The following discussion should be read in conjunction with Shire plc and its subsidiaries' (collectively "Shire" or the "Company") unaudited consolidated financial statements and related notes appearing elsewhere in this report.

Overview

Shire's strategic goal is to become the leading specialty biopharmaceutical company that focuses on meeting the needs of the specialist physician. Shire focuses its business on attention deficit and hyperactivity disorder ("ADHD"), human genetic therapies ("HGT") and gastrointestinal ("GI") diseases as well as opportunities in other therapeutic areas to the extent they arise through acquisitions. Shire's in-licensing, merger and acquisition efforts are focused on products in specialist markets with strong intellectual property protection and global rights. Shire believes that a carefully selected and balanced portfolio of products with strategically aligned and relatively small-scale sales forces will deliver strong results.

Recent developments

VYVANSE - for the treatment of ADHD

Following a review of governing statutory and regulatory standards and public comments, the US Food and Drug Administration ("FDA") has affirmed its prior decision to grant five-year New Chemical Entity ("NCE") exclusivity to lisdexamfetamine dimesylate. The five-year exclusivity period for VYVANSE expires on February 23, 2012. As a consequence of this decision, the FDA appropriately refused to file the Abbreviated New Drug Application submitted by Actavis Elizabeth, LLC for generic lisdexamfetamine dimesylate in January 2009. VYVANSE is covered by US patents which remain in effect until June 29, 2023.

REPLAGAL - for the treatment of Fabry disease

On October 21, 2009 Shire announced plans to file a Biologics License Application with the FDA for REPLAGAL, its enzyme replacement therapy for Fabry disease, by the end of the year. The Company also announced that a treatment protocol for REPLAGAL, filed at the request of the FDA, has been approved, and that Shire will support emergency Investigational New Drug ("IND") requests, in view of the announced supply restriction of the only currently marketed treatment for Fabry disease in the US.

Velaglucerase alfa - for the treatment of Gaucher Disease

On September 1, 2009 Shire reported that it had completed the submission of a New Drug Application ("NDA") for velaglucerase alfa, its enzyme replacement therapy in development for the treatment of Type 1 Gaucher disease. On November 4, 2009 Shire announced that the FDA has granted Priority Review of this application, and issued an action date of February 28, 2010.

Amicus Therapeutics, Inc. ("Amicus") collaboration for the development of pharmacological chaperones

On November 7, 2007 Shire licensed from Amicus the rights to three pharmacological chaperone compounds in markets outside of the US: AMIGAL (HGT-3310) for Fabry disease, PLICERA (HGT-3410) for Gaucher Disease and HGT-3510 (formerly referred to as AT2220) for Pompe disease which were in clinical development. On October 29, 2009, Shire and Amicus have mutually agreed to terminate the collaboration and to return all rights for the three products to Amicus.

Alba Therapeutics Corporation ("Alba") collaboration for the development of SPD 550 for celiac disease

On October 16, 2009 and following review of Phase 2 data, Shire informed Alba of its intent to terminate the collaboration. Effective November 15, 2009 Shire will return to Alba all rights to SPD 550, also known as AT-1001. In December 2007 Shire had acquired rights to SPD 550 in markets outside of the US and Japan.

Significant events in the three months to September 30, 2009

INTUNIV - for the treatment of ADHD in children and adolescents in the US.

On September 3, 2009 Shire announced that it received approval from the FDA for INTUNIV Extended Release Tablets for the treatment of ADHD in children and adolescents aged 6 to 17 years. INTUNIV, a once-daily non-scheduled formulation of guanfacine, is the first selective alpha-2A adrenergic receptor agonist approved for the treatment of ADHD.

Once-daily INTUNIV will be widely available in US pharmacies in November 2009 and will come in four dosage strengths (1 mg, 2 mg, 3 mg, and 4 mg). INTUNIV will be marketed in the US by the existing Shire ADHD sales team of nearly 600 representatives.

Velaglucerase alfa - for the treatment of Gaucher Disease

On July 30, 2009 Shire began the rolling submission with the FDA under Fast Track designation of a New Drug Application ("NDA") for velaglucerase alfa, its enzyme replacement therapy in development for the treatment of Type 1 Gaucher disease. On September 1, 2009 Shire reported that it had completed its NDA submission. On November 4, 2009 Shire announced

that the FDA has granted Priority Review of this application, and issued an action date of February 28, 2010. Velaglucerase alfa is available ahead of its commercial launch in the US via a treatment protocol and elsewhere on a pre-approval basis to 300-600 patients in 2009 and will be available to several hundred more in 2010.

FIRAZYR - for the treatment of hereditary angioedema ("HAE")

In September 2009 Shire initiated a clinical trial to investigate the safety of self-administration of FIRAZYR.

Research Collaboration with Santaris Pharma A/S ("Santaris") on Locked Nucleic Acid ("LNA") Drug Platform

On August 24, 2009 Shire announced that it had entered into a research collaboration with Santaris, to develop its proprietary LNA technology in a range of rare diseases. LNA technology has the benefit of shortened target validation and proof of concept, potentially increasing the speed and lowering the cost of development. As part of the joint research project Santaris will design, develop and deliver pre-clinical LNA oligonucleotides for Shire-selected orphan disease targets, and Shire will have the exclusive right to further develop and commercialize these candidate compounds on a worldwide basis.

FOSRENOL for the treatment of pre-dialysis chronic kidney disease ("CKD") in EU

Shire has received approval through the European Mutual Recognition Procedure for an extension to the current indication for FOSRENOL as a treatment to control hyperphosphataemia in CKD patients who are not on dialysis and with a serum phosphorus level ?1.78mmol/L (5.5mg/dL).

Legal proceedings

On September 23, 2009 the Company received a subpoena from the US Department of Health and Human Services Office of Inspector General in coordination with the US Attorney for the Eastern District of Pennsylvania seeking production of documents related to the sales and marketing of ADDERALL XR, DAYTRANA and VYVANSE. Shire is cooperating and responding to this subpoena.

On October 19, 2009 Teva filed suit in the US District Court for the Southern District of New York against Shire claiming that Shire is in breach of its supply contract for the authorized generic version of ADDERALL XR. Shire has been supplying Teva with authorized generic ADDERALL XR since April 1, 2009. Shire's ability to supply this product, however, is limited by quota restrictions that the US Drug Enforcement Administration places on amphetamine, which is the product's active ingredient. Teva is seeking specific performance and equitable relief. Shire will defend the action.

For further details on these legal proceedings, see ITEM 1, Note 19 (d) vii.

Board Changes

On October 31, 2009 Shire Board announced that Mr David Stout would be joining the Board as a non executive director with effect from October 31, 2009. Mr Stout brings significant pharmaceutical industry experience to the Shire Board, having spent many years at both GSK and prior to that Schering-Plough. Most recently, he was President of Pharmaceutical Operations at GSK. In this role he had responsibility for GSK's pharmaceutical operations in the United States, Europe, Japan and all other International Markets. Mr Stout was also responsible for global manufacturing and global Biologics (vaccines) at GSK.

The Shire Board also announces that Mr David Mott stepped down from the Shire Board on the expiry of his term of office on October 30, 2009.

Research and development

Products in registration as at September 30, 2009

FOSRENOL for the treatment of pre-dialysis CKD in the US Shire is continuing to explore the regulatory pathway required to secure a label extension for FOSRENOL to treat hyperphosphataemia in CKD in the US.

DAYTRANA for ADHD in Canada
Regulatory submissions were filed for approval of the product with Health Canada in November 2007. Review is ongoing.

Velaglucerase alfa for the treatment of Gaucher Disease In July 2009 Shire announced that the results from the first of the three Phase 3 trials of velaglucerase alfa were positive, and achieved statistically significant improvements in the primary endpoint. In September 2009 the Company announced positive results from the final two Phase 3 studies, with both studies reaching all of their primary and secondary efficacy endpoints. In all three studies, most adverse events were mild to moderate in intensity. Most of the drug-related adverse events were reported in association with the velaglucerase alfa infusions, all of which resolved without complications. The development of antibodies to velaglucerase alfa was rare in all three studies, occurring in approximately 1% of patients treated.

On July 30, 2009 Shire began the rolling submission with the FDA under Fast Track designation of a NDA for velaglucerase alfa, its enzyme replacement therapy in development for the treatment of Type 1 Gaucher disease. On November 4, 2009 Shire announced that the FDA has granted Priority Review of this application, and issued an action date of February 28, 2010.

On September 1, 2009 Shire reported that it had completed its NDA submission. Velaglucerase alfa is available ahead of its commercial launch in the US via a treatment protocol and elsewhere on a pre-approval basis. In the EU and other regions, Shire is engaging with national and regional authorities to seek pre-approval access using the fastest mechanisms available in each region. The total number of patients Shire can treat is dependent on the patient weight, as well as the administered dose as recommended by their treating physician; Shire estimates this could translate into a range of 300 to 600 patients globally for uninterrupted treatment starting in September 2009 through the end of the year. Velaglucerase supplies are such that several hundred patients could be added over the course of next year.

Products in clinical development as at September 30, 2009

Phase 3

VYVANSE for ADHD in Europe
Shire plans to submit the regulatory filing for VYVANSE in Europe for the treatment of ADHD in children aged 6 to 17 in 2010.

INTUNIV for use in combination with other ADHD treatments Phase 3 trials in the US are ongoing to support the efficacy and safety of INTUNIV when combined with other approved ADHD treatments.

LIALDA/MEZAVANT for the maintenance of remission in ulcerative colitis in the US Phase 3 trials investigating the use of the product to maintain remission in patients who have ulcerative colitis were initiated in 2006 and are continuing. The product was given this indication on approval in the EU.

LIALDA/MEZAVANT for the treatment of diverticulitis Phase 3 worldwide clinical trials investigating the use of the product for the treatment of diverticulitis were initiated in 2007 and are continuing.

JUVISTA for the improvement of scar appearance Renovo initiated its first pivotal European Phase 3 trial in scar revision in the fourth quarter of 2008 to support the filing of a European regulatory dossier. If the outcome from Renovo's multi centre, EU Phase 3 study is suitably positive, the data will be used to inform the strategy and design of Shire's US development plan and to strengthen the chances of regulatory and commercial success in the US.

FIRAZYR for HAE in the US
Prior to Shire's acquisition, in April 2008 Jerini received a not approvable letter for FIRAZYR for use in the US from the FDA. In December 2008 Jerini met with the FDA to discuss the development of FIRAZYR. It was agreed that an additional clinical study would be required before approval could be considered and that a complete response to the not approvable letter would be filed after completion of this study.

In June 2009 Shire initiated a Phase 3 study in patients with acute attacks of HAE, known as the FAST-3 trial, which is designed to support filing of a NDA for FIRAZYR in the US.

Phase 2

VYVANSE for the treatment of non ADHD indications in adults Shire is conducting Phase 2 pilot clinical trials to assess the efficacy and safety of VYVANSE as adjunctive therapy in depression, for the treatment of negative symptoms and cognitive impairment in schizophrenia, and for the treatment of cognitive impairment in depression.

HGT-1111 / METAZYM
Shire has an ongoing enzyme replacement therapy program for the treatment of metachromatic leukodystrophy ("MLD"), which is a lysosomal storage disorder that results from a deficiency in the enzyme arylsulfatase-A ("ASA"). In June 2008 Shire completed its acquisition from Zymenex of the global rights to a clinical candidate ASA, known as METAZYM (HGT-1111). METAZYM has completed a Phase 1b clinical trial in twelve MLD patients in Europe and an extension to this study is ongoing. The product has been granted orphan drug designation in the US and in the EU. Shire had planned to initiate a Phase 2/3 clinical trial in the fourth quarter of 2009; this timeline is subject to resolution of supply issues at the contract manufacturer and clinical trial design discussions with the FDA.

Phase 1

SPD 535 for the treatment of arteriovenous grafts in hemodialysis patients SPD 535 is in development as a novel molecule with platelet lowering ability and without phosphodiesterase type III inhibition. The initial proof-of-concept program will target prevention of thrombotic complications associated with arteriovenous grafts in hemodialysis patients. Phase 1 development was initiated in the third quarter of 2009.

HGT-2310 - Hunter syndrome with central nervous system symptoms, idursulfase-IT Following the acceptance by the FDA in January 2008 of Shire's IND for idursulfase-IT (HGT-2310 - formerly referred to as ELAPRASE for Hunter syndrome patients with significant central nervous system symptoms) the Company plans to initiate a Phase 1 clinical trial in the fourth quarter of 2009. This product has been granted orphan designation in the US.

Products in pre-clinical development as at September 30, 2009

HGT-1410 for Sanfilippo Syndrome (Mucopolysaccharidosis IIIA) HGT-1410 is in development as an enzyme replacement therapy for the treatment of Sanfilippo Syndrome (Mucopolysaccharidosis IIIA), a lysosomal storage disorder. The product has been granted orphan drug designation in the US and in the EU. Pre-clinical development for this product is continuing.

HGT-2610 for the treatment of Krabbe Disease (Globoid Cell Leukodystrophy) In November 2008 Shire announced that an enzyme replacement therapy was being developed for the treatment of Krabbe Disease, a lysosomal storage disorder. This program is in early development and preclinical studies.

Other pre-clinical development projects
A number of additional projects are underway in the early stages of development for the Specialty Pharmaceutical and HGT businesses. Included are potential programs leveraging CarrierWave technology primarily focused in the areas of pain and ADHD. More data on these latter programs is expected in the first half of 2010.

Development projects abandoned during 2009

During 2009 the Company abandoned the following development projects disclosed within "Research & Development" in its previous Form 10-K and Form 10-Q fillings:

AMIGAL (HGT-3310) for the treatment Fabry disease Amicus met with the FDA and the European Medicines Agency to discuss the AMIGAL development program during 2008 and 2009, and discussions are now complete. Shire has been considering the impact of this feedback on the global development strategy. On October 29, 2009, Shire and Amicus mutually agreed to terminate the collaboration, with all rights returned to Amicus. Shire had rights to AMIGAL in markets outside the US.

PLICERA (HGT-3410) for the treatment of Gaucher Disease During 2009, an additional Phase 2 randomized open-label trial to assess the safety, tolerability and efficacy of PLICERA in naïve patients was ongoing. In September 2009, Amicus announced that preliminary data from this trial did not support advancement of PLICERA into Phase 3. On October 29, 2009, Shire and Amicus mutually agreed to terminate the collaboration, with all rights returned to Amicus. Shire had rights to PLICERA in markets outside the US.

HGT - 3510 for the treatment of Pompe disease In September 2008 Amicus initiated a Phase 2 clinical trial of HGT-3510, an orally administered, small molecule pharmacological chaperone being jointly developed for the treatment of Pompe disease by Shire and Amicus. This trial was placed on clinical hold in February 2009 in response to reports of two serious adverse events that were unexpected and probably related to treatment with HGT-3510. In September 2009 the FDA agreed to convert the trial to a partial clinical hold to allow the initiation of a Phase 1 trial in healthy volunteers. On October 29, 2009, Shire and Amicus mutually agreed to terminate the collaboration, with all rights returned to Amicus. Shire had rights to HGT-3510 in markets outside the US.

Alba collaboration for the development of SPD 550 In December, 2007 Shire acquired rights to SPD 550 in markets outside of the US and Japan. On October 16, 2009 and following review of Phase 2 data, Shire informed Alba of its intention to terminate the collaboration. Effective November 15, 2009 Shire will return to Alba all rights to SPD 550 (larazotide cetate for celiac disease), also known as AT-1001.

DAYTRANA for ADHD in the EU
On March 11, 2009 Shire withdrew the European Marketing Authorization Application ("MAA") for DAYTRANA for the treatment of ADHD. The withdrawal of the European MAA does not impact Shire's commitment to DAYTRANA in the US where the product has been used as a pediatric treatment for ADHD since 2006.

Results of operations for the three months to September 30, 2009 and 2008

Total revenues

The following table provides an analysis of the Company's total revenues by source:

                    3 months to        3 months to
                  September 30,      September 30,
                           2009               2008       change
                            $'M                $'M            %
Product sales             602.5              712.5          -15
Royalties                  60.3               60.8           -1
Other revenues              4.2                5.3          -21
Total                     667.0              778.6          -14

Product sales

The following table provides an analysis of the Company's key product sales:

                                                  3 months to        3 months to
                                                September 30,      September 30,       Product sales       US prescription
                                                         2009               2008              growth                growth
                                                          $'M                $'M                   %                     %
Specialty Pharmaceuticals
ADHD
VYVANSE                                                 129.0               96.0                  34                    57
ADDERALL XR                                              70.9              268.7                 -74                   -59
DAYTRANA                                                 17.4               18.1                  -4                   -12
EQUASYM                                                   9.2                  -                 n/a                   n/a

GI
PENTASA                                                  51.3               49.2                   4                    -3
LIALDA / MEZAVANT                                        65.4               40.4                  62                    34

General Products
FOSRENOL                                                 47.7               43.0                  11                    -3
CALCICHEW                                                12.4               13.3                  -7                   n/a
CARBATROL                                                20.8               21.6                  -4                    -4
REMINYL/REMINYL XL                                       10.5                9.6                   9                   n/a
XAGRID                                                   21.5               19.4                  11                   n/a
Other product sales                                       5.4               10.2                 -47
                                                        461.5              589.5                 -22
Human Genetic Therapies
ELAPRASE                                                 90.9               78.2                  16                   n/a
REPLAGAL                                                 48.3               44.6                   8                   n/a
FIRAZYR                                                   1.8                0.2                 n/a                   n/a
                                                        141.0              123.0                  15
Total product sales                                     602.5              712.5                 -15

The following discussion includes references to prescription and market share data for the Company's key products. The source of this data is IMS Health, September 2009. IMS Health is a leading global provider of business intelligence for the pharmaceutical and healthcare industries.

US ADHD market share

Shire's share of the total US ADHD market for the three months to September 30, 2009 was 22% (2008: 33%). Shire continues to have the leading portfolio of branded products in the US ADHD market.

VYVANSE - ADHD

Product sales of VYVANSE for the three months to September 30, 2009 increased by 34% to $129.0 million (2008: $96.0 million), with VYVANSE's average share of the US ADHD market for the three months to September 30, 2009 increasing to 13% (2008: 9%). Product sales growth was driven by a 57% increase in US prescription demand in the three months to September 30, 2009 over the same period in 2008 and 10% growth in the US ADHD market. Product sales growth was less than prescription growth due to the stocking benefits from new dosage strengths of VYVANSE in the third quarter of 2008.

ADDERALL XR - ADHD

Product sales of ADDERALL XR for the three months to September 30, 2009 were $70.9 million, a decrease of 74% (2008: $268.7 million), following the launch by Teva in April 2009 of its authorized generic version of ADDERALL XR. The launch of the authorized generic version led to a 59% decline in ADDERALL XR US prescription demand and higher US sales deductions in the third quarter of 2009 compared to the same period in 2008.

Sales deductions represented 73% of branded ADDERALL XR gross sales in the third quarter of 2009 compared to 26% in the same period in 2008, following higher Medicaid and Managed Care rebates subsequent to authorized generic launch. These factors more than offset the positive impacts of price increases taken since the third quarter of 2008, and the inclusion in product sales of shipments of authorized generic ADDERALL XR to Teva and Impax in the third quarter of 2009.

As outlined in ITEM 1, Note 15, and the Critical Accounting Estimates section of this ITEM 2, there is considerable uncertainty as to how shipments of authorized generic ADDERALL XR to Teva and Impax should be included in the Medicaid rebate calculation pursuant to the DRA, and as a result a range of reasonably possible rebate amounts are calculable under the Medicaid rebate legislation. For the three months to September 30, 2009 the Company's management has recorded an accrual based on its current best estimate of the rebate payable. That current best estimate is the amount that could be paid by the Company were the CMS to employ an alternative interpretation of the DRA (notwithstanding the fact that, following payment, either the Company or CMS would have the right to challenge the amount paid, and that the result of any such challenge could affect whether or not the estimated accrued rebate amount ultimately reflects the Company's actual obligation). In future periods the Company's management may need to revise its current best estimate of the amount of Medicaid rebate that could be paid by the Company, which could significantly increase or decrease the sales of ADDERALL XR recorded in the period of any such change of estimate.

DAYTRANA - ADHD

Product sales of DAYTRANA for the three months to September 30, 2009 decreased by 4% to $17.4 million (2008: $18.1 million). Product sales declined due to a 12% reduction in US prescription demand, resulting in a decline in DAYTRANA's average share of the US ADHD market to 1% (2008: 2%), although these declines were partially offset by price increases taken since the third quarter of 2008.

EQUASYM - ADHD

Following the acquisition of EQUASYM from UCB Pharma Limited ("UCB") on March 31, 2009 the Company has recorded product sales of EQUASYM for the three months to September 30, 2009 of $9.2 million (2008: $nil).

US oral mesalamine market share

Shire's average market share of the US oral mesalamine market rose to 33% for the three months to September 30, 2009 (2008: 29%).

LIALDA/MEZAVANT - Ulcerative colitis

Product sales of LIALDA/MEZAVANT for the three months to September 30, 2009 increased by 62% to $65.4 million (2008: $40.4 million), with LIALDA's average share of the US oral mesalamine market increasing to 17% (2008: 13%). Product sales growth was driven by a 34% increase in US prescription demand and price increases.

By September 30, 2009 MEZAVANT was available in eight countries outside the US, and further launches are planned in other countries throughout 2009 and 2010, subject to the successful conclusion of pricing and reimbursement negotiations.

PENTASA - Ulcerative colitis

Product sales of PENTASA for the three months to September 30, 2009 were $51.3 million, an increase of 4% compared to the same period in 2008 (2008: $49.2 million), with PENTASA's average share of the US oral mesalamine market falling by 1% to 16% (2008: 17%). Sales grew despite a 3% decrease in prescriptions primarily due to the impact of price increases.

FOSRENOL - Hyperphosphatemia

Product sales of FOSRENOL for the three months to September 30, 2009 were up 11% to $47.7 million (2008: $43.0 million). Expressed in transaction currencies sales were up 14%. In markets outside the US FOSRENOL sales increased as the product entered new countries, and continued to grow in countries entered in the last two years. In the US, FOSRENOL's average share of the phosphate binder market remained constant at 8% (2008: 8%).

. . .