Fire will cost Shire pounds 60m

Click to follow
The Independent Online
SHIRE Pharmaceuticals, the troubled drug company, said yesterday that a recent fire in one of its suppliers' factories could cause a sharp increase in its pre-tax loss and wipe up to pounds 60m off its sales.

The company said that there had been an explosion earlier this week at a US plant which manufactures ingredients for two of its drugs used to treat Attention Deficit Hyperactivity Disorder (ADHD). This had halted production of the compounds.

Shire said that it was in discussion with the US regulatory authorities to produce the drugs at another plant, but warned that the negotiations could hold up production for up to a year.

Stephen Stamp, the finance director, said that a 12-month delay would would wipe out more than $100m (pounds 60m) in sales and lead to a loss of around pounds 20m-pounds 25m.

Last year, Shire posted a pre-tax loss of pounds 146,000.

The finance director said the company would be able to meet the shortfall from its cash resources, currently standing at pounds 30m, but added that the Shire's research and development budget would probably have to be cut back to pare the losses

Mr Stamp said that the setback could also deprive up to 200,000 American children of Adderrall and DextroStat, the two ADHD drugs, for up to eight months as existing stocks were only set to last for four months.

His comments came as the drug group reported a pounds 5.4m pre-tax profit for the first half of the year, compared with a pounds 41,000 loss last year.

Turnover was rose to pounds 40.1m from pounds 13.2m in 1997.

The company said the improved performance was due to a "formidable growth" in its US marketing operations, Shire Richwood, where sales more than doubled to $43.7m.

Shares in Shire closed up 39.5p to 362.5p, after large losses earlier in the week following the announcement of the US fire.

Last month, Shire Pharmaceuticals announced that it recorded encouraging early results from trials of its galantamine treatment for Alzheimer's disease, indicating that it helped to slow memory loss.

Recently, Shire launched its epilepsy treatment, Carbatrol. As well as an anticonvulsant, the drug can be used for the treatment of pain associated with trigeminal neuralgia. Carbatrol is administered using an extended- release sprinkle capsule.

Comments