For the year to December 31, 2007 cost of sales included a charge of US$5.3 million for share based compensation (2006: US$2.0 million) which included a US$2.1 million cumulative catch up charge (2006: US$nil) in respect of the 2005 option awards, for further information see SG&A below.
Research and development (R&D)
R&D expenditure increased to US$775.2 million for the year to December 31, 2007 (36% of product sales), up from US$295.8 million in the year to December 31, 2006 (19% of product sales).
The increase in R&D expenditure during the year to December 31, 2007 primarily relates to the following:
(i) a non-cash charge of US$100.0 million recognised on the effective settlement of Shire's pre-existing relationship with New River Pharmaceuticals Inc. ("New River"). This charge represents the write-off of capitalised up-front and milestone payments made by Shire prior to the acquisition of New River. This charge is presented within R&D as at the time of the New River acquisition VYVANSE, although approved by the FDA, had not yet received the final scheduling classification from the Drug Enforcement Agency ("DEA") and was therefore not available for commercial sale. Further details in respect of this charge are included in Note 3 of the Financial Statements; and
(ii) an intangible asset impairment charge for the year to December 31,
2007 of US$256.4 mi
|SOURCE Shire plc|
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