Business Combinations

3 Months Ended

Mar. 31, 2013

Business Combinations [Abstract]

Business Combination Disclosure

Acquisition of SARcode Bioscience Inc.(“SARcode”)

On April 17, 2013 Shire completed the acquisition of 100% of the outstanding share capital of SARcode, a privately held biopharmaceutical company based in Brisbane, California. After customary closing adjustments, cash consideration paid on closing amounted to $150 million. Further contingent cash consideration of up to $525 million may be payable by Shire in future periods, dependent upon achievement of certain clinical, regulatory, and net sales milestones.

This acquisition brings the new Phase 3 compound,Lifitegrast, currently under development for the signs and symptoms of dry eye disease, into Shire's portfolio. Shire anticipates launching Lifitegrast in the United States as early as 2016 pending a positive outcome of the Phase 3 clinical development program and regulatory approvals. Shire is acquiring the global rights to Lifitegrast and will evaluate an appropriate regulatory filing strategy for markets outside of the United States.

The acquisition of SARcode will be accounted for as a business combination using the acquisition method. The assets acquired and the liabilities assumed from SARcode will be recorded at the date of acquisition, at their fair value. The results of SARcode will be included in Shire's consolidated income statement from April 17, 2013.

In the three months to March 31, 2013 the Company expensed costs of $0.2 million relating to the SARcode acquisition, which have been recorded within Integration and acquisition costs in the Company's consolidated income statement. As the initial accounting for this business combination has not yet been completed, further disclosure relating to this acquisition will be included in the Company's Form 10-Q for the three and six months ended June 30, 2013.

Acquisition of Premacure AB (“Premacure”)

On March 8, 2013 Shire completed the acquisition of 100% of the outstanding share capital of Premacure. The acquisition date fair value of the consideration totaled $140.2 million, comprising cash consideration paid on closing of $30.6 million, and the fair value of contingent consideration payable of $109.6 million. The maximum amount of contingent cash consideration which may be payable by Shire in future periods, dependent upon the successful completion of certain development and commercial milestones, is $169 million. Shire will also pay royalties on relevant net sales.

Premacure is developing a protein replacement therapy(“PREMIPLEX”), currently in Phase 2 development, for the prevention of Retinopathy of Prematurity (“ROP”). ROP is a rare and potentially blinding eye disorder that primarily affects premature infants and is one of the most common causes of visual loss in childhood. Together, the acquisitions of SARcode and Premacure build Shire's presence in the ophthalmology therapeutic area.

The acquisition of Premacure has been accounted for as a business combinationusing the acquisition method. The assets and the liabilities assumed from Premacure have been recorded at their preliminary fair values at the date of acquisition, being March 8, 2013. The Company's consolidated financial statements and results of operations include the results of Premacure from March 8, 2013.

The purchase price allocation is preliminary pending final determination of the fair values of certain assets acquired and liabilities assumed. The purchase price has been allocated on a preliminary basis to acquired in process research and development (“IPR&D”) in respect of PREMIPLEX ($151.8 million), net current liabilities assumed ($11.7 million), net non-current liabilities assumed (including deferred tax liabilities) ($29.5 million) and goodwill ($29.6 million). The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. Goodwill arising of $29.6 million, which is not deductible for tax purposes, has been assigned to the HGT operating segment.

In the three months to March 31, 2013 the Company expensed costs of $0.3 million (2012: nil) relating to the Premacure acquisition, which have been recorded within integration and acquisition costs in the Company's consolidated income statement.

Acquisition of Lotus Tissue Repair, Inc (“Lotus”)

On February12, 2013 Shire completed the acquisition of 100% of the outstanding share capital ofLotus.The acquisition date fair value of consideration totaled $174.2 million, comprising cash consideration paid on closing of $49.4 million, and the fair value of contingent consideration payable of $124.8 million. The maximum amount of contingent cash consideration which may be payable by Shire in future periods is $275.0 million.The amount of contingent cash consideration ultimately payable by Shire is dependent upon achievement of certain pre-clinical and clinical development milestones.

Lotus is developing a proprietary recombinant form of human collagen Type VII (“rC7”) as the first and only intravenous protein replacement therapy currently being investigated for the treatment of Dystrophic EpidermolysisBullosa (“DEB”).  DEB is a devastating orphan disease for which there is no currently approved treatment option other than palliative care. The acquisition adds to Shire's pipeline a late stage pre-clinical product for the treatment of DEB with global rights. This acquisition is complementary to Shire's existing investment in developing ABH001, which is currently being investigated as a dermal substitute therapy for the treatment of non-healing wounds in patients with EpidermolysisBullosa (“EB”).

The acquisition of Lotus has been accounted for as a business combination using the acquisition method. The assets and the liabilities assumed from Lotus have been recorded at their preliminary fair values at the date of acquisition, being February 12, 2013. The Company's consolidated financial statements and results of operations include the results of Lotus from February 12, 2013.

The purchase price allocation is preliminary pending final determination of the fair values of certain assets acquired and liabilities assumed. The purchase price has been allocated on a preliminary basis to acquired IPR&D in respect of rC7 ($176.7 million), net current assets assumed ($6.8 million), net non-current liabilities assumed (including deferred tax liabilities) ($63.4 million) and goodwill ($54.1 million). The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. Goodwill arising of $54.1 million, which is not deductible for tax purposes, has been assigned to the HGT operating segment.

In the three months to March 31, 2013 the Company expensed costs of $1.0 million (2012: $nil) relating to the Lotus acquisition, which have been recorded within integration and acquisition costs in the Company's consolidated income statement.

Supplemental disclosure of proforma information

The unaudited pro forma financial information to present the combined results of the operations of Shire, Premacure andLotusare not provided as the collective impacts of these acquisitions were not material to the Company's results of operations for any period presented.