Shire ups earnings guidance as second quarter sales surge

Thanks to strength in hematology and immunology, product sales of $3.59bn in the three months to 30 June were up 55% compared to the same period last year, or up 7% on a combined pro forma basis, leading to revenue of $3.75bn - ahead of a consensus forecast of $3.71bn.

The FTSE 100 group generated $1.2bn of operating cash flow, which enabled net debt to be cut by $880m in the quarter.

Earnings per share of $3.73 also beat consensus of $3.60 as gross margins were largely in line with expectations.

Guidance for earnings per share for the full year was upgraded by 10 cents to a midpoint of $15.00, driven by cost discipline and accelerated extraction of synergies from its Baxalta acquisition, with product sales guidance lowered to $14.3-14.6bn from $14.5-14.8bn.

Chief executive Flemming Ornskov said Shire was ahead of schedule to deliver at least $700m in cost synergies from the Baxalta integration by the third year after completion.

He said the group was "exploring" a strategic review by the end of the year of its neuroscience business, which could include a potential of independent public offer (IPO) "to derive even greater value from this franchise".

"We are at an exciting inflection point, with both our rare disease and neuroscience businesses performing strongly and each having significant growth potential over the coming years. The strength and scale of our business provides us with the opportunity to further optimize our franchise portfolio - one of our key priorities communicated earlier this year," he added, pointing to the neuroscience review.

"As we enter the second half of 2017, we are focused on generating strong organic growth while continuing to deliver on our key priorities - launching more than 80 products globally by leveraging our expanded commercial platform, progressing our late-stage pipeline, integrating Baxalta, and paying down debt."