months to, | 9 months to, | 9 months to, | |
September 30, | September 30, | September 30, | September 30, | ||
2013 | 2012 | 2013 | 2012 | ||
$’M | $’M | $’M | $’M | ||
___________ | ___________ | ___________ | ___________ | ||
VYVANSE | 299.2 | 247.1 | 897.9 | 773.3 | |
LIALDA/MEZAVANT | 141.9 | 104.4 | 379.9 | 288.5 | |
ELAPRASE | 129.1 | 110.5 | 392.6 | 358.3 | |
REPLAGAL | 108.5 | 121.7 | 336.6 | 379.3 | |
VPRIV | 87.8 | 74.9 | 251.9 | 229.3 | |
ADDERALL XR | 81.4 | 102.2 | 293.5 | 347.5 | |
INTUNIV | 80.8 | 69 | 248.9 | 206.6 | |
PENTASA | 70.6 | 67 | 215.2 | 196.7 | |
FIRAZYR | 62.6 | 30.3 | 153.8 | 81.7 | |
FOSRENOL | 51.9 | 38.1 | 136.3 | 126.8 | |
XAGRID | 24.2 | 22 | 74.1 | 70.7 | |
DERMAGRAFT | 23.9 | 33.7 | 64.7 | 134.9 | |
Other product sales | 33 | 33.6 | 96.4 | 115.5 | |
____________ | ____________ | ____________ | ____________ | ||
Total product sales | 1,194.90 | 1,054.50 | 3,541.80 | 3,309.10 | |
____________ | ____________ | ____________ | ____________ |
Business_Combinations_SARcode_
Business Combinations (SARcode, Premacure and Lotus) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | ||||||||||||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Feb. 12, 2013 | Feb. 12, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Apr. 17, 2013 | Apr. 17, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Mar. 08, 2013 | Mar. 08, 2013 |
Lotus | Lotus | Lotus | Lotus | SARcode Biosciences Inc | SARcode Biosciences Inc | SARcode Biosciences Inc | SARcode Biosciences Inc | Premacure AB | Premacure AB | Premacure AB | Premacure AB | |||||
purchase price allocation | purchase price allocation | purchase price allocation | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Percentage of voting interests acquired | 100.00% | 100.00% | 100.00% | |||||||||||||
Cash consideration paid | $49.40 | $151 | $30.60 | |||||||||||||
Maximum amount of contingent cash consideration | 275 | 525 | 169 | |||||||||||||
Integration and acquisition costs | 18.4 | 2.7 | 39.9 | 15.1 | 4.6 | 0 | 14.7 | 0 | 9.8 | 0 | ||||||
Acquisition-date fair value of consideration totaled | 174.2 | 368 | 140.2 | |||||||||||||
Fair value of contingent consideration payable | 124.8 | 217 | 109.6 | |||||||||||||
Net current assets assumed | 6.8 | |||||||||||||||
Goodwill | 54.1 | 54.1 | 86.6 | 86.6 | 29.6 | |||||||||||
Net non-current liabilities assumed (including deferred tax liabilities) | 63.4 | 122.4 | 29.5 | |||||||||||||
Post acquisition pre-tax losses included in consolidated statement of income | 17.4 | 0 | ||||||||||||||
IPR&D | 176.7 | 412 | 151.8 | |||||||||||||
Net current liabilities assumed | $8.20 | $11.70 |
Reorganization_Costs_Details
Reorganization Costs (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Reorganization Costs | ||||
Reorganization costs | $13.70 | $0 | $57.60 | $0 |
Turnhout | ||||
Reorganization Costs | ||||
Reorganization costs | 1.8 | 21 | ||
"One Shire" business re-alignment | ||||
Reorganization Costs | ||||
Reorganization costs | 11.9 | 36.6 | ||
Reorganization costs liability | $10.60 | $10.60 |
Accounts_Receivable_Net_Detail
Accounts Receivable, Net (Details) (USD $) | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Provision for discounts and doubtful accounts | |||
As at January 1, | $41.70 | $31.10 | |
Provision charged to operations | 225.3 | 214.9 | |
Provision utilization | -215.4 | -196.5 | |
As at September 30, | 51.6 | 49.5 | |
Accounts receivable, net | 1,037.80 | 824.2 | |
Accounts receivable related to royalty income | $36.90 | $38.50 |
Inventories_Details
Inventories (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Schedule of Inventory | ||
Finished goods | $170.60 | $124.40 |
Work-in-progress | 241 | 220.6 |
Raw materials | 68.9 | 91.9 |
Total inventories | $480.50 | $436.90 |
Prepaid_Expenses_and_Other_Cur2
Prepaid Expenses and Other Current Assets (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid expenses | $39.10 | $31.70 |
Income tax receivable | 179.9 | 130.6 |
Value added taxes receivable | 18.7 | 20.9 |
Other current assets | 44.6 | 38.6 |
Prepaid expenses and other current assets, total | $282.30 | $221.80 |
Goodwill_Details
Goodwill (Details) (USD $) | 9 Months Ended | ||||||||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Feb. 12, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 17, 2013 | Sep. 30, 2013 |
Lotus | Lotus | Premacure AB | SARcode Biosciences Inc | SARcode Biosciences Inc | Regenerative Medicine | ||||
Goodwill [Line Items] | |||||||||
Business Acquisition, Purchase Price Allocation, Assets Acquired (Liabilities Assumed), Net | $174.20 | $368 | |||||||
Goodwill | 54.1 | 29.6 | 86.6 | 0 | |||||
Effective rate of tax | 23.00% | 17.00% | |||||||
Goodwill facts and circumstances leading to impairment | Goodwill is tested for impairment at least annually as at October 1 each year. This assessment is also performed whenever there is a change in circumstances that indicates the carrying value of these assets may not be recoverable. In the first quarter of 2013 the Company identified circumstances which indicated that the carrying value of goodwill in the Regenerative Medicine (“RM”) reporting unit may not be recoverable, which triggered an impairment test in advance of the annual testing date. These circumstances included the results of an independent market research study of the DERMAGRAFT sales potential, commissioned by the Company, which was finalized late in the first quarter of 2013. In addition, while the Company still expects DERMAGRAFT to return to growth over coming quarters, the recently completed restructuring of the RM sales and marketing organization and the implementation of a new commercial model had a more pronounced impact than previously expected. As a result of these and other factors forecast future sales are now lower than at the time of acquisition. | ||||||||
Discount Rate | 15.10% | ||||||||
Goodwill impairment method for fair value determination | The results of the Company’s March 31, 2013 impairment test showed that the carrying amount of the RM reporting unit exceeded its fair value and the implied value of the goodwill was $nil. As a result the Company recorded an impairment charge of $198.9 million related to the goodwill allocated to the RM reporting unit. The RM goodwill impairment charge is not deductible for tax purposes. This is the primary reason for the effective rate of tax in the nine months to September 30, 2013 (23%) being higher than the same period in 2012 (17%). Accumulated goodwill impairment as at September 30, 2013 was $198.9 million (December 31, 2012: $nil). Key assumptions used to determine the fair value of the RM reporting unit included expected cash flows for the period from March 31, 2013 to December 31, 2023 and the associated discount rate of 15.1%, which was derived from management’s best estimate of the after-tax weighted average cost of capital for the RM reporting unit. The Company determined the estimated fair value of the RM reporting unit using discounted cash flow analyses. Discounted cash flow analyses are dependent upon a number of quantitative and qualitative factors including estimates of forecasted revenue, profitability, earnings before interest, taxes, depreciation and amortization, and terminal values. The discount rates applied in the discounted cash flow analyses also have an impact on the estimates of fair value, as use of a higher rate will result in a lower estimate of fair value | ||||||||
Accumulated Goodwill Impairment | 198.9 | 0 | |||||||
Business Acquisition, Cost of Acquired Entity, Cash Paid | 49.4 | 151 | |||||||
Goodwill [Roll Forward] | |||||||||
As at January 1, | 644.5 | 592.6 | |||||||
Acquisition | 170.3 | 48.1 | |||||||
Goodwill impairment charge | -198.9 | 0 | |||||||
Foreign currency translation | 5.4 | -1.5 | |||||||
As at September 30, | $621.30 | $639.20 |
Other_Intangible_Assets_Net_De
Other Intangible Assets, Net (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 |
In Millions, unless otherwise specified | ||||
Intangible Assets (Excluding Goodwill) [Line Items] | ||||
Amortized intangible assets | $3,223.20 | $3,216.50 | ||
Other intangible assets, gross | 4,176 | 3,447.50 | ||
Less: Accumulated amortization | -1,200 | -1,059.40 | ||
Other intangible assets, net | 2,976 | 2,388.10 | 2,593.60 | 2,493 |
Estimates of Annual Amortization | ||||
2014 | 170 | |||
2015 | 170 | |||
2016 | 170 | |||
2017 | 170 | |||
2018 | 170 | |||
Currently Marketed Products | ||||
Intangible Assets (Excluding Goodwill) [Line Items] | ||||
Amortized intangible assets | 2,467.90 | 2,462 | ||
Acquired Product Technology | ||||
Intangible Assets (Excluding Goodwill) [Line Items] | ||||
Amortized intangible assets | 710 | 710 | ||
Other Intangible Assets | ||||
Intangible Assets (Excluding Goodwill) [Line Items] | ||||
Amortized intangible assets | 45.3 | 44.5 | ||
IPR&D | ||||
Intangible Assets (Excluding Goodwill) [Line Items] | ||||
Unamortized intangible assets | $952.80 | $231 |
Other_Intangible_Assets_Net_Ro
Other Intangible Assets, Net (Roll Forward) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Other Intangible Assets Roll Forward | ||||
As at January 1, | $2,388.10 | $2,493 | ||
Acquisitions | 733.2 | 281.5 | ||
Amortization charged | -136.1 | -147.3 | ||
Impairment charges | -19.9 | -27 | -19.9 | -27 |
Foreign currency translation | 10.7 | -6.6 | ||
As at September 30, | $2,976 | $2,593.60 | $2,976 | $2,593.60 |
Accounts_Payable_and_Accrued_E2
Accounts Payable and Accrued Expenses (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Accounts Payable and Accrued Liabilities, Current [Line Items] | ||
Trade accounts payable and accrued purchases | $187.80 | $208.10 |
Accrued rebate - Medicaid | 511.7 | 455.6 |
Accrued rebate - Managed care | 235.4 | 184.9 |
Sales return reserve | 95.3 | 90.5 |
Accrued bonuses | 101.6 | 109 |
Accrued employee compensation and benefits payable | 89.1 | 64.5 |
R&D accruals | 79.4 | 73.5 |
Provisions for litigation losses and other claims | 78.3 | 118.2 |
Other accrued expenses | 203 | 197.2 |
Accounts payable and accrued expenses, total | $1,581.60 | $1,501.50 |
Convertible_Bonds_Details
Convertible Bonds (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 |
Debt Instrument [Line Items] | |
Debt issuance date | 9-May-07 |
Issuance price to principal amount, percent | 100.00% |
Final maturity date | 9-May-14 |
Repayment terms | The Bonds may be redeemed at the option of the Company, at their principal amount together with accrued and unpaid interest if: (i) at any time after May 23, 2012 if on no less than 20 dealing days in any period of 30 consecutive dealing days the value of Shire’s ordinary shares underlying each Bond in the principal amount of $100,000 would exceed $130,000; or (ii) at any time conversion rights have been exercised, and/or purchases and corresponding cancellations, and/or redemptions effected in respect of 85% or more in principal amount of Bonds originally issued The Bonds are repayable in US dollars, but also contain provisions entitling the Company to settle redemption amounts in Pounds sterling or in the case of Final Maturity Date by delivery of the underlying ordinary shares and, if necessary, a cash top-up amount. As the Bonds will be redeemed within twelve months of the balance sheet date, the Bonds have been presented as a current liability at September 30, 2013 |
Stated interest rate | 2.75% |
Principal amount | $1,100 |
Other_Current_Liabilities_Deta
Other Current Liabilities (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Other Liabilities, Current [Abstract] | ||
Income taxes payable | $19.40 | $78.40 |
Value added taxes | 28.7 | 23.6 |
Contingent consideration payable | 86 | 16 |
Other current liabilities | 29.1 | 26.1 |
Other current liabilities, total | $163.20 | $144.10 |
Other_Noncurrent_Liabilities_D
Other Non-current Liabilities (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Other Liabilities, Noncurrent [Abstract] | ||
Income taxes payable | $81.50 | $58.90 |
Deferred revenue | 10.3 | 11.4 |
Deferred rent | 11.3 | 11.9 |
Insurance provisions | 7.9 | 12.3 |
Contingent consideration payable | 511.8 | 120.4 |
Other non-current liabilities | 29.5 | 26.7 |
Other noncurrent liabilities, total | $652.30 | $241.60 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Leases, and LC and Guarantees ) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Future Minimum Lease Payments under Operating Leases | |||
2013 | $11.40 | ||
2014 | 42.5 | ||
2015 | 31.8 | ||
2016 | 23.4 | ||
2017 | 17.8 | ||
2018 | 12.1 | ||
Thereafter | 83.2 | ||
Future minimum lease payments, total | 222.2 | ||
Operating Leases, Rent Expense | |||
Lease and rental expense | 31.4 | 35.5 | 31.4 |
Letters of credit and guarantees | |||
Irrevocable standby letters of credit and guarantees | $54 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Collaborative Arrangements) (Details) (Out-licensing Arrangement, USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Out-licensing arrangements | ||
Milestone payments received | $3 | $6 |
Other Revenues | ||
Out-licensing arrangements | ||
Milestone revenues recognized | 4.5 | 6.7 |
Product Sales | ||
Out-licensing arrangements | ||
Milestone revenues recognized | 43.8 | 57.6 |
Development Milestone | ||
Out-licensing arrangements | ||
Maximum milestone payment receivable | 39 | |
Sales Milestone | ||
Out-licensing arrangements | ||
Maximum milestone payment receivable | $71.50 |
Commitments_and_Contingencies_3
Commitments and Contingencies (Commitments and Loss Contingency) (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | INTUNIV | Settlement costs related to agreement in principle to resolve a civil subpoena | Settlement costs related to ADDERALL XR supply agreement dispute | Clinical Testing | Clinical Testing | Contract Manufacturing | Contract Manufacturing | Other Purchasing Commitment | Other Purchasing Commitment | Investment Commitment | Investment Commitment | Capital Commitment | Capital Commitment | ||
Commitment [Line Items] | |||||||||||||||
Commitment amount | $332 | $425 | $84 | $125 | $101 | $145 | $15 | $15 | $109 | $97 | |||||
Commitments expected to be paid in next year | 46 | 89 | |||||||||||||
Legal Matters [Line Items] | |||||||||||||||
Provisions for litigation loss, insurance claims and other disputes | 86.2 | 130.5 | 57.5 | ||||||||||||
Cash payment to Impax | $48 | ||||||||||||||
Settlement of litigation | Payment of a royalty of 25% of gross profits |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Accumulated Other Comprehensive Income (Loss) | ||||
As at January 1, 2013 | $86.90 | |||
Net current period other comprehensive income - Available for sale securities | 0.2 | 1.2 | 7.2 | |
Net current period other comprehensive income | 14.4 | |||
As at September 30, 2013 | 101.3 | 101.3 | ||
Foreign currency translation adjustment | ||||
Accumulated Other Comprehensive Income (Loss) | ||||
As at January 1, 2013 | 85.1 | |||
Other Comprehensive income before reclassification | 14.4 | |||
Amounts reclassified from accumulated other comprehensive income | 0 | |||
Net current period other comprehensive income- Foreign Currency | 14.4 | |||
As at September 30, 2013 | 99.5 | 99.5 | ||
Unrealized holding gain/(loss) on available-for-sale securities | ||||
Accumulated Other Comprehensive Income (Loss) | ||||
As at January 1, 2013 | 1.8 | |||
Other Comprehensive income before reclassification | 2.2 | |||
Net current period other comprehensive income - Available for sale securities | 0 | |||
Gain recognized in the income statement (within Other (expense)/income) on disposal of available-for-sale securities | -2.2 | |||
As at September 30, 2013 | 1.8 | 1.8 | ||
Accumulated other comprehensive income | ||||
Accumulated Other Comprehensive Income (Loss) | ||||
As at January 1, 2013 | 86.9 | |||
Other Comprehensive income before reclassification | 16.6 | |||
Gain recognized in the income statement (within Other (expense)/income) on disposal of available-for-sale securities | -2.2 | |||
Net current period other comprehensive income | 14.4 | |||
As at September 30, 2013 | $101.30 | $101.30 |
Financial_Instruments_Interest
Financial Instruments (Interest Rate and Credit Risks) (Details) (USD $) | 9 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Interest rate risk | ||
Average interest rate received on cash and liquid investments | less than 1% per annum. | |
Debt Instrument [Line Items] | ||
Principal amount | $1,100 | |
Stated interest rate | 2.75% | |
Accounts Receivable | ||
Revenues by major customer, percent | 50.00% | |
United States | ||
Accounts Receivable | ||
Number of major external customers | 3 | |
Italy | ||
Accounts Receivable | ||
Accounts receivable received | 90.2 | |
Spain | ||
Accounts Receivable | ||
Accounts receivable received | $53.50 |
Financial_Instruments_Foreign_
Financial Instruments (Foreign Exchange Risk and Its Classification on Balance Sheet) (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | contract | Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract |
Prepaid expenses and other current assets | Prepaid expenses and other current assets | Other current liabilities | Other current liabilities | |||
Derivatives, Fair Value | ||||||
Assets | $4.20 | $1.30 | ||||
Liabilities | 3.9 | 3 | ||||
Net derivative fair value Assets | 3.8 | |||||
Net derivative fair value liabilities | 3.5 | |||||
Potential effect of rights of set off associated with the foreign exchange contracts | $0.40 | |||||
Number of swap and forward foreign exchange contracts outstanding | 25 | |||||
Swaps and forward contracts maturity | 90 days |
Financial_Instruments_Foreign_1
Financial Instruments (Foreign Exchange Risk and Its Effect on Income Statement) (Details) (Foreign Exchange Contract, Other income, net, USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Foreign Exchange Contract | Other income, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of net income (loss) recognized in income | ($3.20) | $9.50 |
Fair_Value_Measurement_Assets_
Fair Value Measurement (Assets and Liabilities That are Measured and Not Measured at Fair Value on a Recurring Basis) (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | ||
In Millions, unless otherwise specified | ||||
Financial liabilities: | ||||
Convertible bonds | $1,100 | $0 | ||
Convertible bonds | 0 | 1,100 | ||
Carrying value | ||||
Financial liabilities: | ||||
Building financing obligation | 7.8 | 8 | ||
Convertible bonds | 1,100 | |||
Convertible bonds | 1,100 | |||
Estimated fair value | ||||
Financial liabilities: | ||||
Convertible bond | 1,382.90 | 1,228.20 | ||
Building financing obligation | 10.4 | 10.3 | ||
Recurring Basis | ||||
Financial assets: | ||||
Available-for-sale securities | 12 | [1] | 14.2 | [1] |
Contingent consideration receivable | 39.6 | [2] | 38.3 | [2] |
Foreign exchange contracts, asset | 4.2 | 1.3 | ||
Financial liabilities: | ||||
Foreign exchange contracts, liability | 3.9 | 3 | ||
Contingent consideration payable | 597.8 | [3] | 136.4 | [3] |
Recurring Basis | Carrying value | ||||
Financial assets: | ||||
Available-for-sale securities | 12 | [1] | 14.2 | [1] |
Contingent consideration receivable | 39.6 | [2] | 38.3 | [2] |
Foreign exchange contracts, asset | 4.2 | 1.3 | ||
Financial liabilities: | ||||
Foreign exchange contracts, liability | 3.9 | 3 | ||
Contingent consideration payable | 597.8 | [3] | 136.4 | [3] |
Recurring Basis | Level 1 | ||||
Financial assets: | ||||
Available-for-sale securities | 12 | [1] | 14.2 | [1] |
Contingent consideration receivable | 0 | [2] | 0 | [2] |
Foreign exchange contracts, asset | 0 | 0 | ||
Financial liabilities: | ||||
Foreign exchange contracts, liability | 0 | 0 | ||
Contingent consideration payable | 0 | [3] | 0 | [3] |
Recurring Basis | Level 2 | ||||
Financial assets: | ||||
Available-for-sale securities | 0 | [1] | 0 | [1] |
Contingent consideration receivable | 0 | [2] | 0 | [2] |
Foreign exchange contracts, asset | 4.2 | 1.3 | ||
Financial liabilities: | ||||
Foreign exchange contracts, liability | 3.9 | 3 | ||
Contingent consideration payable | 0 | [3] | 0 | [3] |
Recurring Basis | Level 3 | ||||
Financial assets: | ||||
Available-for-sale securities | 0 | [1] | 0 | [1] |
Contingent consideration receivable | 39.6 | [2] | 38.3 | [2] |
Foreign exchange contracts, asset | 0 | 0 | ||
Financial liabilities: | ||||
Foreign exchange contracts, liability | 0 | 0 | ||
Contingent consideration payable | $597.80 | [3] | $136.40 | [3] |
[1] | Available-for-sale securities are included within Investments in the consolidated balance sheet. | |||
[2] | Contingent consideration receivable is included within Prepaid expenses and other current assets and Other non-current assets in the consolidated balance sheet. | |||
[3] | Contingent consideration payable is included within Other current liabilities and Other non-current liabilities in the consolidated balance sheet. |
Fair_Value_Measurement_Assets_1
Fair Value Measurement (Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs) (Details) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Change in the Fair Value of Contigent Consideration Receivable | ||
Balance at beginning of period | $38.30 | $37.80 |
Gain/(loss) recognized in the income statement (within Gain/(loss) on sale of product rights) due to change in fair value during the period | 14.6 | 16.5 |
Reclassification of amounts due to Other receivables within Other current assets | -13.9 | -13.7 |
Amounts recorded to other comprehensive income (within foreign currency translation adjustments) | 0.6 | 0.4 |
Balance at end of period | 39.6 | 41 |
Change in the Fair Value of Contigent Consideration Payable | ||
Balance at beginning of period | 136.4 | 0 |
Initial recognition of contingent consideration payable | 451.4 | 127.8 |
Change in fair value during the period with the corresponding adjustment recognized as a loss in the income statement (within Integration and acquisition costs) | 28.4 | 3.3 |
Reclassification of amounts to Other current liabilities | -11.1 | -6.7 |
Change in fair value during the period with corresponding adjustment to the associated intangible asset | -7.3 | 9 |
Balance at end of period | $597.80 | $133.40 |
Fair_Value_Measurement_Quantit
Fair Value Measurement (Quantitative Information About Recurring and Non-recurring Level 3 Fair Value Measurements) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Fair Value Inputs | ||||
Impairment of intangible assets | $19.90 | $27 | $19.90 | $27 |
Recurring Basis | Contingent Consideration Payable | Minimum | ||||
Fair Value Inputs | ||||
Assumed market participant discount rate | 2.10% | |||
Cumulative probability of milestones being achieved | 18.00% | |||
Periods in which milestones are expected to be achieved | 2014 | 2014 | ||
Forecast quarterly royalties payable on net sales of relevant products | 1 | 1 | ||
Recurring Basis | Contingent Consideration Payable | Maximum | ||||
Fair Value Inputs | ||||
Assumed market participant discount rate | 8.80% | |||
Cumulative probability of milestones being achieved | 57.00% | |||
Periods in which milestones are expected to be achieved | 2024 | 2024 | ||
Forecast quarterly royalties payable on net sales of relevant products | 7.6 | 7.6 | ||
Recurring Basis | Contingent Consideration Payable | Income approach (probability weighted discounted cash flow) | ||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||||
Liabilities | 597.8 | 597.8 | ||
Recurring Basis | Contingent Consideration Receivable | ||||
Fair Value Inputs | ||||
Assumed market participant discount rate | 5.90% | |||
Recurring Basis | Contingent Consideration Receivable | Minimum | ||||
Fair Value Inputs | ||||
Probability weightings applied to different sales scenarios | 10.00% | |||
Future forecast royalties receivable at relevant contractual royalty rates | 5 | 5 | ||
Recurring Basis | Contingent Consideration Receivable | Maximum | ||||
Fair Value Inputs | ||||
Probability weightings applied to different sales scenarios | 45.00% | |||
Future forecast royalties receivable at relevant contractual royalty rates | 158 | 158 | ||
Recurring Basis | Contingent Consideration Receivable | Income approach (probability weighted discounted cash flow) | ||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||||
Assets | 39.6 | 39.6 | ||
Nonrecurring Basis | Movetis-related IPR&D intangible assets | ||||
Fair Value Inputs | ||||
Assumed market participant discount rate | 8.90% | |||
Decline in forecast peak sales | 50.00% | |||
Nonrecurring Basis | Movetis-related IPR&D intangible assets | Income approach (discounted cash flow) | ||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||||
Assets | $20.30 | $20.30 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | ||||
Schedule of Calculation of Numerator and Denominator in Earnings Per Share | ||||||||
Numerator for basic earnings per share | $278.20 | $227.20 | $601.10 | $703.40 | ||||
Interest on convertible bonds, net of tax | 7.6 | 7.5 | 22.7 | 23.7 | ||||
Numerator for diluted earnings per share | $285.80 | $234.70 | $623.80 | $727.10 | ||||
Schedule of Weighted Average Number of Shares | ||||||||
Basic | 548.4 | [1] | 555.9 | [1] | 549.8 | [1] | 555.5 | [1] |
Effect of dilutive shares: | ||||||||
Share based awards to employees | 3.5 | [2] | 3.7 | [2] | 3.9 | [2] | 5 | [2] |
Convertible bonds 2.75% due 2014 | 33.8 | [3] | 33.5 | [3] | 33.8 | [3] | 33.5 | [3] |
Diluted | 585.7 | 593.1 | 587.5 | 594 | ||||
Earning per ordinary share - basic | ||||||||
Earnings per ordinary share attributable to Shire plc shareholders - basic | $0.51 | $0.41 | $1.09 | $1.27 | ||||
Earnings per ordinary share - diluted | ||||||||
Earnings per ordinary share attributable to Shire plc shareholders - diluted | $0.49 | $0.40 | $1.06 | $1.22 | ||||
Share Awards | ||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||
Antidilutive securities excluded from computation of earnings per share | 0.5 | [4] | 6.6 | [4] | 4.5 | [4] | 4.9 | [4] |
[1] | Excludes shares purchased by the EBT and under the share buy-back program and presented by Shire as treasury stock. | |||||||
[2] | Calculated using the treasury stock method. | |||||||
[3] | Calculated using the bif-convertedb method. | |||||||
[4] | Certain stock options have been excluded from the calculation of diluted EPS because (a) their exercise prices exceeded Shire plcbs average share price during the calculation period or (b) the required performance conditions were not satisfied as at the balance sheet date. |
Segmental_Reporting_Revenue_by
Segmental Reporting (Revenue by Product) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Revenue from External Customer [Line Items] | ||||
Product sales | $1,194.90 | $1,054.50 | $3,541.80 | $3,309.10 |
VYVANSE | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 299.2 | 247.1 | 897.9 | 773.3 |
ADDERALL XR | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 81.4 | 102.2 | 293.5 | 347.5 |
INTUNIV | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 80.8 | 69 | 248.9 | 206.6 |
LIALDA and MEZAVANT | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 141.9 | 104.4 | 379.9 | 288.5 |
PENTASA | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 70.6 | 67 | 215.2 | 196.7 |
FOSRENOL | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 51.9 | 38.1 | 136.3 | 126.8 |
XAGRID | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 24.2 | 22 | 74.1 | 70.7 |
Other Products | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 33 | 33.6 | 96.4 | 115.5 |
REPLAGAL | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 108.5 | 121.7 | 336.6 | 379.3 |
ELAPRASE | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 129.1 | 110.5 | 392.6 | 358.3 |
VPRIV | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 87.8 | 74.9 | 251.9 | 229.3 |
FIRAZYR | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | 62.6 | 30.3 | 153.8 | 81.7 |
DERMAGRAFT | ||||
Revenue from External Customer [Line Items] | ||||
Product sales | $23.90 | $33.70 | $64.70 | $134.90 |