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Shire cuts back ahead of US expansion

Published on 29/10/03 at 10:46am

Shire Pharmaceuticals is to revert to its original business model of marketing and developing specialist drugs in late stage clinical development.

After a review of the business by new Chief Executive Matthew Emmens the company said it would close its early stage drug development programmes and use some of its cash reserves to make new acquisitions, particularly in the US.

"Concentrating our business in a more focused way will create a stronger Shire and position us for continued growth. Our strategy is aimed at achieving growth, on average, in the mid-teens range beyond 2003," Mr Emmens said.

Shire's early stage research group, based in Canada, will be closed down with the loss of some 120 jobs, and the vaccines business - which notched up a $15 million loss in the first six months of this year - will be spun off by the end of June 2004.

The review will also see the company out-license its leukaemia treatment Troxatyl and look for a development partner for its HIV treatment SPD754.

At the end of June 2003 the company had cash reserves of some $807 million. Some of this will now be used to acquire new products as Shire aims to build its franchises in CNS, GI and renal therapy areas.

Shire's net income grew by 10% in the second quarter of this year to $66 million, with product sales led by $102 million revenues from Adderall XR, a new formulation of its market-leading attention deficit disorder drug.

The review follows a sustained fall in the company's share price last year after a veiled profit warning and a damaging rift between the UK and US sides of the company saw the exit of former Chief Executive Rolf Stahel.

Mr Stahel is credited with transforming the company's fortunes over his eight years at the helm, taking it from a company with an annual turnover of $3 million into $878 million sales middleweight by 2001.

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