Back to top

Analyst Blog

Ireland-based Shire plc (SHPG - Analyst Report) recently announced that the company has reached an agreement in principle to resolve the previously disclosed civil investigation into Shire's sales and marketing practices in the US relating to key drugs in the Attention Deficit Hyperactivity Disorder (ADHD) market.

The investigation was led by the US Attorney's Office for the Eastern District of Pennsylvania, seeking production of documents related to the sales and marketing of Shire’s drugs for treating ADHD – Adderall XR, Vyvanse and Daytrana.

We remind investors that the investigation started in Oct 2009 when Shire 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. 

The investigation aims to verify whether Shire engaged in off-label promotion and other conduct that may implicate the civil False Claims Act. We note that Shire divested Daytrana to Noven Pharmaceutical Inc in Oct 2010.

In addition, the resolution agreement also aims to address Shire’s sales and marketing practices relating to Lialda and Pentasa.  Lialda is approved in the US and Europe (trade name: Mezavant) for the treatment of ulcerative colitis. Pentasa is approved in the US for the treatment of ulcerative colitis.

Shire recorded a charge of approximately $57.5 million in the fourth quarter of 2012 related to this resolution. 

Further, the agreement in principle is subject to change until this matter is finally resolved as discussions are in process between Shire and the US Government to establish a final resolution to the investigation.

We believe that if the dispute is resolved favorably then a major overhang on Shire's shares will be removed.

Currently, Shire carries a Zacks Rank #3 (Hold). Pharma stocks such as Bayer (BAYRY - Analyst Report), Novo Nordisk (NVO - Analyst Report) and Eli Lilly and Company (LLY - Analyst Report) currently look more attractive with a Zacks Rank #2 (Buy).
 

Please login to Zacks.com or register to post a comment.