By Paul Sandle
LONDON (Reuters) - British drugmaker Shire (LSE:SHP) raised its full-year earnings forecast on Thursday after lower-than-expected costs and accelerating sales helped it to beat forecasts for the third quarter.
Chief Executive Flemming Ornskov said Shire, which makes drugs to treat hyperactivity and expensive medicines for rare diseases, was resetting its cost base.
That, combined with faster product sales growth, enabled it to upgrade its 2013 earnings forecast for the second time this year, to mid-to-high teens growth from the double-digit growth it predicted in July.
Analysts were predicting annual profits - in Shire's preferred measure of non-GAAP earnings per American Depositary Share - of $6.87, up 13 percent on 2012.
Ornskov, who joined Shire in May, has simplified the company from three units into one, reducing overlap in its R&D and commercial operations.
"We now have a single R&D organisation in place and our pipeline has been prioritised," he told reporters. "As a result, our operations are much more efficient."
Shares in Shire, which have risen by a third since the start of the year, reached all-time highs as analysts upgraded forecasts for 2013 and the following two years.
They were trading up 8.7 percent at 2,745 pence at 1356 GMT, topping the FTSE 100 index (.FTSE) leaderboard.
Shire said that combined R&D and commercial costs would be 1-3 percent lower than in 2012, and they would be $250 million below market expectations in 2014 and $300 million below in 2015.
COST CUTS WELCOMED
Analysts at Morgan Stanley, who have Shire as their top pick in European pharmaceuticals, said: "Although an update on cost-savings at Q3 was expected, we think the magnitude of the implied upgrades will positively surprise."
They said the lower costs implied upgrades of up to 13 and 15 percent to expected 2014 and 2015 earnings respectively.
Shire reported a 12 percent rise in third-quarter revenue to $1.24 billion, and a rise of 30 percent to $1.77 in earnings measured in non-GAAP EPS per ADS. Both beat average analyst expectations of $1.22 billion and $1.63 respectively, according to a poll of 20 brokers compiled by Shire.
The company reported 13 percent growth in product sales, compared to the 7 percent growth seen in the second quarter.
Sales of the ulcerative colitis medicine Lialda rose 36 percent from the same period last year and sales of Firazyr, which treats the rare blood disorder hereditary angioedema, more than doubled.
Vyvanse, Shire's top-selling drug to treat ADHD (attention deficit hyperactivity disorder), posted a 21 percent rise in sales to 299.2 million pounds ($483.7 million) due to higher prescription demand, the company said.
Ornskov said the company had plenty of firepower to continue its longstanding strategy of growth through acquisitions. "We will seek to enhance the growth and replenish our pipeline through M&A," he said.
Chief Financial Officer Graham Hetherington declined to comment on reports that Shire was interested in ViroPharma Inc (NSQ:VPHM), a drugmaker that also specialises in rare diseases.
"Our focus is on growing assets, and assets operating in specialist and particularly rare disease areas," he said.
(Editing by Kevin Liffey)