Recently, Shire plc (SHPGY) announced that it has received approval for a manufacturing facility of Vpriv from the European Medicines Agency’s (“EMA”) Committee for Medicinal Products for Human Use. The approval of the Lexington, Massachusetts facility will significantly increase the manufacturing capacity of Vpriv which in turn will enable Shire to meet the huge demand for product.

Shire has invested more than $200 million on maintaining product supply, and has also received a Leadership in Energy and Environmental Design (“LEED”) Certification for the Lexington facility. A decision by the European Commission (“EC”) is expected shortly.

Shire now has two manufacturing units approved by the EMA for the production of Vpriv – one in Alewife, Cambridge and the other in Lexington, Massachusetts. The approval of the Lexington facility provides Shire with the scope to increase production of Replagal. The new unit has substantially augmented the bioreactor capacity to 8000L from 1000L.

Vpriv is approved in the US for the long-term treatment of type 1 Gaucher disease in pediatric and adult patients since February 2010. EU approval for the long-term treatment of type 1 Gaucher disease came in August 2010. Meanwhile, Replagal, though not approved in the US, is approved for the long-term treatment of patients with a confirmed diagnosis of Fabry disease in other countries.

Our Take

In 2011, Vpriv and Replagal sales increased 79% ($256.2 million) and 35% ($475.2 million), respectively. While Vpriv benefited from switches from patients being treated with Sanofi’s (SNY) Cerezyme, Replagal benefited from switches from Sanofi’s Fabrazyme.

Currently, Shire’s products have established a solid position in the market and it will be challenging for Sanofi to recapture lost market share.

Our Recommendation

We currently have a Neutral recommendation on Shire. The stock carries a Zacks #2 Rank (buy rating) in the short run.

Shire’s recent collaborations and acquisitions (including Movetis and Advanced BioHealing Inc.) have added immense potential to its pipeline. With several of its products already facing or likely to face generic competition, the company’s pipeline needs to deliver.

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