10-K 1 dp63589_10k.htm FORM 10-K
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`UNITED STATES
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`SECURITIES AND EXCHANGE COMMISSION
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`Washington, D.C. 20549
`FORM 10-K
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`[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`
`For the fiscal year ended December 31, 2015
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`[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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`Commission file number 0-29630
`SHIRE PLC
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`(Exact name of registrant as specified in its charter)
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`Jersey (Channel Islands)
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`98-0601486
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`(State or other jurisdiction of incorporation or organization)
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`(I.R.S. Employer Identification No.)
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`5 Riverwalk, Citywest Business Campus, Dublin 24,
`Republic of Ireland
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`(Address of principal executive offices and zip code)
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`+353 1 429 7700
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`(Registrant’s telephone number, including area code)
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`Securities registered pursuant to Section 12(b) of the Act:
`
`Title of each class
`American Depositary Shares, each representing three
`Ordinary Shares 5 pence par value per share
`Securities registered pursuant to Section 12(g) of the Act:
`None
`(Title of class)
`
`Name of exchange on which registered
`NASDAQ Global Select Market
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`1
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`CFAD Exhibit 1059
`CFAD v. NPS
`IPR2015-00990
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`Indicate by check mark whether the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
`
`Yes [X] No [ ]
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`Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act
`
`Yes [ ] No [X]
`
`Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
`Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required
`to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
`
`Yes [X] No [ ]
`
`Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
`not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by
`reference to Part III of this Form 10-K or any amendment to this Form 10-K.
`
`[X]
`
`Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See
`definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
`
`Large accelerated filer [X] Accelerated filer Non-accelerated filer Smaller reporting company
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`Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
`
`Yes [ ] No [X]
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`Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every
`Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232,405 of this chapter)
`during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
`
`Yes [X] No [ ]
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`As at June 30, 2015, the last business day of the Registrant’s most recently completed second quarter, the aggregate market
`value of the ordinary shares, £0.05 par value per share of the Registrant held by non-affiliates was approximately $47.3 billion.
`This was computed using the average bid and asked price at the above date.
`
`As at February 12, 2016, the number of outstanding ordinary shares of the Registrant was 601,127,241.
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`THE “SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
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`Statements included herein that are not historical facts are forward-looking statements. Such forward-looking statements
`involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties
`materialize, Shire’s results could be materially adversely affected. The risks and uncertainties include, but are not limited to,
`the following:
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`the proposed combination with Baxalta may not be completed due to a failure to satisfy certain closing conditions,
`including any shareholder or regulatory approvals or the receipt of applicable tax opinions;
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`disruption from the proposed transaction with Baxalta may make it more difficult to conduct business as usual or maintain
`relationships with patients, physicians, employees or suppliers;
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`the combined company may not achieve some or all of the anticipated benefits of Baxalta’s spin-off from Baxter
`International, Inc. (“Baxter”) and the proposed transaction may have an adverse impact on Baxalta’s existing
`arrangements with Baxter, including those related to transition, manufacturing and supply services and tax matters;
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`the failure to achieve the strategic objectives with respect to the proposed combination with Baxalta may adversely affect
`the combined company’s financial condition and results of operations;
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`products and product candidates may not achieve commercial success;
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`product sales from ADDERALL XR and INTUNIV are subject to generic competition;
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`the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third-party payers in a timely
`manner for the combined company’s products may affect future revenues, financial condition and results of operations,
`particularly if there is pressure on pricing of products to treat rare diseases;
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`supply chain or manufacturing disruptions may result in declines in revenue for affected products and commercial traction
`from competitors; regulatory actions associated with product approvals or changes to manufacturing sites, ingredients or
`manufacturing processes could lead to significant delays, an increase in operating costs, lost product sales, an
`interruption of research activities or the delay of new product launches;
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`the successful development of products in various stages of research and development is highly uncertain and requires
`significant expenditures and time, and there is no guarantee that these products will receive regulatory approval;
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`the actions of certain customers could affect the combined company’s ability to sell or market products profitably, and
`fluctuations in buying or distribution patterns by such customers can adversely affect the combined company’s revenues,
`financial condition or results of operations;
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`investigations or enforcement action by regulatory authorities or law enforcement agencies relating to the combined
`company’s activities in the highly regulated markets in which it operates may result in significant legal costs and the
`payment of substantial compensation or fines;
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`adverse outcomes in legal matters and other disputes, including the combined company’s ability to enforce and defend
`patents and other intellectual property rights required for its business, could have a material adverse effect on the
`combined company’s revenues, financial condition or results of operations;
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`Shire is undergoing a corporate reorganization and was the subject of an unsuccessful acquisition proposal and the
`consequent uncertainty could adversely affect the combined company’s ability to attract and/or retain the highly skilled
`personnel needed to meet its strategic objectives;
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`failure to achieve the strategic objectives with respect to Shire’s acquisition of NPS Pharmaceuticals Inc. or Dyax Corp.
`(“Dyax”) may adversely affect the combined company’s financial condition and results of operations;
`
`the combined company will be dependent on information technology and its systems and infrastructure face certain risks,
`including from service disruptions, the loss of sensitive or confidential information, cyber-attacks and other security
`breaches or data leakages that could have a material adverse effect on the combined company’s revenues, financial
`condition or results of operations;
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`the combined company may be unable to retain and hire key personnel and/or maintain its relationships with customers,
`suppliers and other business partners;
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`difficulties in integrating Dyax or Baxalta into Shire may lead to the combined company not being able to realize the
`expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits at the time anticipated
`or at all; and
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`other risks and uncertainties detailed from time to time in Shire’s, Dyax’s or Baxalta’s filings with the Securities and Exchange
`Commission (“SEC”), including those risks outlined in Baxalta’s current Registration Statement on Form S-1, as amended, and
`in “ITEM 1A: Risk Factors” in Shire’s Annual Report on Form 10-K for the year ended December 31, 2015.
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`The following are trademarks either owned or licensed by Shire plc or its subsidiaries, which are the subject of
`trademark registrations in certain territories, or which are owned by third parties as indicated and referred to in this
`Form 10-K:
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`ADDERALL XR® (mixed salts of a single entity amphetamine)
`ADUVANZTM (lisdexamfetamine dimesylate)
`AGRYLIN® (anagrelide hydrochloride)
`APRISO® (trademark of Salix Pharmaceuticals, Ltd. (“Salix”))
`ASACOL® (trademark of Medeva Pharma Suisse AG (used under license by Warner Chilcott Company, LLC (“Warner
`Chilcott”)))
`BERINERT® (trademark of CSL Behring GmbH)
`BERINERT P® (trademark of Aventis Behring GmbH)
`BUCCOLAM® (midazolam hydrochloride oromucosal solution)
`CALCICHEW® (trademark of Takeda Nycomed AS)
`CARBATROL® (carbamazepine extended-release capsules)
`CERDELGA® (trademark of Genzyme Corporation (“Genzyme”))
`CEREZYME® (trademark of Genzyme)
`CINRYZE® (C1 esterase inhibitor [human])
`CLAVERSAL® (trademark of Merckle Recordati)
`COLAZAL® (trademark of Salix Pharmaceuticals, Inc)
`CONCERTA® (trademark of Alza Corporation (“Alza”))
`DAYTRANA® (trademark of Noven Pharmaceutical Inc. (“Noven”))
`DELZICOL® (trademark of Warner Chilcott)
`DERMAGRAFT® (trademark of Organogenesis Inc. (“Organogenesis”))
`ELAPRASE® (idursulfase)
`ELELYSO® (trademark of Pfizer Inc.)
`ELVANSE® (lisdexamfetamine dimesylate)
`ELVANSE ADULT® (lisdexamfetamine dimesylate)
`ELVANSE VUXEN® (lisdexamfetamine dimesylate)
`EPIVIR® (trademark of GlaxoSmithKline (“GSK”))
`ESTRACE® (trademark of Trimel Pharmaceuticals Inc.)
`EQUASYM® (methylphenidate hydrochloride)
`EQUASYM XL® (methylphenidate hydrochloride)
`EXPUTEX® (trademark of Phoenix Labs)
`FABRAZYME® (trademark of Genzyme)
`FIRAZYR® (icatibant)
`FOCALIN XR® (trademark of Novartis AG)
`FOSRENOL® (lanthanum carbonate)
`GATTEX® (teduglutide [rDNA origin])
`HUNTERASETM (trademark of Green Cross Corp.)
`INTUNIV® (guanfacine extended release)
`KALBITOR® (ecallantide)
`KAPVAY® (trademark of Shionogi Pharma, Inc. (“Shionogi”))
`LIALDA® (trademark of Nogra International Limited)
`MEDIKINET® (trademark of Medice Arzneimittel Pütter GmbH & Co. KG (“Medice”))
`MEZAVANT® (trademark of Giuliani International Limited)
`MIMPARA® (cinacalcet HCl)
`MICROTROL® (trademark of Supernus Pharmaceuticals, Inc. (“Supernus”))
`NATPAR® (parathyroid hormone)
`NATPARA® (parathyroid hormone (rDNA))
`PENTASA® (trademark of Ferring B.V. Corp (“Ferring”))
`PLENADREN (hydrocortisone, modified release tablet)
`QUILLIVANT® (trademark of Next Wave Pharmaceuticals, Inc.)
`REMINYL® (galantamine hydrobromide) (United Kingdom ("UK”) and Republic of Ireland) (trademark of Johnson & Johnson
`(“J&J”)), excluding UK and Republic of Ireland)
`REGPARA® (cinacalcet HCl)
`REPLAGAL® (agalsidase alfa)
`RESOLOR® (prucalopride)
`REVESTIVE® (teduglutide)
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`RITALIN LA® (trademark of Novartis AG)
`RUCONEST® (trademark of Pharming Intellectual Property B.V.)
`SALOFALK® (trademark of Dr Falk Pharma)
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`SENSIPAR® (cinacalcet HCl)
`STRATTERA® (trademark of Eli Lilly and Company (“Lilly”))
`TYVENSE® (lisdexamfetamine dimesylate)
`UCERIS® (trademark of Santarus, Inc.)
`VANCOCIN® (trademark of ANI Pharmaceuticals Inc.)
`VENVANSE® (lisdexamfetamine dimesylate)
`VPRIV® (velaglucerase alfa)
`VYVANSE® (lisdexamfetamine dimesylate)
`XAGRID® (anagrelide hydrochloride)
`ZAVESCA® (trademark of Actelion Pharmaceuticals, Ltd.)
`ZEFFIX® (trademark of GSK)
`3TC® (trademark of GSK)
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`SHIRE PLC
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`2015 Form 10-K Annual Report
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`Table of contents
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`PART I
`ITEM 1. BUSINESS
`General
`Strategy
`Business model
`2015 and Recent Highlights
`Financial information about operating segments
`Sales and marketing
`Manufacturing and distribution
`Intellectual property
`Competition
`Government regulation
`Regulatory Developments
`Third party reimbursement and pricing
`Responsibility
`Employees
`Available information
`ITEM 1A. RISK FACTORS
`ITEM 1B. UNRESOLVED STAFF COMMENTS
`ITEM 2. PROPERTIES
`ITEM 3. LEGAL PROCEEDINGS
`ITEM 4. MINE SAFETY DISCLOSURES
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`PART II
`ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
`ISSUER PURCHASES OF EQUITY SECURITIES
`ITEM 6. SELECTED FINANCIAL DATA
`ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
`OPERATIONS
`ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
`ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
`ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
`DISCLOSURE
`ITEM 9A. CONTROLS AND PROCEDURES
`ITEM 9B. OTHER INFORMATION
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`PART III
`ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
`ITEM 11. EXECUTIVE COMPENSATION
`ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
`STOCKHOLDER MATTERS
`ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
`ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
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`PART IV
`ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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`23
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`ITEM 1: Business
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`General
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`PART I
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`Shire plc and its subsidiaries (collectively referred to as either “Shire”, or the “Company”) is fast-becoming a leading biotech
`company, focusing on developing and marketing innovative medicines for patients with rare diseases and other select
`conditions.
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`The Company has grown both organically and through acquisition, completing a series of major transactions that have brought
`therapeutic, geographic and pipeline growth and diversification. The Company will continue to conduct its own research and
`development (“R&D”), focused on rare diseases, as well as evaluate companies, products and pipeline opportunities that offer
`a strategic fit and have the potential to deliver value to all of the Company’s stakeholders: patients, physicians, policy makers,
`payers, investors and employees.
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`Strategy
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`Shire’s purpose is to enable people with life altering conditions to lead better lives.
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`The Company aspires to be a leading global biotech delivering innovative medicines to patients with rare diseases and other
`specialty conditions. This is underpinned by four strategic drivers:
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`Growth:
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` Optimize In-Line assets through commercial excellence
` Advance late-stage pipeline and launch new products
` Accelerate growth through the acquisition of assets in core / adjacent therapeutic areas (“TAs”)
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`Innovation:
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` Invest to develop therapeutic advances for diseases with significant unmet need
` Expand rare diseases expertise through internal research and collaborations with external partners
` Extend the Company’s portfolio to new indications and TAs
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`Efficiency:
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` Operate a lean and agile organization
` Maintain focus on profitability while investing for future growth
` Retain flexibility to reinvest in high-growth opportunities
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`People:
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` Foster and reward a high performance culture
` Attract, develop and retain the best talent
` Live our values
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`Business model
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`In 2013 Shire integrated its operations into a simplified “One Shire” organization. The One Shire model has created a simple
`structure and a focused, efficient organization that is scalable for growth. The core elements of this model have been retained
`through multiple acquisitions since its original implementation.
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`Shire has commercial units that focus exclusively on the commercial execution of its marketed products (the “In-Line” group) in
`the areas of Hereditary Angioedema/Lysomal Storage Diseases (“HAE/LSD”), Neuroscience, Gastrointestinal (“GI”) and
`Internal Medicine, and in Ophthalmics to support the development of Shire’s ophthalmic pipeline candidates. This ensures that
`the Company provides innovative treatments, and services the needs of its customers and patients, as efficiently as possible.
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`Shire has a single R&D organization (the “Pipeline” group), and early stage research is focused primarily on rare diseases.
`This single structure is designed to ensure Shire explores and develops opportunities built upon its core capabilities, priority
`commercial units and TAs, and also seeks to explore related and emerging areas.
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`Growth is also fuelled by the acquisition of new companies, in-licensing and new product development opportunities through
`R&D partnerships. Shire’s global corporate development team searches for new technologies, innovative products and
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`strategic partnerships. The team engages in conversations with scientists and entrepreneurs on a global basis, while
`collaborating with commercial and R&D experts throughout the Company.
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`Shire’s support functions, including Technical Operations, are unified across the business to run as efficiently and effectively
`as possible to support the In-Line and Pipeline activities.
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`Shire leads its business through the Executive Committee, with support from its In-Line Committee, Pipeline Committee and
`Corporate Committee, which comprise senior management from across functions and commercial units to support the In-Line
`products, Pipeline activities and other corporate and group related activity. The Executive Committee is responsible for
`ensuring the appropriate allocation of resources and focused decision making across the enterprise in the best interests of
`Shire’s patients, shareholders and other stakeholders.
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`2015 and Recent Highlights
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`See “Currently marketed products” and “Products under development” below for a full discussion of 2015 product, pipeline and
`business highlights, including:
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`Pipeline development:
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`the launch in the US of NATPARA (parathyroid hormone for injection) as an adjunct to calcium and vitamin D to control
`hypocalcemia in patients with hypoparathyroidism (“HPT”);
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`the announcement of OPUS-3 top-line Phase 3 Trial results for SHP606 (“lifitegrast”), which met primary and key
`secondary endpoints, significantly reducing patient-reported symptoms for Dry Eye Disease (“DED”);
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`the new drug application (“NDA”) filing and US Food and Drug Administration (“FDA”) Priority Review designation for
`lifitegrast for the treatment of signs and symptoms of DED in adults;
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`the re-submission of the NDA for lifitegrast with the FDA in response to the complete response letter (“CRL”) Shire
`received from the FDA on October 16, 2015 and to include the positive data from OPUS-3, with FDA acceptance of
`the Submission and a July 22, 2016 PDUFA date;
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`the FDA fast track designation for CINRYZE (C1 esterase inhibitor [human]) for investigation in the treatment of
`Antibody Mediated Rejection (“AMR”) in patients receiving kidney transplants;
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`the receipt of European Approval for INTUNIV (guanfacine hydrochloride prolonged release tablets) as a non-stimulant
`treatment of Attention Deficit Hyperactivity Disorder (“ADHD”) in children and adolescents 6 to 17 years old for whom
`stimulants are not suitable, not tolerated or have been shown to be ineffective;
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`the announcement of FDA approval of VYVANSE (lisdexamfetamine dimesylate) Capsules (CII) for adults with
`moderate to severe Binge Eating Disorder (“BED”);
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`the reporting of topline results in multiple Phase 2 studies for SHP625 in cholestatic liver disease; and
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`the positive response from European Decentralised Procedure for ELVANSE Adult in adults with ADHD.
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`Geographical expansion:
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`the expansion of Shire’s international reach, with Shire medicines now available in 72 countries around the world and
`a Shire operational presence in 50 countries.
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`Business development:
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`the announcement of the proposed combination with Baxalta, which would create a global leader in rare diseases;
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`the completion on January 22, 2016 of the acquisition of Dyax, expanding and extending Shire’s industry-leading
`Hereditary Angioedema (“HAE”) portfolio;
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`the acquisition of NPS Pharmaceuticals, Inc. (“NPS Pharma”) as a further step in building a leading biotech focused on
`rare diseases;
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`the acquisition of Meritage Pharma, Inc. (“Meritage Pharma”);
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`the announcement of a new research agreement with the Foundation Fighting Blindness;
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`the acquisition of Foresight Biotherapeutics Inc. (“Foresight”), to boost the Ophthalmics portfolio; and
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`the announcement of research collaborations with Cincinnati Children’s Hospital and the University of Pittsburgh.
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`Other developments:
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`the execution of an agreement with Sanquin Blood Supply, the manufacturer of CINRYZE, enabling Shire to attain
`enhanced CINRYZE manufacturing flexibility and capacity;
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`the appointments of Jeffery Poulton, Sara Mathew and Olivier Bohuon to the Board of Directors;
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`the appointment of Bill Mordan as General Counsel and Corporate Secretary;
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`the announcement that David Kappler will step down as Deputy Chairman and Senior Independent Director of the
`Board of Directors, and that William Burns, Non-Executive Director and member of the Remuneration, Nomination and
`Science& Technology Committees, will be appointed Senior Independent Director; and
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`the confirmation from the US Court of Appeals for the Federal Circuit (“CAFC”) that certain patents protecting
`VYVANSE (lisdexamfetamine dimesylate) patents are valid and infringed by several ANDA filers.
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`Financial information about operating segments
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`The Company comprises a single operating and reportable segment. This segment is engaged in the research, development,
`licensing, manufacturing, marketing, distribution and sale of innovative specialist medicines to meet significant unmet patient
`needs. Additional segment information is presented in Note 23 to the Company’s consolidated financial statements contained
`in ITEM 15: Exhibits and Financial Statement Schedules of this Annual Report on Form 10-K.
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`Sales and marketing
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`At December 31, 2015 the Company employed 2,160 (2014: 2,151) sales and marketing staff to service its operations
`throughout the world, including its major markets in North America, Europe, Latin America, and Asia Pacific.
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`Currently marketed products
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`The table below lists the Company’s main marketed products at December 31, 2015 indicating the owner/licensor, disease
`area and the key territories in which Shire markets the product.
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`Products
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`Disease area
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`Owner/licensor
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`Key territories
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`Treatments for Neuroscience
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`VYVANSE/VENVANSE/
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`ADHD and BED
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`Shire
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`US, Europe, Canada and
`Brazil (1)
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`ELVANSE/TYVENSE/ELVANSE
`VUXEN/ADUVANZ
`(lisdexamfetamine dimesylate)
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`ADDERALL XR (mixed salts of a
`single-entity amphetamine)
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`INTUNIV (extended release
`guanfacine)
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`Treatments for GI diseases
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`ADHD
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`ADHD
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`Shire
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`Shire
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`US and Canada
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`US, Europe and Canada
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`LIALDA (mesalamine)/ MEZAVANT
`(mesalazine)
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`Ulcerative Colitis
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`Nogra SpA
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`US, Canada and Europe
`(2,3)
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`PENTASA (mesalamine)
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`Ulcerative Colitis
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`Shire
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`US
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`Treatments for Rare Diseases
`REPLAGAL (agalsidase alfa)
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`Fabry disease
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`ELAPRASE (idursulfase)
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`VPRIV (velaglucerase alfa)
`FIRAZYR (icatibant)
`CINRYZE C1 esterase inhibitor
`[human]
`GATTEX/REVESTIVE
`
`Hunter syndrome
`(Mucopolysaccharidosis Type II,
`MPS II)
`Gaucher disease, Type 1
`HAE
`HAE
`
`Short Bowel Syndrome (“SBS”)
`
`NATPARA/NATPAR
`
`Control of hypocalcemia in
`patients with hypoparathyroidism
`Treatments for diseases in Other therapeutic areas
`FOSRENOL (lanthanum carbonate) Hyperphosphatemia in end stage
`renal disease
`
`(1) Marketed in Brazil as VENVANSE and in the EU as ELVANSE or TYVENSE.
`(2) Marketed by distributors in certain other markets.
`(3) Marketed in the US as LIALDA and in Europe as MEZAVANT XL or MEZAVANT.
`(4) Marketed in Japan under license by Dainippon Sumitomo Pharma Co., Ltd.
`(5) Marketed in Asia Pacific under license by Genzyme.
`(6)Marketed in the US as GATTEX and in Europe and Canada as REVESTIVE.
`(7) Marketed in Japan under license by Bayer Yakuhin Limited (“Bayer”).
`Treatments for Neuroscience
`
`Shire
`
`Shire
`
`Shire
`Shire
`Shire
`
`Shire
`
`Shire
`
`Shire
`
`Europe, Latin America
`and Asia Pacific(4)
`Global(5)
`
`Global
`Global
`US and Europe
`
`US, Europe and Canada(6)
`
` US
`
`US, Europe and Japan(2, 7)
`
`ADHD is a chronic neurobehavioral disorder that manifests as a persistent pattern of inattention and/or hyperactivity-impulsivity
`that is more frequent and severe than is typically observed in individuals at a comparable level of development. Although there
`is no cure for ADHD, there are accepted treatments that have been demonstrated to improve symptoms. Standard treatments
`include educational approaches, psychological therapies that may include behavior modification, and/or medication.
`
`The worldwide prevalence of ADHD is estimated at 5.3% (Am J Psych. 2007). In the US, the prevalence is estimated at
`approximately 12% in the paediatric population aged 3 to 17 years. The diagnosis rate is fairly high with approximately 61% of
`prevalent patients being diagnosed and 66% of these patients being treated with pharmacologic treatment.
`
`In adults the prevalent rates tend to vary widely depending on the sampling scheme and methodology of the study, but the US
`adult prevalence is as high as 10.5% of the population aged 20 plus with less than a third being diagnosed. Of those
`diagnosed, slightly more than half receive pharmacologic treatment.
`
`According to IMS Health National Prescription Audit (“IMS NPA”), a leading global provider of business intelligence for the
`pharmaceutical and healthcare industries, the US ADHD market was valued at approximately $9.6 billion for the twelve months
`ended December 2015; this represents an increase of approximately 8.1% from the twelve months ended December 2014.
`
`10
`
`http://www.sec.gov/Archives/edgar/data/936402/000095010316011313/dp63589_10k.htm
`
`

`

`The current market dynamics in the US present significant challenges as well as opportunities for growth. While the market
`continues to grow in volume, the growth rate is slowing. We expect this trend to continue given the lack of promoted products,
`increased generic entries and lack of product innovation in the near future. The increased genericization of the market will put
`increasing pressure on prices, particularly with multiple generic entrants for ADDERALL XR and CONCERTA. Cost pressures
`are not only driven by the generics but also by increased price sensitivity of customers – physicians may suggest generics
`anticipating cost concerns for their patients, patients are paying more for their healthcare costs every year, and with the current
`economic conditions their sensitivity has increased as well. While there are no major innovative product launches in the near
`future, we expect several new pediatric-friendly forms such as oral suspension, dissolving tablets, sprinkles, and chewables
`that are expected to launch putting more pressure on the pediatric market.
`
`Within the US the overall ADHD market exists in two distinct parts, pediatric and adult, with different needs and market
`dynamics. The pediatric market is led by long-acting therapies, with CONCERTA the lead product followed closely by
`VYVANSE. This market also had a much higher branded share, almost 50%, though generics are growing. The pediatric
`market is growing, though more slowly than the overall market, and zero to 18 represents just under half of the existing overall
`ADHD market volume. The adult market is dominated by generics, with short-acting therapies and long acting therapies
`showing a basic 50/50 split. Growth rates in the adult market are very strong, particularly in the 25 plus age segment.
`
`VYVANSE
`
`VYVANSE is the first pro-drug stimulant for the treatment of ADHD, where the amino acid l-lysine is linked to d-amphetamine.
`VYVANSE is therapeutically inactive until metabolized in the body.
`
`The FDA approved VYVANSE as a once-daily treatment for children aged 6 to 12 with ADHD in February 2007, for adults in
`April 2008 and for adolescents aged 13 to 17 in November 2010. In addition VYVANSE became the first drug in its class to be
`approved by the FDA for maintenance treatment, having been approved both as a maintenance treatment in adults with ADHD
`in January 2012, and as a maintenance treatment in pediatrics and adolescents aged 6 to 17 in April 2013. VYVANSE is
`available in the US in seven dosage strengths: 10mg, 20mg, 30mg, 40mg, 50mg, 60mg and 70mg.
`
`VYVANSE was approved by Health Canada for the treatment of ADHD in pediatric patients aged 6 to 12 in February 2009, for
`adolescents and adults in November 2010, and was launched in Canada in January 2010 for pediatric patients and January
`2011 for adolescents and adults.
`
`VENVANSE was granted marketing authorization by ANVISA, the Brazilian health authority, for the treatment of ADHD in
`children aged 6 to12 and launched in May 2011 and launched for adolescents and adults in November 2013.
`
`ELVANSE/TYVENSE received a positive outcome from the European Decentralised Procedure in December 2012. ELVANSE
`is indicated as part of a comprehensive treatment program for ADHD in children 6 years of age and over when response to
`previous methylphenidate treatment is considered clinically inadequate. The product has been approved and launched in eight
`countries through the European Decentralised Procedure (UK, Germany, Sweden, Spain, Norway, Finland, Denmark and
`Ireland). The product has also been approved and launched in Switzerland.
`
`ELVANSE ADULT/ELVANSE VUXEN/ADUVANZ received a positive outcome from the European Decentralised Procedure in
`January 2015. ELVANSE ADULT is indicated as part of a comprehensive treatment programme for ADHD in adults taking into
`consideration the profile of the patient, including a thorough assessment of the severity and chronicity of the patient’s
`symptoms, the potential for abuse, misuse or diversion and clinical response to any previous pharmacotherapies for the
`treatment of ADHD. The product has been approved and launched in the UK, Sweden and Denmark. The product has also
`been approved and launched in Switzerland.
`
`VYVANSE was also approved in the US in January 2015 as the first and only treatment of moderate to severe BED in adults.
`BED is defined as recurring episodes (more than once weekly), for at least 3 months, of consuming a large amount of food in a
`short time, compared with others. Patients feel a lack of control during a binge eating episode and marked distress over their
`eating. They typically experience shame and guilt, among other symptoms, about their binge eating and may conceal the
`symptoms. Unlike people with other eating disorders, adults with BED don’t routinely try to “undo” their excessive eating with
`extreme actions like purging or over-exercising. BED is the most common eating disorder in the US, affecting an estimated 2.8
`million adults1, according to a national survey. BED occurs in both men and women and is more common than anorexia and
`bulimia combined. BED can occur in normal, overweight, and obese adults, and is seen across racial and ethnic groups.
`
`Further information about litigation proceedings regarding VYVANSE can be found in ITEM 3: Legal Proceedings and Note 17,
`“Commitments and contingencies, Legal and other proceedings” to t