Document_and_Entity_Informatio
Document and Entity Information (USD $) | 3 Months Ended | ||
In Billions, except Share data in Millions, unless otherwise specified | Mar. 31, 2014 | 2-May-14 | Jun. 30, 2013 |
Document and Entity Information [Abstract] | ' | ' | ' |
Document Type | '10-Q | ' | ' |
Document Period End Date | 31-Mar-14 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Central Index Key | '0000936402 | ' | ' |
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 | ' | 598 | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus | 'Q1 | ' | ' |
Entity Public Float | ' | ' | $17.40 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $139.10 | $2,239.40 |
Restricted cash | 32.3 | 22.2 |
Accounts receivable, net | 1,091.20 | 961.2 |
Inventories | 636.2 | 455.3 |
Assets held for sale | ' | 31.6 |
Deferred tax asset | 392.1 | 315.6 |
Prepaid expenses and other current assets | 350.3 | 263 |
Total current assets | 2,641.20 | 4,288.30 |
Non-current assets: | ' | ' |
Investments | 35.2 | 31.8 |
Property, plant and equipment, net | 884 | 891.8 |
Goodwill | 2,161.20 | 624.6 |
Other intangible assets, net | 4,943.40 | 2,312.60 |
Deferred tax asset | 145.5 | 141.1 |
Other non-current assets | 89.7 | 32.8 |
Total assets | 10,900.20 | 8,323 |
Current liabilities: | ' | ' |
Accounts payable and accrued expenses | 1,765.20 | 1,688.40 |
Short term borrowings | 671.3 | 0 |
Other current liabilities | 83.1 | 119.5 |
Total current liabilities | 2,519.60 | 1,807.90 |
Non-current liabilities | ' | ' |
Long term borrowings | 850 | 0 |
Deferred tax liability | 1,255.50 | 560.6 |
Other non-current liabilities | 629.3 | 588.5 |
Total liabilities | 5,254.40 | 2,957 |
Commitments and contingencies | ' | ' |
Equity: | ' | ' |
Common stock of 5p par value; 1,000 million shares authorized; and 597.9 million shares issued and outstanding (2013: 1,000 million shares authorized; and 597.5 million shares issued and outstanding) | 58.6 | 58.6 |
Additional paid-in capital | 4,233 | 4,186.30 |
Treasury stock: 12.0 million shares (2013: 13.4 million shares) | -381.7 | -450.6 |
Accumulated other comprehensive income | 112.8 | 110.2 |
Retained earnings | 1,623.10 | 1,461.50 |
Total equity | 5,645.80 | 5,366 |
Total liabilities and equity | $10,900.20 | $8,323 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (GBP £) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, except Per Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ' | ' |
Common Stock, Par Value (in USD per share) | £ 0.05 | £ 0.05 |
Common Stock, Shares Authorized | 1,000 | 1,000 |
Common Stock, Shares, Issued | 597.9 | 597.5 |
Common Stock, Shares, Outstanding | 597.9 | 597.5 |
Treasury Stock, Shares | 12 | 13.4 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 3 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Revenues: | ' | ' | ||
Product sales | $1,308.10 | $1,098.20 | ||
Royalties | 32.3 | 38.5 | ||
Other revenues | 6.4 | 6.7 | ||
Total revenues | 1,346.80 | 1,143.40 | ||
Costs and expenses: | ' | ' | ||
Cost of product sales | 229.5 | 147.4 | ||
Research and development | 360.5 | [1] | 220.6 | [1] |
Selling, general and administrative | 430.3 | [1] | 391.7 | [1] |
Goodwill impairment charge | 0 | 7.1 | ||
Gain on sale of product rights | -36.4 | -6.5 | ||
Reorganization costs | 49.4 | 17.5 | ||
Integration and acquisition costs | 6.6 | 4.1 | ||
Total operating expenses | 1,039.90 | 781.9 | ||
Operating income from continuing operations | 306.9 | 361.5 | ||
Interest income | 0.5 | 0.7 | ||
Interest expense | -7.8 | -9.2 | ||
Other income/(expense), net | 4.7 | -1 | ||
Total other expense, net | -2.6 | -9.5 | ||
Income from continuing operations before income taxes and equity in (losses)/earnings of equity method investees | 304.3 | 352 | ||
Income taxes | -50.6 | -71.4 | ||
Equity in (losses)/earnings of equity method investees, net of taxes | -0.6 | 0.4 | ||
Income from continuing operations, net of taxes | 253.1 | 281 | ||
Loss from discontinued operations, net of taxes | -22.7 | -216.2 | ||
Net income | $230.40 | $64.80 | ||
Earnings from continuing operations (in USD per share) | $0.43 | $0.51 | ||
Loss from discontinued operations (in USD per share) | ($0.04) | ($0.39) | ||
Earnings per ordinary share - basic (in USD per share) | $0.39 | $0.12 | ||
Earnings from continuing operations (in USD per share) | $0.43 | $0.49 | ||
Loss from discontinued operations (in USD per share) | ($0.04) | ($0.37) | ||
Earnings per ordinary share - diluted (in USD per share) | $0.39 | $0.12 | ||
Weighted average number of shares: | ' | ' | ||
Basic (in shares) | 584.3 | [2] | 551.5 | [2] |
Diluted (in shares) | 588.8 | 588.9 | ||
[1] | Research and development (bR&Db) includes intangible asset impairment charges of $166.0 million (2013: $nil) for the three months to March 31, 2014. Selling, general and administrative (bSG&Ab) costs include amortization of intangible assets relating to intellectual property rights acquired of $57.8 million for the three months to March 31, 2014 (2013: $36.1 million). | |||
[2] | Excludes shares purchased by the EBT and presented by Shire as treasury stock |
Consolidated_Statements_of_Inc1
Consolidated Statements of Income (Parenthetical) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Intangible Assets (Excluding Goodwill) [Line Items] | ' | ' |
Impairment of unamortized intangible assets | $166 | ' |
Impairment charges | 166 | 0 |
Acquired Intellectual Property Rights | ' | ' |
Intangible Assets (Excluding Goodwill) [Line Items] | ' | ' |
Impairment of unamortized intangible assets | ' | 0 |
Amortization of intangible assets | $57.80 | $36.10 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Statement of Income and Comprehensive Income [Abstract] | ' | ' | ' |
Net income | $230.40 | $64.80 | ' |
Other comprehensive income: | ' | ' | ' |
Foreign currency translation adjustments | -1.7 | -36.1 | ' |
Unrealized holding gain on available-for-sale securities (net of taxes of $2.5 million and $0.2 million) | 4.3 | -1.7 | ' |
Comprehensive income | 233 | 27 | ' |
Components of accumulated other comprehensive income | ' | ' | ' |
Foreign currency translation adjustments | 108.7 | ' | 110.4 |
Unrealized holding gain/(loss) on available-for-sale securities, net of taxes | 4.1 | ' | -0.2 |
Accumulated other comprehensive income | $112.80 | ' | $110.20 |
Consolidated_Statements_of_Com1
Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Statement of Income and Comprehensive Income [Abstract] | ' | ' |
Unrealized holding gain on available-for-sale securities, tax | $2.50 | $0.20 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Equity (USD $) | Total | Common stock | Additional paid-in capital | Treasury stock | Accumulated other comprehensive income | Retained earnings |
In Millions | ||||||
As at Dec. 31, 2013 | $5,366 | $58.60 | $4,186.30 | ($450.60) | $110.20 | $1,461.50 |
Shares as at Dec. 31, 2013 | 597.5 | 597.5 | ' | ' | ' | ' |
Net income | 230.4 | ' | ' | ' | ' | 230.4 |
Other comprehensive income, net of tax | 2.6 | ' | ' | ' | 2.6 | ' |
Options exercised | 0 | ' | 0 | ' | ' | ' |
Option exercised (in shares) | ' | 0.4 | ' | ' | ' | ' |
Share-based compensation | 26.2 | ' | 26.2 | ' | ' | ' |
Tax benefit associated with exercise of stock options (in US dollar) | 20.5 | ' | 20.5 | ' | ' | ' |
Shares released by EBT to satisfy exercise of stock options | 0.1 | ' | ' | 68.9 | ' | -68.8 |
As at Mar. 31, 2014 | $5,645.80 | $58.60 | $4,233 | ($381.70) | $112.80 | $1,623.10 |
Shares as at Mar. 31, 2014 | 597.9 | 597.9 | ' | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net income | $230.40 | $64.80 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 96.5 | 75 |
Share based compensation | 26.2 | 16.6 |
Change in fair value of contingent consideration | -59.2 | 1.8 |
Goodwill impairment charge | 0 | 7.1 |
Unwind of inventory fair value step up for products sold | 38.8 | 0 |
Impairment of IPR&D intangible assets | 166 | 0 |
Impairment of Property, Plant and Equipment ("PP&E") | 12.1 | 0 |
Gain on sale of product rights | -36.4 | -6.5 |
Other, net | -2.2 | 0.1 |
Movement in deferred taxes | 18.5 | 1.4 |
Equity in losses/(earnings) of equity method investees | 0.6 | -0.4 |
Changes in operating assets and liabilities: | ' | ' |
Increase in accounts receivable | -77.3 | -51.3 |
Increase in sales deduction accruals | 70.8 | 44.4 |
Increase in inventory | -18.6 | -29.1 |
Increase in prepayments and other assets | -74.6 | -61.8 |
Decrease in accounts and notes payable and other liabilities | -145.5 | -93.5 |
Net cash provided by operating activities | 246.1 | 160.4 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Movements in restricted cash | -10.1 | -2.2 |
Purchases of subsidiary undertakings and businesses, net of cash acquired | -3,764.40 | -77.2 |
Purchases of non-current investments and PP&E | -15.6 | -50.1 |
Proceeds from short-term investments | 46.8 | 0 |
Proceeds received on sale of product rights | 48 | 4.8 |
Proceeds from capital expenditure grants | 0 | 2.7 |
Proceeds from disposal of non-current investments and PP&E | 8 | 0.7 |
Other, net | -2.9 | 0 |
Net cash used in investing activities | -3,690.20 | -121.3 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from revolving line of credit, long-term and short-term borrowings | 2,170 | 0 |
Repayment of short term borrowings | -650.2 | 0 |
Repayment of debt acquired with ViroPharma | -533.9 | 0 |
Proceeds from ViroPharma call options | 346.7 | 0 |
Payments to acquire shares under the share buy-back program (in USD) | 0 | -70.6 |
Contingent consideration payments | -7.8 | -6 |
Excess tax benefit associated with exercise of stock options | 20.5 | 4.4 |
Other, net | 0.2 | -0.7 |
Net cash provided by/(used in) financing activities | 1,345.50 | -72.9 |
Effect of foreign exchange rate changes on cash and cash equivalents | -1.7 | 2.3 |
Net decrease in cash and cash equivalents | -2,100.30 | -31.5 |
Cash and cash equivalents at beginning of period | 2,239.40 | 1,482.20 |
Cash and cash equivalents at end of period | 139.1 | 1,450.70 |
Supplemental information associated with continuing operations: | ' | ' |
Interest paid | -2.6 | -1 |
Income taxes paid | -82.6 | -96.1 |
Continung operations | ' | ' |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Goodwill impairment charge | ' | 7.1 |
Discontinued operations | ' | ' |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Goodwill impairment charge | ' | 191.8 |
Goowill impairment charge total | ' | ' |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Goodwill impairment charge | $0 | $198.90 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2014 | |
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, 2013 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, 2013. | |
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, 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 | |
To be adopted in future periods | |
Reporting discontinued operations and disclosures of disposals of components of an entity | |
In April 2014 the Financial Accounting Standard Board (“FASB”) issued guidance on the reporting of discontinued operations and disclosures of disposals of components of an entity. The amendments in this update revise the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have (or will have) a major effect on an entity's operations and financial results. The guidance requires expanded disclosures for discontinued operations which provide users of financial statements with more information about the assets, liabilities, revenues, and expenses of discontinued operations. The guidance also requires an entity to disclose the pre-tax profit or loss of an individually significant component of an entity that does not qualify for discontinued operations reporting. | |
The guidance will be effective for disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within annual periods beginning on or after December 15, 2015. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial position, results of operations and cash flows. | |
Business_Combinations
Business Combinations | 3 Months Ended | ||
Mar. 31, 2014 | |||
Business Combinations [Abstract] | ' | ||
Business Combination Disclosure | ' | ||
2. Business combinations | |||
Proposed acquisition of Fibrotech | |||
On May 1, 2014 Shire entered into a definitive agreement to acquire Fibrotech, a privately held, biotechnology company focused on the development of small molecules for the treatment of renal diseases and fibrosis. The acquisition of Fibrotech will strengthen the Company's growing and innovative portfolio targeting renal and fibrotic diseases, and leverages existing renal capabilities. Shire will make an upfront payment of $75 million and additional contingent payments based on the achievement of development and regulatory milestones. The closing of the acquisition is subject to customary conditions, including approval of Australia's Foreign Investment Review Board. | |||
Acquisition of ViroPharma Incorporated (“ViroPharma”) | |||
On January 24, 2014, Shire completed its acquisition of 100% of the outstanding share capital of ViroPharma. The acquisition-date fair value of cash consideration paid on closing was $3,997 million. | |||
The acquisition of ViroPharma added CINRYZE (C1 esterase inhibitor [human]) to Shire's portfolio of currently marketed products. CINRYZE is a leading brand for the prophylactic treatment of Hereditary Angioedema (“HAE”) in adolescents and adults. | |||
The acquisition of ViroPharma has been accounted for as a purchase business combination using the acquisition method. The assets acquired and the liabilities assumed from ViroPharma have been recorded at their preliminary fair values at the date of acquisition, being January 24, 2014. The Company's consolidated financial statements include the results of ViroPharma from January 24, 2014. The amount of ViroPharma's post acquisition revenues and pre-tax losses included in the Company's consolidated statement of income for the three months to March 31, 2014 were $92.8 million and $59.2 million respectively. The pre-tax loss in the three months to March 31, 2014 is stated after charges on the unwind of inventory fair value adjustments of $38.8 million, intangible asset amortization of $23.3 million and integration costs of $25.8 million. | |||
The Company's preliminary allocation of the purchase price to the assets acquired and liabilities assumed is outlined below: | |||
Preliminary | |||
Fair value | |||
$’M | |||
Identifiable assets acquired and liabilities assumed | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | 232.6 | ||
Short term investments | 57.8 | ||
Accounts receivable | 52.2 | ||
Inventories | 203.5 | ||
Deferred tax assets | 100.2 | ||
Purchased call option | 346.7 | ||
Other current assets | 42.5 | ||
_______________ | |||
Total current assets | 1,035.50 | ||
Non-current assets: | |||
Property, plant and equipment | 24.7 | ||
Goodwill | 1,536.60 | ||
Other intangible assets | |||
- Currently marketed products | 2,320.00 | ||
- IPR&D | 530 | ||
Other non-current assets | 11.6 | ||
_______________ | |||
Total assets | 5,458.40 | ||
_______________ | |||
LIABILITIES | |||
Current liabilities: | |||
Accounts payable and other current liabilities | 116.6 | ||
Convertible bond | 551.4 | ||
Non-current liabilities: | |||
Deferred tax liabilities | 695.9 | ||
Other non-current liabilities | 97.5 | ||
_______________ | |||
Total liabilities | 1,461.40 | ||
_______________ | |||
Fair value of identifiable assets acquired and liabilities assumed | 3,997.00 | ||
_______________ | |||
Consideration | |||
Cash consideration paid | 3,997.00 | ||
_______________ | |||
The purchase price allocation is preliminary pending final determination of the fair values of certain assets and liabilities. The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. | |||
(a) Other intangible assets – currently marketed products | |||
Other intangible assets totaling $2,320.0 million relate to intellectual property rights acquired for ViroPharma's currently marketed products, primarily attributed to CINRYZE, for the routine prophylaxis against HAE attacks in adolescent and adult patients. Shire also obtained intellectual property rights to three other commercialized products, PLENADREN, an orphan drug for the treatment of adrenal insufficiency in adults, BUCCOLAM, an oromucosal solution for the treatment of prolonged, acute, and convulsive seizures in infants, toddlers, children and adolescents and VANCOCIN, an oral capsule formulation for the treatment of C. difficile-associated diarrhea (“CDAD”). The preliminary fair value of currently marketed products has been estimated using an income approach, based on the present value of incremental after tax cash flows attributable to each separately identifiable intangible asset. | |||
The estimated useful lives of the CINRYZE, PLENADREN, BUCCOLAM and VANCOCIN intangible assets range from 3 to 23 years (weighted average 21 years), with amortization being recorded on a straight line basis. | |||
(b) Other intangible assets – IPR&D | |||
IPR&D relates to development projects acquired with ViroPharma, that have been initiated and have achieved material progress and whose fair value is estimable with reasonable certainty but (i) have not yet reached technological feasibility or have not yet received the relevant regulatory approval and (ii) have no alternative future use. | |||
IPR&D, totaling $530.0 million principally relates to Maribavir , an investigational antiviral product for cytomegalovirus and VP20621, a non-toxigenic strain of C.difficile for the treatment and prevention of CDAD. The preliminary fair value of these IPR&D assets has been estimated based on an income approach, using the present value of incremental after tax cash flows expected to be generated by these development projects after the deduction of contributory asset charges for other assets employed in these projects. The estimated cash flows have been probability adjusted to take into account their stage of completion and the remaining risks and uncertainties surrounding their future development and commercialization. | |||
The major risks and uncertainties associated with the timely completion of the acquired IPR&D projects include the ability to confirm the efficacy of the technology based on the data from clinical trials, and obtaining the relevant regulatory approvals as well as other risks as described in PART 1: ITEM 1A “Risk Factors” of the Company's annual report on Form 10-K. The valuation of IPR&D has been based on information available at the time of the acquisition and on expectations and assumptions that (i) have been deemed reasonable by the Company's management and (ii) are based on information, expectations and assumptions that would be available to a market participant. However, no assurance can be given that the assumptions and events associated with such assets will occur as projected. For these reasons, the actual cash flows may vary from forecast future cash flows. | |||
The estimated probability adjusted after tax cash flows used in fair valuing other intangible assets have been discounted at rates ranging from 9.5% to 10.0%. | |||
(c) Goodwill | |||
Goodwill arising of $1,536.6 million, which is not deductible for tax purposes, includes the expected operational synergies that will result from combining the operations of ViroPharma with the operations of Shire; other synergies expected to be realized due to Shire's structure; intangible assets that do not qualify for separate recognition at the time of the acquisition; and the value of the assembled workforce. | |||
In the three months to March 31, 2014 the Company expensed costs of $65.8 million (2013: $nil) relating to the acquisition and post acquisition integration of ViroPharma, which have been recorded within Integration and acquisition costs in the Company's consolidated statement of income. | |||
Supplemental disclosure of pro forma information | |||
The following unaudited pro forma financial information presents the combined results of the operations of Shire and ViroPharma as if the acquisition of ViroPharma had occurred as at January 1, 2013. The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations actually would have been had the acquisition been completed at the date indicated. In addition, the unaudited pro forma financial information does not purport to project the future results of operations of the combined Company. | |||
3 months to | 3 months to | ||
March 31, | March 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
_______________ | _______________ | ||
Revenues | 1,378.60 | 1,250.50 | |
Net income from continuing operations | 219.4 | 129.7 | |
_______________ | _______________ | ||
Per share amounts: | |||
Net income from continuing operations per share - basic | 37.6c | 23.5c | |
Net income from continuing operations per share - diluted | 37.4c | 22.0c | |
_______________ | _______________ | ||
The unaudited pro forma financial information above reflects the following pro forma adjustments: | |||
an adjustment to decrease net income by $33.8 million for the period to March 31, 2013 to reflect acquisition costs incurred by Shire, and increase net income by $23.2 million for the period to March 31, 2014 to eliminate acquisition costs incurred; | |||
an adjustment to decrease net income by approximately $25.1 million for the period to March 31, 2013, to reflect charges on the unwind of inventory fair value adjustments as acquisition date inventory is sold, and a corresponding increase in net income for the period to March 31, 2014; | |||
an adjustment of $12 million in the period to March 31, 2013 to reflect additional interest expense associated with the drawdown of debt to partially finance the acquisition of ViroPharma and the amortization of related deferred debt issuance costs; | |||
an adjustment to increase amortization expense by approximately $6.1 million in the period to March 31, 2014 and $16.3 million in the period to March 31, 2013, related to amortization of the fair value of identifiable intangible assets acquired and the elimination of ViroPharma's historical intangible asset amortization expense; | |||
an adjustment to reflect the additional depreciation expense (approximately $0.1 million in the period to March 31, 2014 and 2013) related to the fair value adjustment to property, plant and equipment acquired; | |||
adjustments to reflect the tax effects of the above adjustments, where applicable | |||
Divestment_of_Product_Rights
Divestment of Product Rights | 3 Months Ended |
Mar. 31, 2014 | |
Gains (Losses) on Sales of Assets [Abstract] | ' |
Divestment of product rights | ' |
3. Divestment of product rights | |
On January 1, 2014 the Company transferred the marketing authorizations for the CALCICHEW range of products in the UK and Ireland to Takeda Pharmaceutical Company Limited. In addition in the first quarter of 2014 Shire received a cash consideration of $43.5 million from the sale of certain CALCICHEW trade marks to Takeda Nycomed AS (“Takeda”), resulting in a gain (net of taxes) of $43.5 million being recorded in the consolidated statement of income. | |
In the three months to March 31, 2014 the Company recorded total gains on the sale of product rights of $36.4 million (2013: $6.5 million), related to the sale of CALCICHEW trademarks to Takeda and the re-measurement of contingent consideration receivable from the 2010 divestment of DAYTRANA. | |
At March 31, 2014 the Company has recorded a receivable based on the fair value of future contingent consideration totaling $59.4 million (2013: $36.1 million), related to the divestment of DAYTRANA ($25.8 million) and the divestment of the DERMAGRAFT business ($33.6 million). The total contingent consideration receivable is split between current assets of $8.1 million (2013: $9.6 million) and non-current assets of $51.3 million (2013: $26.5 million). |
Reorganization_Costs
Reorganization Costs | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Restructuring and Related Activities [Abstract] | ' | ||||
Reorganization Costs Disclosure | ' | ||||
4. Reorganization costs | |||||
One Shire business reorganization | |||||
On May 2, 2013, the Company initiated the reorganization of its business to integrate the three divisions into a simplified One Shire organization in order to drive future growth and innovation. | |||||
As part of the One Shire reorganization, the Company undertook a review of all of its pipeline programs and identified those projects that fit with the Company's new strategic direction and have an acceptable likelihood of success. Shire's pre-clinical investments are now primarily focused on Rare Diseases, meaning that the majority of other pre-clinical projects have been discontinued. Several clinical programs have also been discontinued. The impact of the prioritization and rationalization of the Company's development portfolio means many of the R&D programs currently run from Basingstoke, UK have ceased. Taken together with the overall streamlining of the R&D organization, this has resulted in a significant number of R&D roles in Basingstoke being eliminated and some positions being re-located. A small number of functional roles that support R&D in Basingstoke have also been affected. | |||||
In addition the Company also announced plans to relocate its international commercial hub from Nyon, Switzerland to Zug, Switzerland. All Nyon-based employees have been impacted by the One Shire transition and the move to Zug. Shire is planning for the new Zug office to be ready for occupancy in summer 2014, and will phase out the Nyon office over a reasonable period of time to enable employees and their families to manage their re-locations. | |||||
In the three months to March 31, 2014 the Company incurred reorganization costs totaling $49.4 million, relating to employee involuntary termination benefits and other reorganization costs. Reorganization costs of $114.0 million have been incurred since May 2013. The One Shire reorganization is expected to be substantially completed by the end of 2014. Currently, the Company estimates that further costs in respect of the One Shire reorganization of approximately $101 million will be expensed as incurred during 2014. | |||||
The liability for reorganization costs arising from the One Shire business reorganization at March 31, 2014 is as follows: | |||||
Opening liability | Amount | Closing liability at | |||
at January 1, | charged to re- | March 31, | |||
2014 | organization | Paid/Utilized | 2014 | ||
$'M | $'M | $'M | $'M | ||
___________ | ____________ | ___________ | ___________ | ||
Involuntary termination benefits | 15.3 | 42.2 | -44.5 | 13 | |
Other reorganization costs | 9.5 | 7.2 | -14.5 | 2.2 | |
___________ | ___________ | ___________ | ___________ | ||
24.8 | 49.4 | -59 | 15.2 | ||
___________ | ___________ | ___________ | ___________ | ||
At March 31, 2014 the closing reorganization cost liability was recorded within accounts payable and accrued expenses ($15.2 million). |
Integration_and_acquisition_co
Integration and acquisition costs | 3 Months Ended |
Mar. 31, 2014 | |
IntegrationAndAcquisitionCosts[Abstract] | ' |
Integration and acquisition costs | ' |
5. Integration and acquisition costs | |
For the three months to March 31, 2014 Shire recorded a net charge within integration and acquisition costs of $6.6 million. This comprised a charge of $65.8 million associated with the acquisition and integration of ViroPharma, partially offset by a net credit of $59.2 million relating to the change in fair values of contingent consideration payable in relation to prior business combinations. | |
The net credit on changes in contingent consideration liabilities principally arises on the re-measurement of contingent consideration payable on the acquisition of FerroKin Biosciences, Inc. (“FerroKin”) ($71.9 million), following the decision to place the ongoing Phase 2 clinical trial for SHP602 on clinical hold. | |
In the first quarter of 2013 integration and acquisition costs of $4.1 million primarily related to the acquisition of Lotus Tissue Repair Inc. and the integration of FerroKin. |
Accounts_Receivable_Net
Accounts Receivable, Net | 3 Months Ended | ||
Mar. 31, 2014 | |||
Receivables [Abstract] | ' | ||
Accounts Receivable Disclosure | ' | ||
6. Accounts receivable, net | |||
Accounts receivable at March 31, 2014 of $1,091.2 million (December 31, 2013: $961.2 million), are stated net of a provision for discounts and doubtful accounts of $47.4 million (December 31, 2013: $47.9 million). | |||
Provision for discounts and doubtful accounts: | |||
2014 | 2013 | ||
$’M | $’M | ||
_____________ | _____________ | ||
As at January 1, | 47.9 | 41.7 | |
Provision charged to operations | 80.7 | 76.3 | |
Provision utilization | -81.2 | -73.3 | |
_____________ | _____________ | ||
As at March 31, | 47.4 | 44.7 | |
_____________ | _____________ | ||
At March 31, 2014 accounts receivable included $37.2 million (December 31, 2013: $37.8 million) related to royalty income |
Inventories
Inventories | 3 Months Ended | ||
Mar. 31, 2014 | |||
Inventory Disclosure [Abstract] | ' | ||
Inventory Disclosure | ' | ||
7. Inventories | |||
At March 31, 2014 inventories include $95.4 million in respect of the fair value of inventories acquired with ViroPharma, stated at fair value (being estimated selling price less estimated costs to complete and sell). All other inventories are stated at the lower of cost or market. Inventories comprise: | |||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
____________ | ____________ | ||
Finished goods | 248.8 | 156.6 | |
Work-in-progress | 283.2 | 240.5 | |
Raw materials | 104.2 | 58.2 | |
____________ | ____________ | ||
636.2 | 455.3 | ||
____________ | ____________ |
Results_of_discontinued_operat
Results of discontinued operations | 3 Months Ended | ||
Mar. 31, 2014 | |||
DiscontinuedOperationsAndDisposalGroupsAbstract | ' | ||
Results of discontinued operations Disclosure | ' | ||
8. Results of discontinued operations | |||
Following the divestment of the Company's DERMAGRAFT business in January 2014, the Company recorded charges of $22.7 million, primarily relating to costs associated with the divestment, in the three months to March 31, 2014. These costs have been presented within discontinued operations in the consolidated income statement. | |||
The operating results associated with the DERMAGRAFT business have been classified as discontinued operations in the consolidated statements of income for all periods presented. The components of discontinued operations which relate to the DERMAGRAFT business are as follows: | |||
3 months to March 31, | 2014 | 2013 | |
$’M | $’M | ||
Revenues: | _______________ | _______________ | |
Product revenues | 1.9 | 18.5 | |
_______________ | _______________ | ||
Loss from discontinued operations before income taxes | -35.8 | -227.9 | |
Income taxes | 13.1 | 11.7 | |
_______________ | _______________ | ||
Loss from discontinued operations, net of taxes | -22.7 | -216.2 | |
_______________ | _______________ | ||
The loss from discontinued operations before income taxes in the first quarter of 2013 includes a charge of $191.8 million, being the proportion of the Regenerative Medicine (“RM”) reporting unit goodwill impairment charge that related to the DERMAGRAFT business. |
Prepaid_Expenses_and_Other_Cur
Prepaid Expenses and Other Current Assets | 3 Months Ended | ||
Mar. 31, 2014 | |||
Prepaid Expense and Other Assets, Current [Abstract] | ' | ||
Prepaid Expense and Other Assets, Current | ' | ||
9. Prepaid expenses and other current assets | |||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
______________ | ____________ | ||
Prepaid expenses | 63.8 | 29.4 | |
Income tax receivable | 211.7 | 177.4 | |
Value added taxes receivable | 4.1 | 14.5 | |
Other current assets | 70.7 | 41.7 | |
______________ | ______________ | ||
350.3 | 263 | ||
______________ | ______________ |
Goodwill
Goodwill | 3 Months Ended | ||
Mar. 31, 2014 | |||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||
Goodwill Disclosure | ' | ||
10. Goodwill | |||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
____________ | ____________ | ||
Goodwill arising on businesses acquired | 2,161.20 | 624.6 | |
____________ | ____________ | ||
In the three months to March 31, 2014 the Company completed the acquisition of ViroPharma, which resulted in goodwill with a preliminary value of $1,536.6 million (see Note 2 for details). | |||
2014 | 2013 | ||
$’M | $’M | ||
____________ | ____________ | ||
As at January 1, | 624.6 | 644.5 | |
Acquisitions | 1,536.60 | 83.7 | |
Goodwill impairment charge related to continuing operations | - | -7.1 | |
Goodwill impairment charge related to DERMAGRAFT business recorded to discontinued operations | - | -191.8 | |
Foreign currency translation | - | -6.5 | |
____________ | ____________ | ||
As at March 31, | 2,161.20 | 522.8 | |
____________ | ____________ | ||
In the first quarter of 2013 the Company recorded an impairment charge of $198.9 million related to the goodwill allocated to the former RM reporting unit. Following the divestment of the DERMAGRAFT business, $191.8 million of the impairment charge was reclassified to discontinued operations, being the portion of the former RM reporting unit goodwill impairment charge that related to the DERMAGRAFT business. |
Other_Intangible_Assets_Net
Other Intangible Assets, Net | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ' | |||
Other Intangible Assets Disclosure | ' | |||
11. Other intangible assets, net | ||||
March 31, | December 31, | |||
2014 | 2013 | |||
$’M | $’M | |||
________________ | ________________ | |||
Amortized intangible assets | ||||
Intellectual property rights acquired for currently marketed products | 4,914.50 | 2,573.30 | ||
Other intangible assets | 30 | 46.1 | ||
________________ | ________________ | |||
4,944.50 | 2,619.40 | |||
Unamortized intangible assets | ||||
Intellectual property rights acquired for IPR&D | 1,315.60 | 951.5 | ||
________________ | ________________ | |||
6,260.10 | 3,570.90 | |||
Less: Accumulated amortization | -1,316.70 | -1,258.30 | ||
________________ | ________________ | |||
4,943.40 | 2,312.60 | |||
________________ | ________________ | |||
The change in the net book value of other intangible assets for the three months to March 31, 2014 and 2013 is shown in the table below: | ||||
Other intangible assets | ||||
2014 | 2013 | |||
$’M | $’M | |||
________________ | ________________ | |||
As at January 1, | 2,312.60 | 2,388.10 | ||
Acquisitions | 2,854.00 | 328.5 | ||
Amortization charged | -57.8 | -36.1 | ||
Amortization charged on DERMAGRAFT product technology, presented within discontinued operations in the consolidated income statement | - | -9.8 | ||
Impairment charges | -166 | - | ||
Foreign currency translation | 0.6 | -13.5 | ||
________________ | ________________ | |||
As at March 31, | 4,943.40 | 2,657.20 | ||
________________ | ________________ | |||
In the three months to March 31, 2014 the Company acquired intangible assets totaling $2,854 million, primarily relating to the preliminary fair value of currently marketed intangible assets of $2,320 million and IPR&D assets of $530 million, which were acquired with ViroPharma (see Note 2 for further details). | ||||
The Company reviews its intangible assets for impairment whenever events or circumstances suggest that their carrying value may not be recoverable. In the three months to March 31, 2014 the Company identified indicators of impairment in respect of its SHP602 IPR&D asset. These indicators included the decision to place the ongoing Phase 2 clinical trial in pediatric and adult patients on hold while certain nonclinical findings are analyzed and evaluated. | ||||
The Company therefore reviewed the recoverability of its SHP602 IPR&D asset and recorded an impairment charge of $166.0 million within R&D expenses in the consolidated statement of income to record the SHP602 IPR&D asset to its revised fair value. This fair value was based on the revised discounted cash flow forecasts associated with SHP602, which included a reduced probability of commercial launch, and an overall delay in the forecast timing of launch. | ||||
Management estimates that the annual amortization charge in respect of intangible assets held at March 31, 2014 will be approximately $259 million for each of the five years to March 31, 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 | 3 Months Ended | ||
Mar. 31, 2014 | |||
Accounts Payable and Accrued Liabilities, Current [Abstract] | ' | ||
Accounts Payable and Accrued Expenses Disclosure | ' | ||
12. Accounts payable and accrued expenses | |||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
________________ | ________________ | ||
Trade accounts payable and accrued purchases | 258.2 | 202.6 | |
Accrued rebates – Medicaid | 573.7 | 549.1 | |
Accrued rebates – Managed care | 317.2 | 258.1 | |
Sales return reserve | 87.3 | 98.8 | |
Accrued bonuses | 37.5 | 130.9 | |
Accrued employee compensation and benefits payable | 131.7 | 79.4 | |
R&D accruals | 51.2 | 69.6 | |
Provisions for litigation losses and other claims | 68.6 | 71.7 | |
Other accrued expenses | 239.8 | 228.2 | |
________________ | ________________ | ||
1,765.20 | 1,688.40 | ||
________________ | ________________ |
Other_Current_Liabilities
Other Current Liabilities | 3 Months Ended | ||
Mar. 31, 2014 | |||
Other Liabilities, Current [Abstract] | ' | ||
Other Current Liabilities | ' | ||
13. Other current liabilities | |||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
_____________ | _____________ | ||
Income taxes payable | 28.3 | 69 | |
Value added taxes | 7.9 | 15.8 | |
Contingent consideration payable | 8.1 | 12.9 | |
Other current liabilities | 38.8 | 21.8 | |
_____________ | _____________ | ||
83.1 | 119.5 | ||
_____________ | _____________ |
Borrowings
Borrowings | 3 Months Ended |
Mar. 31, 2014 | |
DebtDisclosureAbstract | ' |
Borrowings Disclosure | ' |
14. Borrowings | |
Term Loan Agreement | |
In connection with its acquisition of ViroPharma on November 11, 2013 Shire entered into a $2,600 million Facilities Agreement with, among others, Morgan Stanley Bank International Limited (acting as lead arranger and agent) (the “Facilities Agreement”). The Facilities Agreement was subsequently reduced to $1,200 million. At March 31, 2014 the Facilities Agreement comprises two credit facilities: (i) a $550 million term loan facility which matures on November 10, 2014, of which $350 million was utilized, and (ii) an $850 million term loan facility which matures on November 11, 2015, which was fully utilized. The $550 million term loan facility was further reduced in April 2014 to $350 million. | |
Revolving Credit Facility (“RCF”) | |
On November 23, 2010 the Company entered into a committed multicurrency revolving and swingline facilities agreement with a number of financial institutions, for which Abbey National Treasury Services Plc (trading as Santander Global Banking and Markets), Bank of America Securities Limited, Barclays Capital, Citigroup Global Markets Limited, Lloyds TSB Bank plc and The Royal Bank of Scotland plc acted as mandated lead arrangers and bookrunners. The RCF, which is for an aggregate amount of $1,200 million and includes a $250 million swingline facility, may be used for general corporate purposes and matures on November 23, 2015. As at March 31, 2014 Shire has drawn loans totalling $320 million under the RCF. | |
Other_Noncurrent_Liabilities
Other Non-current Liabilities | 3 Months Ended | ||
Mar. 31, 2014 | |||
Other Liabilities, Noncurrent [Abstract] | ' | ||
Other Noncurrent Liabilities Disclosure | ' | ||
15. Other non-current liabilities | |||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
____________ | ____________ | ||
Income taxes payable | 176.4 | 115.7 | |
Deferred revenue | 10.9 | 9.8 | |
Deferred rent | 11 | 11.3 | |
Insurance provisions | 1.3 | 1 | |
Contingent consideration payable | 342.2 | 393 | |
Other non-current liabilities | 87.5 | 57.7 | |
____________ | ____________ | ||
629.3 | 588.5 | ||
____________ | ____________ |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | ||
Mar. 31, 2014 | |||
Commitments and Contingencies Disclosure [Abstract] | ' | ||
Commitments and Contingencies Disclosure | ' | ||
16. Commitments and contingencies | |||
(a) Leases | |||
Future minimum lease payments under operating leases at March 31, 2014 are presented below: | |||
Operating | |||
leases | |||
$’M | |||
_____________ | |||
2014 | 30.1 | ||
2015 | 32.3 | ||
2016 | 24.5 | ||
2017 | 20.7 | ||
2018 | 15.6 | ||
2019 | 12.9 | ||
Thereafter | 95.5 | ||
_____________ | |||
231.6 | |||
_____________ | |||
The Company leases land, facilities, motor vehicles and certain equipment under operating leases expiring through 2032. Lease and rental expense amounted to $13.2 million and $17.8 million for the three months March 31, 2014 and 2013 respectively, which is predominately included in SG&A expenses in the Company's consolidated income statement. | |||
(b) Letters of credit and guarantees | |||
At March 31, 2014 the Company had irrevocable standby letters of credit and guarantees with various banks and insurance companies totaling $59.6 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: | |||
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 three months to March 31, 2014 Shire received up-front and milestone payments totaling $1.0 million (2013: $nil). In the three months to March 31, 2014 Shire recognized milestone income of $1.5 million (2013: $0.5 million) in other revenues and $12.5 million (2013: $14.5 million) in product sales for shipment of product to the relevant licensee. | |||
(d) Commitments | |||
(i) Clinical testing | |||
At March 31, 2014 the Company had committed to pay approximately $ 356 million (December 31, 2013: $ 346 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 March 31, 2014 the Company had committed to pay approximately $ 636 million (December 31, 2013: $ 109 million) in respect of contract manufacturing. The Company expects to pay $ 142 million of these commitments in 2014. The increase in contract manufacturing commitments arises principally from commitments with ViroPharma's contract manufacturer of CINRYZE. | |||
(iii) Other purchasing commitments | |||
At March 31, 2014 the Company had committed to pay approximately $ 449 million (December 31, 2013: $ 128 million) for future purchases of goods and services, predominantly relating to active pharmaceutical ingredients sourcing. The Company expects to pay $ 287 million of these commitments in 2014. The increase in other purchasing commitments arises principally from commitments with ViroPharma's suppliers of blood plasma used in the manufacturing of CINRYZE. | |||
(iv) Investment commitments | |||
At March 31, 2014 the Company had outstanding commitments to subscribe for interests in companies and partnerships for amounts totaling $ 14 million (December 31, 2013: $ 14 million) which may all be payable in 2014, depending on the timing of capital calls. The investment commitments include additional funding to certain variable interest entities of which Shire is not the primary beneficiary. These entities control and conduct all related research up to achievement of pre-defined development success criteria at which point Shire will have an option to acquire the entity for pre-defined purchase consideration, including consideration contingent upon achievement of certain development and commercial milestones. | |||
(v) Capital commitments | |||
At March 31, 2014 the Company had committed to spend $ 5 million (December 31, 2013: $ 12 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 March 31, 2014 provisions for litigation losses, insurance claims and other disputes totaled $69.9 million (December 31, 2013: $72.7 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"). 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. | |||
The District Court of New Jersey consolidated the cases against Sandoz, Roxane, Amneal and Actavis. Shire amended its complaints in all of the pending cases to add Johnson Matthey Inc. and Johnson Matthey Pharmaceutical Materials (collectively “Johnson Matthey”) as defendants. The lawsuit filed against Watson was transferred to the District Court of New Jersey but was not consolidated with the case against the other ANDA filers and the case was subsequently dismissed in view of the withdrawal of Watson's ANDA. | |||
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 and Johnson Matthey in the US District Court for the District of New Jersey which was subsequently consolidated with the pending case in New Jersey against Sandoz, Roxane, Amneal and Actavis. In May 2012, the case that was filed against Mylan in the Eastern District of New York was transferred and consolidated with the pending case in New Jersey against Mylan, Sandoz, Roxane, Amneal and Actavis. 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. | |||
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. | |||
The case had been administratively closed since February 22, 2013, but was reopened on February 27, 2014. A Markman hearing is scheduled to take place on January 12, 2015. A trial is scheduled to begin on July 6, 2015. | |||
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 appealed the trial court's ruling to the Court of Appeals of the Federal Circuit (“CAFC”) and a hearing took place on December 2, 2013. The ruling of the CAFC was issued on March 28, 2014 overruling the trial court on the interpretation of two claim terms and remanding the case for further proceedings. | |||
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 October 2014. | |||
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 recorded a $57.5 million charge comprised of the agreement in principle amount, interest and costs, which was 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 | |||
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. | |||
Following the disposal of DERMAGRAFT business, Shire has retained certain legacy liabilities including any liability that may arise from this investigation. 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. | |||
Litigations related to ViroPharma | |||
On January 24, 2014 Shire acquired ViroPharma. ViroPharma has been party to litigation in the ordinary course of its business. ViroPharma's principal pending legal and other proceedings are disclosed below. | |||
On May 17, 2012, a class action complaint was filed in the United States District Court for the Eastern District of Pennsylvania naming as defendants ViroPharma Incorporated and Vincent J. Milano, who resigned as ViroPharma Incorporated's President and Chief Executive Officer upon completion of the ViroPharma acquisition by Shire. The complaint alleges, among other things, securities laws violations by the defendants in connection with certain statements made by the defendants related to VANCOCIN. On October 19, 2012, the complaint was amended to include individuals who were then officers of ViroPharma Incorporated as named defendants and allege additional information as the basis for the claim. ViroPharma moved to dismiss the complaint and an oral argument was held on June 10, 2013, but no decision has been issued. | |||
On April 6, 2012, ViroPharma received a notification that the United States Federal Trade Commission (“FTC”) is conducting an investigation into whether ViroPharma had engaged in unfair methods of competition with respect to VANCOCIN. On August 3, 2012, ViroPharma received a Civil Investigative Demand from the FTC requesting additional information related to this matter. Shire intends to continue to cooperate fully with the FTC investigation. At this time, Shire is unable to predict the outcome or duration of this investigation. | |||
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | ||||||
Accumulated Other Comprehensive Income (Loss) | ' | ||||||
17. Accumulated Other Comprehensive Income | |||||||
The changes in accumulated other comprehensive income, net of their related tax effects, in the three months to March 31, 2014 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, 2014 | 110.4 | -0.2 | 110.2 | ||||
Current period change: | |||||||
Other Comprehensive income before reclassification | -1.7 | 7.5 | 5.8 | ||||
Gain transferred to the income statement (within Other income/(expense), net) on disposal of available-for-sale securities | 0 | -3.2 | -3.2 | ||||
Net current period other comprehensive income | -1.7 | 4.3 | 2.6 | ||||
As at March 31, 2014 | 108.7 | 4.1 | 112.8 | ||||
Financial_Instruments
Financial Instruments | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Derivative Instrument Detail [Abstract] | ' | ||||
Financial Instruments Disclosure | ' | ||||
18. 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 its $1,200 million Revolving Credit Facility (“RCF”), its $550 million term loan facility (which was reduced to $350 million facility in April 2014) and its $850 million term loan facility (the “Facilities”) on which interest is at floating rates, to the extent the RCF or the Facilities are utilized. At March 31, 2014 the Company utilized $350 million of the $550 million term loan facility, fully utilized the $850 million term loan facility and utilized $320 million of the RCF. This exposure is to US dollar interest rates. | |||||
The Company has evaluated the interest rate risk on the RCF and the Facilities and considers the risks associated with floating interest rates on the instruments as appropriate and no derivative instruments have been entered into to manage this risk. A hypothetical one percentage point increase or decrease in the interest rates applicable to drawings under the RCF and the Facilities at March 31, 2014 would increase or decrease interest expense by approximately $15.2 million per annum. | |||||
The Company is also exposed to interest rate risk on its restricted cash, cash and cash equivalents and on foreign exchange contracts on which interest is at floating rates. This exposure is primarily to US dollar, Pounds sterling, Euro and Canadian dollar 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 three months to March 31, 2014 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. | |||||
No derivative instruments were entered into during the three months March 31, 2014 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, 2013 there were three customers in the US that accounted for 52% 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, 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 three months March 31, 2014, including receipts of $28.1 million and $27.3 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. 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 March 31, 2014 the Company had 26 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 March 31, 2014 the potential effect of rights of set off associated with the foreign exchange contracts would be an offset to both assets and liabilities of $0.2 million, resulting in net derivative assets and derivative liabilities of $1.4 million and $1.0 million, respectively. Further details are included below: | |||||
Fair value | Fair value | ||||
March 31, | December 31, | ||||
2014 | 2013 | ||||
$’M | $’M | ||||
_____________ | _____________ | ||||
Assets | Prepaid expenses and other current assets | 1.6 | 4 | ||
Liabilities | Other current liabilities | 1.2 | 2.8 | ||
_____________ | _____________ | ||||
Net gains/(losses) (both realized and unrealized) arising on foreign exchange contracts have been classified in the consolidated statements of income as follows: | |||||
Location of net gains/(losses) recognized in income | Amount of net gains/(losses) recognized in income | ||||
__________________________________ | ____________ | ||||
In the three months to | March 31, | March 31, | |||
2014 | 2013 | ||||
$’M | $’M | ||||
_____________ | _____________ | ||||
Foreign exchange contracts | Other income, net | 1.8 | -1.6 | ||
_____________ | _____________ | ||||
These net foreign exchange gains/(losses) are offset within Other income, net by net foreign exchange (losses)/gains arising on the balance sheet items that these contracts were put in place to manage. |
Fair_Value_Measurement
Fair Value Measurement | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Fair Value Disclosures [Abstract] | ' | ||||||
Fair Value Disclosures | ' | ||||||
19. Fair value measurement | |||||||
Assets and liabilities that are measured at fair value on a recurring basis | |||||||
As at March 31, 2014 and December 31, 2013 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 March 31, 2014 | $'M | $'M | $'M | $'M | $'M | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Financial assets: | |||||||
Available-for-sale securities(1) | 23.8 | 23.8 | 23.8 | - | - | ||
Contingent consideration receivable (2) | 59.4 | 59.4 | - | - | 59.4 | ||
Foreign exchange contracts | 1.6 | 1.6 | - | 1.6 | - | ||
Financial liabilities: | |||||||
Foreign exchange contracts | 1.2 | 1.2 | - | 1.2 | - | ||
Contingent consideration payable(3) | 350.3 | 350.3 | - | - | 350.3 | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Total | Level 1 | Level 2 | Level 3 | ||||
At December 31, 2013 | $'M | $'M | $'M | $'M | $'M | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Financial assets: | |||||||
Available-for-sale securities(1) | 6.7 | 6.7 | 6.7 | - | - | ||
Contingent consideration receivable (2) | 36.1 | 36.1 | - | - | 36.1 | ||
Foreign exchange contracts | 4 | 4 | - | 4 | - | ||
Financial liabilities: | |||||||
Foreign exchange contracts | 2.8 | 2.8 | - | 2.8 | - | ||
Contingent consideration payable(3) | 1 | 405.9 | 405.9 | - | - | 405.9 | |
____________ | ____________ | ___________ | ___________ | ___________ | |||
(1) Available-for-sale securities are included within Investments and Prepaid expenses and other current assets 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 | |||||||
2014 | 2013 | ||||||
$'M | $'M | ||||||
____________ | ____________ | ||||||
Balance at January 1, | 36.1 | 38.3 | |||||
Initial recognition of contingent consideration receivable | 33.6 | - | |||||
(Loss)/gain recognized in the income statement (within Gain on sale of product rights) due to change in fair value during the period | -7.1 | 5.4 | |||||
Reclassification of amounts to Other receivables within Other current assets | -4 | -5 | |||||
Amounts recorded to other comprehensive income (within foreign currency translation adjustments) | 0.8 | -1 | |||||
Balance at March 31, | 59.4 | 37.7 | |||||
Contingent consideration payable | |||||||
2014 | 2013 | ||||||
$'M | $'M | ||||||
____________ | ____________ | ||||||
Balance at January 1, | 405.9 | 136.4 | |||||
Initial recognition of contingent consideration payable | 10 | 233.8 | |||||
Change in fair value during the period with the corresponding adjustment recognized as a (gain)/loss in the income statement (within Integration and acquisition costs) | -59.2 | 1.8 | |||||
Reclassification of amounts to Other current liabilities | -2.4 | -5.8 | |||||
Change in fair value during the period with corresponding adjustment to the associated intangible asset | -4 | - | |||||
Balance at March 31, | 350.3 | 366.2 | |||||
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 March 31, 2014 | Fair value | Valuation Technique | Significant unobservable Inputs | Range | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
Contingent consideration receivable ("CCR") | 59.4 | Income approach (probability weighted discounted cash flow) | • Probability weightings applied to different sales scenarios • Future forecast consideration receivable based on contractual terms with purchaser • Assumed market participant discount rate | • 10 to 70% • $15 million to $148 million • 7 to 11.5% | |||
____________ | ____________ | ____________ | ____________ | ||||
Financial liabilities: | Fair Value at the Measurement Date | ||||||
At March 31, 2014 | Fair value | Valuation Technique | Significant unobservable Inputs | Range | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
Contingent consideration payable | 350.3 | 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 | • 11 to 57% (Weighted average) • 2.9 to 15% (Weighted average) • 2014 to 2025 • $2.1 to $7.6 million | |||
____________ | ____________ | ____________ | ____________ | ||||
The Company re-measures the CCR (relating to contingent consideration due to the Company following divestment of certain 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 products 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 is 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 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 first quarter of 2014 the Company reviewed the SHP602 IPR&D intangible asset for impairment and recognized an impairment charge of $166 million, recorded within R&D in the consolidated income statement, to write down this asset to fair value. The fair value of this asset was determined using the income approach, which used significant unobservable (Level 3) inputs. These unobservable inputs included, among other things, probabilities of the IPR&D intangible asset receiving regulatory approval, 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. | |||||||
Fair Value at the Measurement Date | |||||||
At March 31, 2014 | Fair value | Valuation Technique | Significant unobservable Inputs | Rate used | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
SHP602 IPR&D intangible asset | $nil | Income approach (discounted cash flow) | • Probability of regulatory approval being obtained • Expected commercial launch date • Assumed market participant discount rate | • 11 to 15% • 2021 • 11.3% | |||
____________ | ____________ | ____________ | ____________ | ||||
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 | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Earnings Per Share [Abstract] | ' | ||||
Earnings Per Share Disclosure | ' | ||||
20. 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 | ||||
March 31, | March 31, | ||||
2014 | 2013 | ||||
$’M | $’M | ||||
_________________ | _________________ | ||||
Income from continuing operations, net of taxes | 253.1 | 281 | |||
Loss from discontinued operations1 | -22.7 | -216.2 | |||
_________________ | _________________ | ||||
Numerator for basic earnings per share | 230.4 | 64.8 | |||
Interest on convertible bonds, net of tax | - | 7.6 | |||
_________________ | _________________ | ||||
Numerator for diluted earnings per share | 230.4 | 72.4 | |||
_________________ | _________________ | ||||
Weighted average number of shares: | |||||
Millions | Millions | ||||
_________________ | _________________ | ||||
Basic 1 | 584.3 | 551.5 | |||
Effect of dilutive shares: | |||||
Share based awards to employees 2 | 4.5 | 3.8 | |||
Convertible bonds 2.75% due 2014 | - | 33.6 | |||
_________________ | _________________ | ||||
Diluted | 588.8 | 588.9 | |||
_________________ | _________________ | ||||
1. Excludes shares purchased by the EBT and presented by Shire as treasury stock. | |||||
2. Calculated using the treasury stock method. | |||||
The share equivalents not included in the calculation of the diluted weighted average number of shares are shown below: | |||||
2014 | 2013 | ||||
No. of shares | No. of shares | ||||
Millions | Millions | ||||
_________________ | _________________ | ||||
Share based awards to employees1 | 0.8 | 5.6 | |||
_________________ | _________________ | ||||
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 | 3 Months Ended | ||
Mar. 31, 2014 | |||
Segment Reporting [Abstract] | ' | ||
Segment Reporting Disclosure | ' | ||
21. Segmental reporting | |||
Shire comprises a single operating and reportable segment engaged in the research, 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 Pipeline group, consisting of R&D and Business Development, which prioritizes its activities towards late stage development programs across a variety of therapeutic areas, while focusing its pre-clinical development activities primarily in rare diseases; a Technical Operations group is responsible for the Company's global supply chain; and an In-line marketed products group focuses on commercialized products. The In-Line marketed products group currently consists of four 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. | |||
This 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. | |||
3 months to, | 3 months to, | ||
March 31, | March 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
___________ | ___________ | ||
VYVANSE | 351.2 | 298.4 | |
LIALDA/MEZAVANT | 128.9 | 100.5 | |
ELAPRASE | 128.6 | 114.3 | |
REPLAGAL | 114.3 | 114 | |
VPRIV | 86.9 | 81.6 | |
CINRYZE | 85.6 | - | |
ADDERALL XR | 85.1 | 99.8 | |
INTUNIV | 82.3 | 77.7 | |
FIRAZYR | 74.9 | 41.7 | |
PENTASA | 72.3 | 71 | |
FOSRENOL | 41.4 | 42.3 | |
XAGRID | 27.1 | 23.4 | |
Other product sales | 29.5 | 33.5 | |
____________ | ____________ | ||
Total product sales | 1,308.10 | 1,098.20 | |
____________ | ____________ |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
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, 2013 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, 2013. | |
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, 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 | |
To be adopted in future periods | |
Reporting discontinued operations and disclosures of disposals of components of an entity | |
In April 2014 the Financial Accounting Standard Board (“FASB”) issued guidance on the reporting of discontinued operations and disclosures of disposals of components of an entity. The amendments in this update revise the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have (or will have) a major effect on an entity's operations and financial results. The guidance requires expanded disclosures for discontinued operations which provide users of financial statements with more information about the assets, liabilities, revenues, and expenses of discontinued operations. The guidance also requires an entity to disclose the pre-tax profit or loss of an individually significant component of an entity that does not qualify for discontinued operations reporting. | |
The guidance will be effective for disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within annual periods beginning on or after December 15, 2015. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial position, results of operations and cash flows. | |
Business_Combinations_Tables
Business Combinations (Tables) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Business Acquisition [Line Items] | ' | ||
Schedule of Purchase Price Allocation | ' | ||
Preliminary | |||
Fair value | |||
$’M | |||
Identifiable assets acquired and liabilities assumed | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | 232.6 | ||
Short term investments | 57.8 | ||
Accounts receivable | 52.2 | ||
Inventories | 203.5 | ||
Deferred tax assets | 100.2 | ||
Purchased call option | 346.7 | ||
Other current assets | 42.5 | ||
_______________ | |||
Total current assets | 1,035.50 | ||
Non-current assets: | |||
Property, plant and equipment | 24.7 | ||
Goodwill | 1,536.60 | ||
Other intangible assets | |||
- Currently marketed products | 2,320.00 | ||
- IPR&D | 530 | ||
Other non-current assets | 11.6 | ||
_______________ | |||
Total assets | 5,458.40 | ||
_______________ | |||
LIABILITIES | |||
Current liabilities: | |||
Accounts payable and other current liabilities | 116.6 | ||
Convertible bond | 551.4 | ||
Non-current liabilities: | |||
Deferred tax liabilities | 695.9 | ||
Other non-current liabilities | 97.5 | ||
_______________ | |||
Total liabilities | 1,461.40 | ||
_______________ | |||
Fair value of identifiable assets acquired and liabilities assumed | 3,997.00 | ||
_______________ | |||
Consideration | |||
Cash consideration paid | 3,997.00 | ||
_______________ | |||
Business Acquisition, Pro Forma Information | ' | ||
3 months to | 3 months to | ||
March 31, | March 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
_______________ | _______________ | ||
Revenues | 1,378.60 | 1,250.50 | |
Net income from continuing operations | 219.4 | 129.7 | |
_______________ | _______________ | ||
Per share amounts: | |||
Net income from continuing operations per share - basic | 37.6c | 23.5c | |
Net income from continuing operations per share - diluted | 37.4c | 22.0c | |
_______________ | _______________ |
Reorganization_costs_Table
Reorganization costs (Table) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Restructuring and Related Activities [Abstract] | ' | ||||
Schedule of Reorganization costs | ' | ||||
Opening liability | Amount | Closing liability at | |||
at January 1, | charged to re- | March 31, | |||
2014 | organization | Paid/Utilized | 2014 | ||
$'M | $'M | $'M | $'M | ||
___________ | ____________ | ___________ | ___________ | ||
Involuntary termination benefits | 15.3 | 42.2 | -44.5 | 13 | |
Other reorganization costs | 9.5 | 7.2 | -14.5 | 2.2 | |
___________ | ___________ | ___________ | ___________ | ||
24.8 | 49.4 | -59 | 15.2 | ||
___________ | ___________ | ___________ | ___________ |
Accounts_Receivable_Net_Tables
Accounts Receivable, Net (Tables) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Receivables [Abstract] | ' | ||
Provision for discounts and doubtful accounts | ' | ||
2014 | 2013 | ||
$’M | $’M | ||
_____________ | _____________ | ||
As at January 1, | 47.9 | 41.7 | |
Provision charged to operations | 80.7 | 76.3 | |
Provision utilization | -81.2 | -73.3 | |
_____________ | _____________ | ||
As at March 31, | 47.4 | 44.7 | |
_____________ | _____________ |
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Inventory Disclosure [Abstract] | ' | ||
Schedule of Inventory | ' | ||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
____________ | ____________ | ||
Finished goods | 248.8 | 156.6 | |
Work-in-progress | 283.2 | 240.5 | |
Raw materials | 104.2 | 58.2 | |
____________ | ____________ | ||
636.2 | 455.3 | ||
____________ | ____________ |
Results_of_discontinued_operat1
Results of discontinued operations (Table) | 3 Months Ended | ||
Mar. 31, 2014 | |||
DiscontinuedOperationIncomeLossFromDiscontinuedOperationDisclosuresAbstract | ' | ||
Schedule of discontinued operations | ' | ||
3 months to March 31, | 2014 | 2013 | |
$’M | $’M | ||
Revenues: | _______________ | _______________ | |
Product revenues | 1.9 | 18.5 | |
_______________ | _______________ | ||
Loss from discontinued operations before income taxes | -35.8 | -227.9 | |
Income taxes | 13.1 | 11.7 | |
_______________ | _______________ | ||
Loss from discontinued operations, net of taxes | -22.7 | -216.2 | |
_______________ | _______________ |
Prepaid_Expenses_and_Other_Cur1
Prepaid Expenses and Other Current Assets (Tables) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Prepaid Expense and Other Assets, Current [Abstract] | ' | ||
Prepaid Expense and Other Assets, Current | ' | ||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
______________ | ____________ | ||
Prepaid expenses | 63.8 | 29.4 | |
Income tax receivable | 211.7 | 177.4 | |
Value added taxes receivable | 4.1 | 14.5 | |
Other current assets | 70.7 | 41.7 | |
______________ | ______________ | ||
350.3 | 263 | ||
______________ | ______________ |
Goodwill_Tables
Goodwill (Tables) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||
Schedule of Acquired Goodwill | ' | ||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
____________ | ____________ | ||
Goodwill arising on businesses acquired | 2,161.20 | 624.6 | |
____________ | ____________ | ||
Schedule of Goodwill | ' | ||
2014 | 2013 | ||
$’M | $’M | ||
____________ | ____________ | ||
As at January 1, | 624.6 | 644.5 | |
Acquisitions | 1,536.60 | 83.7 | |
Goodwill impairment charge related to continuing operations | - | -7.1 | |
Goodwill impairment charge related to DERMAGRAFT business recorded to discontinued operations | - | -191.8 | |
Foreign currency translation | - | -6.5 | |
____________ | ____________ | ||
As at March 31, | 2,161.20 | 522.8 | |
____________ | ____________ |
Other_Intangible_Assets_Net_Ta
Other Intangible Assets, Net (Tables) | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ' | |||
Schedule of Other Intangible Assets | ' | |||
March 31, | December 31, | |||
2014 | 2013 | |||
$’M | $’M | |||
________________ | ________________ | |||
Amortized intangible assets | ||||
Intellectual property rights acquired for currently marketed products | 4,914.50 | 2,573.30 | ||
Other intangible assets | 30 | 46.1 | ||
________________ | ________________ | |||
4,944.50 | 2,619.40 | |||
Unamortized intangible assets | ||||
Intellectual property rights acquired for IPR&D | 1,315.60 | 951.5 | ||
________________ | ________________ | |||
6,260.10 | 3,570.90 | |||
Less: Accumulated amortization | -1,316.70 | -1,258.30 | ||
________________ | ________________ | |||
4,943.40 | 2,312.60 | |||
________________ | ________________ | |||
Intangible Assets (Excluding Goodwill) Roll Forward | ' | |||
Other intangible assets | ||||
2014 | 2013 | |||
$’M | $’M | |||
________________ | ________________ | |||
As at January 1, | 2,312.60 | 2,388.10 | ||
Acquisitions | 2,854.00 | 328.5 | ||
Amortization charged | -57.8 | -36.1 | ||
Amortization charged on DERMAGRAFT product technology, presented within discontinued operations in the consolidated income statement | - | -9.8 | ||
Impairment charges | -166 | - | ||
Foreign currency translation | 0.6 | -13.5 | ||
________________ | ________________ | |||
As at March 31, | 4,943.40 | 2,657.20 | ||
________________ | ________________ |
Accounts_Payable_and_Accrued_E1
Accounts Payable and Accrued Expenses (Tables) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Accounts Payable and Accrued Liabilities, Current [Abstract] | ' | ||
Schedule of Accounts Payable and Accrued Expenses | ' | ||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
________________ | ________________ | ||
Trade accounts payable and accrued purchases | 258.2 | 202.6 | |
Accrued rebates – Medicaid | 573.7 | 549.1 | |
Accrued rebates – Managed care | 317.2 | 258.1 | |
Sales return reserve | 87.3 | 98.8 | |
Accrued bonuses | 37.5 | 130.9 | |
Accrued employee compensation and benefits payable | 131.7 | 79.4 | |
R&D accruals | 51.2 | 69.6 | |
Provisions for litigation losses and other claims | 68.6 | 71.7 | |
Other accrued expenses | 239.8 | 228.2 | |
________________ | ________________ | ||
1,765.20 | 1,688.40 | ||
________________ | ________________ |
Other_Current_Liabilities_Tabl
Other Current Liabilities (Tables) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Other Liabilities, Current [Abstract] | ' | ||
Schedule of Other Current Liabilities | ' | ||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
_____________ | _____________ | ||
Income taxes payable | 28.3 | 69 | |
Value added taxes | 7.9 | 15.8 | |
Contingent consideration payable | 8.1 | 12.9 | |
Other current liabilities | 38.8 | 21.8 | |
_____________ | _____________ | ||
83.1 | 119.5 | ||
_____________ | _____________ |
Other_Noncurrent_Liabilities_T
Other Non-current Liabilities (Tables) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Other Liabilities, Noncurrent [Abstract] | ' | ||
Schedule of Other Noncurrent Liabilities | ' | ||
March 31, | December 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
____________ | ____________ | ||
Income taxes payable | 176.4 | 115.7 | |
Deferred revenue | 10.9 | 9.8 | |
Deferred rent | 11 | 11.3 | |
Insurance provisions | 1.3 | 1 | |
Contingent consideration payable | 342.2 | 393 | |
Other non-current liabilities | 87.5 | 57.7 | |
____________ | ____________ | ||
629.3 | 588.5 | ||
____________ | ____________ |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Commitments and Contingencies Disclosure [Abstract] | ' | ||
Future Minimum Lease Payments under Operating Leases | ' | ||
Operating | |||
leases | |||
$’M | |||
_____________ | |||
2014 | 30.1 | ||
2015 | 32.3 | ||
2016 | 24.5 | ||
2017 | 20.7 | ||
2018 | 15.6 | ||
2019 | 12.9 | ||
Thereafter | 95.5 | ||
_____________ | |||
231.6 | |||
_____________ |
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
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, 2014 | 110.4 | -0.2 | 110.2 | ||||
Current period change: | |||||||
Other Comprehensive income before reclassification | -1.7 | 7.5 | 5.8 | ||||
Gain transferred to the income statement (within Other income/(expense), net) on disposal of available-for-sale securities | 0 | -3.2 | -3.2 | ||||
Net current period other comprehensive income | -1.7 | 4.3 | 2.6 | ||||
As at March 31, 2014 | 108.7 | 4.1 | 112.8 | ||||
Financial_Instruments_Tables
Financial Instruments (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Derivative Instrument Detail [Abstract] | ' | ||||
Schedule of Foreign Exchange Contracts, Statement of Financial Position | ' | ||||
Fair value | Fair value | ||||
March 31, | December 31, | ||||
2014 | 2013 | ||||
$’M | $’M | ||||
_____________ | _____________ | ||||
Assets | Prepaid expenses and other current assets | 1.6 | 4 | ||
Liabilities | Other current liabilities | 1.2 | 2.8 | ||
_____________ | _____________ | ||||
Schedule of Foreign Exchange Contracts, Gain (Loss) in Other Income (Expense) | ' | ||||
Location of net gains/(losses) recognized in income | Amount of net gains/(losses) recognized in income | ||||
__________________________________ | ____________ | ||||
In the three months to | March 31, | March 31, | |||
2014 | 2013 | ||||
$’M | $’M | ||||
_____________ | _____________ | ||||
Foreign exchange contracts | Other income, net | 1.8 | -1.6 | ||
_____________ | _____________ |
Fair_Value_Measurement_Tables
Fair Value Measurement (Tables) | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
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 March 31, 2014 | $'M | $'M | $'M | $'M | $'M | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Financial assets: | |||||||
Available-for-sale securities(1) | 23.8 | 23.8 | 23.8 | - | - | ||
Contingent consideration receivable (2) | 59.4 | 59.4 | - | - | 59.4 | ||
Foreign exchange contracts | 1.6 | 1.6 | - | 1.6 | - | ||
Financial liabilities: | |||||||
Foreign exchange contracts | 1.2 | 1.2 | - | 1.2 | - | ||
Contingent consideration payable(3) | 350.3 | 350.3 | - | - | 350.3 | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Total | Level 1 | Level 2 | Level 3 | ||||
At December 31, 2013 | $'M | $'M | $'M | $'M | $'M | ||
____________ | ____________ | ___________ | ___________ | ___________ | |||
Financial assets: | |||||||
Available-for-sale securities(1) | 6.7 | 6.7 | 6.7 | - | - | ||
Contingent consideration receivable (2) | 36.1 | 36.1 | - | - | 36.1 | ||
Foreign exchange contracts | 4 | 4 | - | 4 | - | ||
Financial liabilities: | |||||||
Foreign exchange contracts | 2.8 | 2.8 | - | 2.8 | - | ||
Contingent consideration payable(3) | 1 | 405.9 | 405.9 | - | - | 405.9 | |
____________ | ____________ | ___________ | ___________ | ___________ | |||
(1) Available-for-sale securities are included within Investments and Prepaid expenses and other current assets 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 | |||||||
2014 | 2013 | ||||||
$'M | $'M | ||||||
____________ | ____________ | ||||||
Balance at January 1, | 36.1 | 38.3 | |||||
Initial recognition of contingent consideration receivable | 33.6 | - | |||||
(Loss)/gain recognized in the income statement (within Gain on sale of product rights) due to change in fair value during the period | -7.1 | 5.4 | |||||
Reclassification of amounts to Other receivables within Other current assets | -4 | -5 | |||||
Amounts recorded to other comprehensive income (within foreign currency translation adjustments) | 0.8 | -1 | |||||
Balance at March 31, | 59.4 | 37.7 | |||||
Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobervable Inputs (Level 3) | ' | ||||||
Contingent consideration payable | |||||||
2014 | 2013 | ||||||
$'M | $'M | ||||||
____________ | ____________ | ||||||
Balance at January 1, | 405.9 | 136.4 | |||||
Initial recognition of contingent consideration payable | 10 | 233.8 | |||||
Change in fair value during the period with the corresponding adjustment recognized as a (gain)/loss in the income statement (within Integration and acquisition costs) | -59.2 | 1.8 | |||||
Reclassification of amounts to Other current liabilities | -2.4 | -5.8 | |||||
Change in fair value during the period with corresponding adjustment to the associated intangible asset | -4 | - | |||||
Balance at March 31, | 350.3 | 366.2 | |||||
Fair Value Inputs, Assets Quantitative Information Table | ' | ||||||
Financial assets: | Fair Value at the Measurement Date | ||||||
At March 31, 2014 | Fair value | Valuation Technique | Significant unobservable Inputs | Range | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
Contingent consideration receivable ("CCR") | 59.4 | Income approach (probability weighted discounted cash flow) | • Probability weightings applied to different sales scenarios • Future forecast consideration receivable based on contractual terms with purchaser • Assumed market participant discount rate | • 10 to 70% • $15 million to $148 million • 7 to 11.5% | |||
____________ | ____________ | ____________ | ____________ | ||||
Fair Value at the Measurement Date | |||||||
At March 31, 2014 | Fair value | Valuation Technique | Significant unobservable Inputs | Rate used | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
SHP602 IPR&D intangible asset | $nil | Income approach (discounted cash flow) | • Probability of regulatory approval being obtained • Expected commercial launch date • Assumed market participant discount rate | • 11 to 15% • 2021 • 11.3% | |||
____________ | ____________ | ____________ | ____________ | ||||
Fair Value Inputs, Liabilities Quantitative Information Table | ' | ||||||
Financial liabilities: | Fair Value at the Measurement Date | ||||||
At March 31, 2014 | Fair value | Valuation Technique | Significant unobservable Inputs | Range | |||
$'M | |||||||
____________ | ___________ | ___________ | ___________ | ||||
Contingent consideration payable | 350.3 | 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 | • 11 to 57% (Weighted average) • 2.9 to 15% (Weighted average) • 2014 to 2025 • $2.1 to $7.6 million | |||
____________ | ____________ | ____________ | ____________ |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Earnings Per Share [Abstract] | ' | ||||
Schedule of Calculation of Numerator and Denominator in Earnings Per Share | ' | ||||
2014 | 2013 | ||||
$’M | $’M | ||||
_________________ | _________________ | ||||
Income from continuing operations, net of taxes | 253.1 | 281 | |||
Loss from discontinued operations1 | -22.7 | -216.2 | |||
_________________ | _________________ | ||||
Numerator for basic earnings per share | 230.4 | 64.8 | |||
Interest on convertible bonds, net of tax | - | 7.6 | |||
_________________ | _________________ | ||||
Numerator for diluted earnings per share | 230.4 | 72.4 | |||
_________________ | _________________ | ||||
Schedule of Weighted Average Number of Shares | ' | ||||
Weighted average number of shares: | |||||
Millions | Millions | ||||
_________________ | _________________ | ||||
Basic 1 | 584.3 | 551.5 | |||
Effect of dilutive shares: | |||||
Share based awards to employees 2 | 4.5 | 3.8 | |||
Convertible bonds 2.75% due 2014 | - | 33.6 | |||
_________________ | _________________ | ||||
Diluted | 588.8 | 588.9 | |||
_________________ | _________________ | ||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | ||||
2014 | 2013 | ||||
No. of shares | No. of shares | ||||
Millions | Millions | ||||
_________________ | _________________ | ||||
Share based awards to employees1 | 0.8 | 5.6 | |||
_________________ | _________________ |
Segmental_Reporting_Tables
Segmental Reporting (Tables) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Segment Reporting [Abstract] | ' | ||
Schedule of Segment Revenue from Major Products | ' | ||
3 months to, | 3 months to, | ||
March 31, | March 31, | ||
2014 | 2013 | ||
$’M | $’M | ||
___________ | ___________ | ||
VYVANSE | 351.2 | 298.4 | |
LIALDA/MEZAVANT | 128.9 | 100.5 | |
ELAPRASE | 128.6 | 114.3 | |
REPLAGAL | 114.3 | 114 | |
VPRIV | 86.9 | 81.6 | |
CINRYZE | 85.6 | - | |
ADDERALL XR | 85.1 | 99.8 | |
INTUNIV | 82.3 | 77.7 | |
FIRAZYR | 74.9 | 41.7 | |
PENTASA | 72.3 | 71 | |
FOSRENOL | 41.4 | 42.3 | |
XAGRID | 27.1 | 23.4 | |
Other product sales | 29.5 | 33.5 | |
____________ | ____________ | ||
Total product sales | 1,308.10 | 1,098.20 | |
____________ | ____________ |
Business_Combinations_Fibrotec
Business Combinations (Fibrotech) (Details) (Fibrotech, USD $) | 0 Months Ended |
In Millions, unless otherwise specified | 1-May-14 |
Fibrotech | ' |
Business Acquisition [Line Items] | ' |
Cash consideration to be paid on closing of the acquisition | $75 |
Business_Combinations_ViroPhar
Business Combinations (ViroPharrma) (Details) (USD $) | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | |||||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 24, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Jan. 24, 2014 | Jan. 24, 2014 | Jan. 24, 2014 | Jan. 24, 2014 |
Viropharma | Viropharma | Viropharma | Viropharma | Viropharma | Viropharma | Viropharma | |||||
Minimum | Maximum | Currently Marketed Products | IPR&D | ||||||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of voting interests acquired | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' |
Cash consideration paid | ' | ' | ' | ' | $3,997 | ' | ' | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | ' | ' | ' | ' | 232.6 | ' | ' | ' | ' | ' | ' |
Short term investments | ' | ' | ' | ' | 57.8 | ' | ' | ' | ' | ' | ' |
Accounts receivable | ' | ' | ' | ' | 52.2 | ' | ' | ' | ' | ' | ' |
Inventories | ' | ' | ' | ' | 203.5 | ' | ' | ' | ' | ' | ' |
Deferred tax assets | ' | ' | ' | ' | 100.2 | ' | ' | ' | ' | ' | ' |
Purchased call option | ' | ' | ' | ' | 346.7 | ' | ' | ' | ' | ' | ' |
Other current assets | ' | ' | ' | ' | 42.5 | ' | ' | ' | ' | ' | ' |
Total current assets | ' | ' | ' | ' | 1,035.50 | ' | ' | ' | ' | ' | ' |
Non-current assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property, plant and equipment | ' | ' | ' | ' | 24.7 | ' | ' | ' | ' | ' | ' |
Goodwill | 2,161.20 | 522.8 | 624.6 | 644.5 | 1,536.60 | ' | ' | ' | ' | ' | ' |
Other intangible assets, net | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,320 | 530 |
Other non-current assets | ' | ' | ' | ' | 11.6 | ' | ' | ' | ' | ' | ' |
Total assets | ' | ' | ' | ' | 5,458.40 | ' | ' | ' | ' | ' | ' |
Current liabilities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accounts payable and other current liabilities | ' | ' | ' | ' | 116.6 | ' | ' | ' | ' | ' | ' |
Convertible bond | ' | ' | ' | ' | 551.4 | ' | ' | ' | ' | ' | ' |
Non-current liabilities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred tax liabilities | ' | ' | ' | ' | 695.9 | ' | ' | ' | ' | ' | ' |
Other non-current liabilities | ' | ' | ' | ' | 97.5 | ' | ' | ' | ' | ' | ' |
Total liabilities | ' | ' | ' | ' | 1,461.40 | ' | ' | ' | ' | ' | ' |
Fair value of identified assets acquired and liabilities assumed | ' | ' | ' | ' | 3,997 | ' | ' | ' | ' | ' | ' |
Pro Forma Information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Post acquisition revenues included in consolidated statement of income | ' | ' | ' | ' | ' | 92.8 | ' | ' | ' | ' | ' |
Post acquisition pre-tax losses included in consolidated statement of income | ' | ' | ' | ' | ' | 59.2 | ' | ' | ' | ' | ' |
Post acquisition amortization of intangible assets included in consolidated statement of income | ' | ' | ' | ' | ' | 23.3 | ' | ' | ' | ' | ' |
Post acquisition unwind of inventory fair value adjustment included in consolidated statement of income | 38.8 | 0 | ' | ' | ' | 38.8 | ' | ' | ' | ' | ' |
Post acquisition integration costs included in consolidated statement of income | ' | ' | ' | ' | ' | 25.8 | ' | ' | ' | ' | ' |
Weighted average amortization period of acquired amortizable intangible assets | ' | ' | ' | ' | '21 years | ' | ' | ' | ' | ' | ' |
Discount rate used in determining fair value of acquired in process research and development, low rate | ' | ' | ' | ' | 9.50% | ' | ' | ' | ' | ' | ' |
Discount rate used in determining fair value of acquired in process research and development, high rate | ' | ' | ' | ' | 10.00% | ' | ' | ' | ' | ' | ' |
Integration and acquisition costs | $6.60 | $4.10 | ' | ' | ' | $65.80 | $0 | ' | ' | ' | ' |
Estimated useful life of intangible assets | ' | ' | ' | ' | ' | ' | ' | '3 years | '23 years | ' | ' |
Business_Combinations_Pro_Form
Business Combinations (Pro Forma Information) (Details) (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Pro Forma Information | ' | ' |
Revenues | $1,378.60 | $1,250.50 |
Net income from continuing operations | 219.4 | 129.7 |
Net income from continuing operations per share - basic | $0.38 | $0.24 |
Net income from continuing operations per share - diluted | $0.37 | $0.22 |
Pro Forma Data Adjustments | ' | ' |
Decrease to net income to reflect the additional depreciation expense related to the fair value adjustment to property, plant and equipment acquired | -0.1 | -0.1 |
Decrease to net income to increase amortization expense of intangible assets | -6.1 | -16.3 |
Increase/(decrease) to net income to reflect acquisition related costs | 23.2 | -33.8 |
Decrease to net income to reflect the additional interest expense | ' | -12 |
Increase/(decrease) to net income to reflect the fair value adjustment to acquisition date inventory. | $25.10 | ($25.10) |
Divestment_of_Product_Rights_D
Divestment of Product Rights (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Product Information [Line Items] | ' | ' |
Current divestiture contingent consideration receivable | $8.10 | $9.60 |
Noncurrent divestiture contingent consideration receivable | 51.3 | 26.5 |
Total divestiture contingent consideration receivable | 59.4 | 36.1 |
DAYTRANA | ' | ' |
Product Information [Line Items] | ' | ' |
Total divestiture contingent consideration receivable | 25.8 | ' |
CALCICHEW | ' | ' |
Product Information [Line Items] | ' | ' |
Cash consideration received on sale of product rights | 43.5 | ' |
Gain (net of taxes) on sale of product righs | 43.5 | ' |
Total | ' | ' |
Product Information [Line Items] | ' | ' |
Gain (net of taxes) on sale of product righs | 36.4 | 6.5 |
DERMAGRAFT | ' | ' |
Product Information [Line Items] | ' | ' |
Total divestiture contingent consideration receivable | $33.60 | ' |
Reorganization_Costs_Details
Reorganization Costs (Details) (USD $) | 3 Months Ended | 11 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 |
Reorganization Costs | ' | ' | ' |
Reorganization costs | $49.40 | $17.50 | ' |
Reorganization cost incurred to date | ' | ' | 114 |
Restructuring Reserve (Roll Forward) | ' | ' | ' |
Reorganization Reserve Opening liability | 24.8 | ' | ' |
Amounts charged to re-organization | 49.4 | 17.5 | ' |
Reorganization liability, Paid and Utilized | -59 | ' | ' |
Reorganization Reserve Closing liability | 15.2 | ' | 15.2 |
Reorganization liability, Current | 15.2 | ' | 15.2 |
Involuntary termination benefits | ' | ' | ' |
Reorganization Costs | ' | ' | ' |
Reorganization costs | 42.2 | ' | ' |
Restructuring Reserve (Roll Forward) | ' | ' | ' |
Reorganization Reserve Opening liability | 15.3 | ' | ' |
Amounts charged to re-organization | 42.2 | ' | ' |
Reorganization liability, Paid and Utilized | -44.5 | ' | ' |
Reorganization Reserve Closing liability | 13 | ' | 13 |
Other reorganization costs | ' | ' | ' |
Reorganization Costs | ' | ' | ' |
Reorganization costs | 7.2 | ' | ' |
Restructuring Reserve (Roll Forward) | ' | ' | ' |
Reorganization Reserve Opening liability | 9.5 | ' | ' |
Amounts charged to re-organization | 7.2 | ' | ' |
Reorganization liability, Paid and Utilized | -14.5 | ' | ' |
Reorganization Reserve Closing liability | 2.2 | ' | 2.2 |
"One Shire" business re-alignment | ' | ' | ' |
Reorganization Costs | ' | ' | ' |
Reorganization costs | 49.4 | ' | ' |
Reorganizations costs, expected costs | 101 | ' | ' |
Restructuring Reserve (Roll Forward) | ' | ' | ' |
Amounts charged to re-organization | $49.40 | ' | ' |
Integration_and_acquisition_co1
Integration and acquisition costs (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Business Acquisition [Line Items] | ' | ' |
Integration and acquisition costs | $6.60 | $4.10 |
Change in fair value of contingent consideration | -59.2 | ' |
Viropharma | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Integration and acquisition costs | 65.8 | 0 |
Acquisition and Integration Costs, Gross Amount | FerroKin | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Change in fair value of contingent consideration | -71.9 | ' |
Acquisition and Integration Costs, Gross Amount | Viropharma | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Integration and acquisition costs | 65.8 | ' |
Acquisition and Integration Costs, Net Amount | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Integration and acquisition costs | $6.60 | ' |
Accounts_Receivable_Net_Detail
Accounts Receivable, Net (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Provision for discounts and doubtful accounts | ' | ' | ' |
As at January 1, | $47.90 | $41.70 | ' |
Provision charged to operations | 80.7 | 76.3 | ' |
Provision utilization | -81.2 | -73.3 | ' |
As at March 31, | 47.4 | 44.7 | ' |
Accounts receivable, net | 1,091.20 | ' | 961.2 |
Accounts receivable related to royalty income | $37.20 | ' | $37.80 |
Inventories_Details
Inventories (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Schedule of Inventory | ' | ' |
Finished goods | $248.80 | $156.60 |
Work-in-progress | 283.2 | 240.5 |
Raw materials | 104.2 | 58.2 |
Total inventories | 636.2 | 455.3 |
Inventory stated at fair value | $95.40 | ' |
Results_of_discontinued_operat2
Results of discontinued operations (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Results of discontinued operations | ' | ' |
Loss from discontinued operations, net of taxes | ($22.70) | ($216.20) |
Goodwill impairment charge | 0 | 7.1 |
DERMAGRAFT | ' | ' |
Results of discontinued operations | ' | ' |
Product Revenues | 1.9 | 18.5 |
Loss from discontinuing operations before income taxes | -35.8 | -227.9 |
Income tax expense from discontinued operations | 13.1 | 11.7 |
Loss from discontinued operations, net of taxes | -22.7 | -216.2 |
Continung operations | ' | ' |
Results of discontinued operations | ' | ' |
Goodwill impairment charge | ' | 7.1 |
Discontinued operations | ' | ' |
Results of discontinued operations | ' | ' |
Goodwill impairment charge | ' | 191.8 |
Discontinued operations | DERMAGRAFT | ' | ' |
Results of discontinued operations | ' | ' |
Goodwill impairment charge | ' | $191.80 |
Prepaid_Expenses_and_Other_Cur2
Prepaid Expenses and Other Current Assets (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Prepaid Expense and Other Assets, Current [Abstract] | ' | ' |
Prepaid expenses | $63.80 | $29.40 |
Income tax receivable | 211.7 | 177.4 |
Value added taxes receivable | 4.1 | 14.5 |
Other current assets | 70.7 | 41.7 |
Prepaid expenses and other current assets, total | $350.30 | $263 |
Goodwill_Details
Goodwill (Details) (USD $) | 3 Months Ended | |||||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jan. 24, 2014 | Mar. 31, 2013 |
Continung operations | Continung operations | Discontinued operations | Discontinued operations | Viropharma | Former RM reporting unit | |||
Goodwill [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill arising on business acquired | $1,536.60 | $83.70 | ' | ' | ' | ' | ' | ' |
Goodwill [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' |
As at January 1, | 624.6 | 644.5 | ' | ' | ' | ' | 1,536.60 | ' |
Acquisition | 1,536.60 | 83.7 | ' | ' | ' | ' | ' | ' |
Goodwill impairment charge | ' | ' | 0 | -7.1 | 0 | -191.8 | ' | 198.9 |
Foreign currency translation | 0 | -6.5 | ' | ' | ' | ' | ' | ' |
As at March 31, | $2,161.20 | $522.80 | ' | ' | ' | ' | $1,536.60 | ' |
Other_Intangible_Assets_Net_De
Other Intangible Assets, Net (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
Intangible Assets (Excluding Goodwill) [Line Items] | ' | ' | ' | ' |
Amortized intangible assets | $4,944.50 | ' | $2,619.40 | ' |
Other intangible assets, gross | 6,260.10 | ' | 3,570.90 | ' |
Less: Accumulated amortization | -1,316.70 | ' | -1,258.30 | ' |
Other intangible assets, net | 4,943.40 | 2,657.20 | 2,312.60 | 2,388.10 |
Other Disclosures | ' | ' | ' | ' |
Impairment charges | 166 | 0 | ' | ' |
Acquisitions | 2,854 | 328.5 | ' | ' |
Estimates of Annual Amortization | ' | ' | ' | ' |
2014 | 259 | ' | ' | ' |
2015 | 259 | ' | ' | ' |
2016 | 259 | ' | ' | ' |
2017 | 259 | ' | ' | ' |
2018 | 259 | ' | ' | ' |
Currently Marketed Products | ' | ' | ' | ' |
Intangible Assets (Excluding Goodwill) [Line Items] | ' | ' | ' | ' |
Amortized intangible assets | 4,914.50 | ' | 2,573.30 | ' |
Currently Marketed Products | Viropharma | ' | ' | ' | ' |
Other Disclosures | ' | ' | ' | ' |
Acquisitions | 2,320 | ' | ' | ' |
Other Intangible Assets | ' | ' | ' | ' |
Intangible Assets (Excluding Goodwill) [Line Items] | ' | ' | ' | ' |
Amortized intangible assets | 30 | ' | 46.1 | ' |
IPR&D | ' | ' | ' | ' |
Intangible Assets (Excluding Goodwill) [Line Items] | ' | ' | ' | ' |
Unamortized intangible assets | 1,315.60 | ' | 951.5 | ' |
IPR&D | Viropharma | ' | ' | ' | ' |
Other Disclosures | ' | ' | ' | ' |
Acquisitions | 530 | ' | ' | ' |
SHP602 IPR&D | ' | ' | ' | ' |
Other Disclosures | ' | ' | ' | ' |
Impairment charges | $166 | ' | ' | ' |
Other_Intangible_Assets_Net_Ro
Other Intangible Assets, Net (Roll Forward) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Other Intangible Assets Roll Forward | ' | ' |
As at January 1, | $2,312.60 | $2,388.10 |
Acquisitions | 2,854 | 328.5 |
Impairment charges | -166 | 0 |
Foreign currency translation | 0.6 | -13.5 |
As at March 31, | 4,943.40 | 2,657.20 |
Continung operations | ' | ' |
Other Intangible Assets Roll Forward | ' | ' |
Amortization charged | -57.8 | -36.1 |
DERMAGRAFT | Discontinued operations | ' | ' |
Other Intangible Assets Roll Forward | ' | ' |
Amortization charged | $0 | ($9.80) |
Accounts_Payable_and_Accrued_E2
Accounts Payable and Accrued Expenses (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Accounts Payable and Accrued Liabilities, Current [Line Items] | ' | ' |
Trade accounts payable and accrued purchases | $258.20 | $202.60 |
Accrued rebates - Medicaid | 573.7 | 549.1 |
Accrued rebates - Managed care | 317.2 | 258.1 |
Sales return reserve | 87.3 | 98.8 |
Accrued bonuses | 37.5 | 130.9 |
Accrued employee compensation and benefits payable | 131.7 | 79.4 |
R&D accruals | 51.2 | 69.6 |
Provisions for litigation losses and other claims | 68.6 | 71.7 |
Other accrued expenses | 239.8 | 228.2 |
Accounts payable and accrued expenses, total | $1,765.20 | $1,688.40 |
Other_Current_Liabilities_Deta
Other Current Liabilities (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Other Liabilities, Current [Abstract] | ' | ' |
Income taxes payable | $28.30 | $69 |
Value added taxes | 7.9 | 15.8 |
Contingent consideration payable | 8.1 | 12.9 |
Other current liabilities | 38.8 | 21.8 |
Other current liabilities, total | $83.10 | $119.50 |
Borrowings_Details
Borrowings (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 |
contract | |
Line of Credit Facility [Line Items] | ' |
Facility agreement initiation date | 11-Nov-13 |
Facilitiy agreement total amount | $2,600 |
Number of term loan facilities | 2 |
Term loan facility one | ' |
Line of Credit Facility [Line Items] | ' |
Facility agreement expiration date | 10-Nov-14 |
Facility amount outstanding | 350 |
Term loan facilitly two | ' |
Line of Credit Facility [Line Items] | ' |
Facility agreement expiration date | 11-Nov-15 |
Term loan facility | 850 |
Facility amount outstanding | 850 |
Original facility | Term loan facility one | ' |
Line of Credit Facility [Line Items] | ' |
Term loan facility | 550 |
Revised facility | ' |
Line of Credit Facility [Line Items] | ' |
Facilitiy agreement total amount | 1,200 |
Revised facility | Term loan facility one | ' |
Line of Credit Facility [Line Items] | ' |
Term loan facility | 350 |
Revolving Credit Facility | ' |
Line of Credit Facility [Line Items] | ' |
Facility agreement initiation date | 23-Nov-10 |
Facilitiy agreement total amount | 1,200 |
Facility agreement expiration date | 23-Nov-15 |
Swingline Facility | 250 |
Facility amount outstanding | $320 |
Other_Noncurrent_Liabilities_D
Other Non-current Liabilities (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Other Liabilities, Noncurrent [Abstract] | ' | ' |
Income taxes payable | $176.40 | $115.70 |
Deferred revenue | 10.9 | 9.8 |
Deferred rent | 11 | 11.3 |
Insurance provisions | 1.3 | 1 |
Contingent consideration payable | 342.2 | 393 |
Other non-current liabilities | 87.5 | 57.7 |
Other noncurrent liabilities, total | $629.30 | $588.50 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Leases, and LC and Guarantees ) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Future Minimum Lease Payments under Operating Leases | ' | ' |
2014 | $30.10 | ' |
2015 | 32.3 | ' |
2016 | 24.5 | ' |
2017 | 20.7 | ' |
2018 | 15.6 | ' |
2019 | 12.9 | ' |
Thereafter | 95.5 | ' |
Future minimum lease payments, total | 231.6 | ' |
Operating Leases, Rent Expense | ' | ' |
Lease and rental expense | 13.2 | 17.8 |
Letters of credit and guarantees | ' | ' |
Irrevocable standby letters of credit and guarantees | $59.60 | ' |
Commitments_and_Contingencies_2
Commitments and Contingencies (Collaborative Arrangements) (Details) (Out-licensing Arrangement, USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Out-licensing arrangements | ' | ' |
Milestone payments received | $1 | $0 |
Other Revenues | ' | ' |
Out-licensing arrangements | ' | ' |
Milestone revenues recognized | 1.5 | 0.5 |
Product Sales | ' | ' |
Out-licensing arrangements | ' | ' |
Milestone revenues recognized | 12.5 | 14.5 |
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 $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | Settlement costs related to agreement in principle to resolve a civil subpoena | Clinical Testing | Clinical Testing | Contract Manufacturing | Contract Manufacturing | Contract Manufacturing | Other Purchasing Commitment | Other Purchasing Commitment | Other Purchasing Commitment | Investment Commitment | Investment Commitment | Capital Commitment | Capital Commitment | ||
Commitment [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitment amount | ' | ' | ' | $356 | $346 | ' | $636 | $109 | ' | $449 | $128 | $14 | $14 | $5 | $12 |
Commitments expected to be paid in next year | ' | ' | ' | ' | ' | 142 | ' | ' | 287 | ' | ' | ' | ' | ' | ' |
Legal Matters [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Provisions for litigation loss, insurance claims and other disputes | $69.90 | $72.70 | $57.50 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 |
Accumulated Other Comprehensive Income (Loss) | ' |
As at January 1, 2014 | $110.20 |
Other comprehensive income, net of tax | 2.6 |
As at March, 2014 | 112.8 |
Foreign currency translation adjustment | ' |
Accumulated Other Comprehensive Income (Loss) | ' |
As at January 1, 2014 | 110.4 |
Other Comprehensive income before reclassification | -1.7 |
Gain transferred to the income statement (within Other income/(expense),net) on disposal of available-for-sale-securities | 0 |
Other comprehensive income, net of tax | -1.7 |
As at March, 2014 | 108.7 |
Unrealized holding gain/(loss) on available-for-sale securities | ' |
Accumulated Other Comprehensive Income (Loss) | ' |
As at January 1, 2014 | -0.2 |
Other Comprehensive income before reclassification | 7.5 |
Gain transferred to the income statement (within Other income/(expense),net) on disposal of available-for-sale-securities | -3.2 |
Other comprehensive income, net of tax | 4.3 |
As at March, 2014 | 4.1 |
Accumulated other comprehensive income | ' |
Accumulated Other Comprehensive Income (Loss) | ' |
As at January 1, 2014 | 110.2 |
Other Comprehensive income before reclassification | 5.8 |
Gain transferred to the income statement (within Other income/(expense),net) on disposal of available-for-sale-securities | -3.2 |
Other comprehensive income, net of tax | 2.6 |
As at March, 2014 | $112.80 |
Financial_Instruments_Interest
Financial Instruments (Interest Rate and Credit Risks) (Details) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | |||||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 |
contract | Product Sales | Government-owned or Supported Healthcare Providers | Government-owned or Supported Healthcare Providers | Term loan facility one | Term loan facilitly two | Original facility | Revolving Credit Facility | Revised facility | Revised facility | |
Italy | Spain | Term loan facility one | Term loan facility one | |||||||
Interest rate risk | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Average interest rate received on cash and liquid investments | 'less than 1% per annum. | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term loan facility | ' | ' | ' | ' | ' | $850 | $550 | ' | ' | $350 |
Facilitiy agreement total amount | 2,600 | ' | ' | ' | ' | ' | ' | 1,200 | 1,200 | ' |
Interest rate risk exposure | 'A hypothetical one percentage point increase or decrease in the interest rates applicable to drawings under the RCF and the Facilities at March 31, 2014 would increase or decrease interest expense by approximately $15.2 million per annum. | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Facility amount outstanding | ' | ' | ' | ' | 350 | 850 | ' | 320 | ' | ' |
Accounts Receivable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of major external customers | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration risk percentage | ' | 52.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Accounts receivable received | ' | ' | $27.30 | $28.10 | ' | ' | ' | ' | ' | ' |
Financial_Instruments_Foreign_
Financial Instruments (Foreign Exchange Risk and Its Classification on Balance Sheet) (Details) (USD $) | 3 Months Ended | |||||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 |
Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract | ||
contract | Prepaid expenses and other current assets | Prepaid expenses and other current assets | Other current liabilities | Other current liabilities | ||
Derivatives, Fair Value | ' | ' | ' | ' | ' | ' |
Assets | ' | ' | $1.60 | $4 | ' | ' |
Liabilities | ' | ' | ' | ' | 1.2 | 2.8 |
Net derivative fair value assets | ' | 1.4 | ' | ' | ' | ' |
Net derivative fair value liabilities | ' | 1 | ' | ' | ' | ' |
Potential effect of rights of set off associated with the foreign exchange contracts | ' | $0.20 | ' | ' | ' | ' |
Number of swap and forward foreign exchange contracts outstanding | ' | 26 | ' | ' | ' | ' |
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 $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Foreign Exchange Contract | Other income, net | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' |
Amount of net income (loss) recognized in income | $1.80 | ($1.60) |
Fair_Value_Measurement_Assets_
Fair Value Measurement (Assets and Liabilities That are Measured and Not Measured at Fair Value on a Recurring Basis) (Details) (Recurring Basis, USD $) | Mar. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Carrying value | ' | ' | ||
Financial assets: | ' | ' | ||
Available-for-sale securities | $23.80 | [1] | $6.70 | [1] |
Contingent consideration receivable | 59.4 | [2] | 36.1 | [2] |
Foreign exchange contracts, asset | 1.6 | 4 | ||
Financial liabilities: | ' | ' | ||
Foreign exchange contracts, liability | 1.2 | 2.8 | ||
Contingent consideration payable | 350.3 | [3] | 405.9 | [3] |
Estimated fair value | ' | ' | ||
Financial assets: | ' | ' | ||
Available-for-sale securities | 23.8 | [1] | 6.7 | [1] |
Contingent consideration receivable | 59.4 | [2] | 36.1 | [2] |
Foreign exchange contracts, asset | 1.6 | 4 | ||
Financial liabilities: | ' | ' | ||
Foreign exchange contracts, liability | 1.2 | 2.8 | ||
Contingent consideration payable | 350.3 | [3] | 405.9 | [3] |
Level 1 | ' | ' | ||
Financial assets: | ' | ' | ||
Available-for-sale securities | 23.8 | [1] | 6.7 | [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] |
Level 2 | ' | ' | ||
Financial assets: | ' | ' | ||
Available-for-sale securities | 0 | [1] | 0 | [1] |
Contingent consideration receivable | 0 | [2] | 0 | [2] |
Foreign exchange contracts, asset | 1.6 | 4 | ||
Financial liabilities: | ' | ' | ||
Foreign exchange contracts, liability | 1.2 | 2.8 | ||
Contingent consideration payable | 0 | [3] | 0 | [3] |
Level 3 | ' | ' | ||
Financial assets: | ' | ' | ||
Available-for-sale securities | 0 | [1] | 0 | [1] |
Contingent consideration receivable | 59.4 | [2] | 36.1 | [2] |
Foreign exchange contracts, asset | 0 | 0 | ||
Financial liabilities: | ' | ' | ||
Foreign exchange contracts, liability | 0 | 0 | ||
Contingent consideration payable | $350.30 | [3] | $405.90 | [3] |
[1] | Available-for-sale securities are included within Investments and Prepaid expenses and other current assets 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 $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Change in the Fair Value of Contigent Consideration Receivable | ' | ' |
Balance at beginning of period | $36.10 | $38.30 |
Initial recognition of contingent consideration receivable | 33.6 | 0 |
(Loss)/gain recognized in the income statement (within Gain on sale of product rights) due to change in fair value during the period | -7.1 | 5.4 |
Reclassification of amounts due to Other receivables within Other current assets | -4 | -5 |
Amounts recorded to other comprehensive income (within foreign currency translation adjustments) | 0.8 | -1 |
Balance at end of period | 59.4 | 37.7 |
Change in the Fair Value of Contigent Consideration Payable | ' | ' |
Balance at beginning of period | 405.9 | 136.4 |
Initial recognition of contingent consideration payable | 10 | 233.8 |
Change in fair value during the period with the corresponding adjustment recognized as a gain/(loss) in the income statement (within Integration and acquisition costs) | -59.2 | 1.8 |
Reclassification of amounts to Other current liabilities | -2.4 | -5.8 |
Change in fair value during the period with corresponding adjustment to the associated intangible asset | -4 | 0 |
Balance at end of period | $350.30 | $366.20 |
Fair_Value_Measurement_Quantit
Fair Value Measurement (Quantitative Information About Recurring and Non-recurring Level 3 Fair Value Measurements) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Fair Value Inputs | ' | ' |
Impairment of IPR&D intangible assets | $166 | $0 |
SHP602 IPR&D | ' | ' |
Fair Value Inputs | ' | ' |
Impairment of IPR&D intangible assets | 166 | ' |
Recurring Basis | Contingent Consideration Payable | Minimum | ' | ' |
Fair Value Inputs | ' | ' |
Assumed market participant discount rate | 2.90% | ' |
Cumulative probability of milestones being achieved | 11.00% | ' |
Periods in which milestones are expected to be achieved | '2014 | ' |
Forecast quarterly royalties payable on net sales of relevant products | 2.1 | ' |
Recurring Basis | Contingent Consideration Payable | Maximum | ' | ' |
Fair Value Inputs | ' | ' |
Assumed market participant discount rate | 15.00% | ' |
Cumulative probability of milestones being achieved | 57.00% | ' |
Periods in which milestones are expected to be achieved | '2025 | ' |
Forecast quarterly royalties payable on net sales of relevant products | 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 | 350.3 | ' |
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 | 15 | ' |
Assumed market participant discount rate | 7.00% | ' |
Recurring Basis | Contingent Consideration Receivable | Maximum | ' | ' |
Fair Value Inputs | ' | ' |
Probability weightings applied to different sales scenarios | 70.00% | ' |
Future forecast royalties receivable at relevant contractual royalty rates | 148 | ' |
Assumed market participant discount rate | 11.50% | ' |
Recurring Basis | Contingent Consideration Receivable | Income approach (probability weighted discounted cash flow) | ' | ' |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ' | ' |
Assets | 59.4 | ' |
Nonrecurring Basis | ' | ' |
Fair Value Inputs | ' | ' |
Assumed market participant discount rate | 11.30% | ' |
Expected commercial launch date | '2021 | ' |
Nonrecurring Basis | SHP602 IPR&D | ' | ' |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ' | ' |
Liabilities | $0 | ' |
Nonrecurring Basis | Minimum | ' | ' |
Fair Value Inputs | ' | ' |
Probability of regulatory approval being obtained | 11.00% | ' |
Nonrecurring Basis | Income approach (discounted cash flow) | Maximum | ' | ' |
Fair Value Inputs | ' | ' |
Probability of regulatory approval being obtained | 15.00% | ' |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Schedule of Calculation of Numerator and Denominator in Earnings Per Share | ' | ' | ||
Income from continuing operations, net of taxes | $253.10 | $281 | ||
Loss from discontinued operations, net of taxes | -22.7 | -216.2 | ||
Net income | 230.4 | 64.8 | ||
Interest on convertible bonds, net of tax (in USD) | 0 | 7.6 | ||
Numerator for diluted earnings per share (in USD) | $230.40 | $72.40 | ||
Schedule of Weighted Average Number of Shares | ' | ' | ||
Basic (in shares) | 584.3 | [1] | 551.5 | [1] |
Effect of dilutive shares: | ' | ' | ||
Share based awards to employees | 4.5 | [2] | 3.8 | [2] |
Convertible bonds 2.75% due 2014 | 0 | 33.6 | ||
Diluted (in shares) | 588.8 | 588.9 | ||
Share Awards | ' | ' | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ||
Antidilutive securities excluded from computation of earnings per share | 0.8 | [3] | 5.6 | [3] |
[1] | Excludes shares purchased by the EBT and presented by Shire as treasury stock | |||
[2] | . Calculated using the treasury stock method | |||
[3] | 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_by_Segment
Segmental Reporting (by Segment) (Details) | 3 Months Ended |
Mar. 31, 2014 | |
number | |
Segment Reporting Information [Line Items] | ' |
Commercial units | 4 |
Segmental_Reporting_Revenue_by
Segmental Reporting (Revenue by Product) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | $1,308.10 | $1,098.20 |
VYVANSE | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 351.2 | 298.4 |
ADDERALL XR | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 85.1 | 99.8 |
INTUNIV | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 82.3 | 77.7 |
LIALDA and MEZAVANT | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 128.9 | 100.5 |
PENTASA | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 72.3 | 71 |
FOSRENOL | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 41.4 | 42.3 |
XAGRID | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 27.1 | 23.4 |
Other Products | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 29.5 | 33.5 |
REPLAGAL | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 114.3 | 114 |
ELAPRASE | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 128.6 | 114.3 |
VPRIV | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 86.9 | 81.6 |
FIRAZYR | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | 74.9 | 41.7 |
CINRYZE | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Product sales | $85.60 | $0 |