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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended March 31, 2004

Commission File Number: 0-29630

SHIRE PHARMACEUTICALS GROUP PLC
(Exact name of registrant as specified in its charter)

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, and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]           No [  ]

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [X]           No [  ]

As of April 30, 2004, the number of outstanding ordinary shares of the Registrant was 479,994,787.

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THE “SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

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 affected. The risks and uncertainties include, but are not limited to, risks associated with the inherent uncertainty of pharmaceutical research, product development, manufacturing and commercialization, the impact of competitive products, including, but not limited to, the impact of competitive products on Shire’s Attention Deficit Hyperactivity Disorder (ADHD) franchise, patents, including but not limited to, legal challenges relating to Shire’s ADHD franchise, government regulation and approval, including but not limited to the expected product approval dates of lanthanum carbonate (FOSRENOL^®), methylphenidate (METHYPATCH^®), anagrelide hydrochloride (XAGRID^®), carbamazepine (BIPOTROL^®) mesalamine (PENTASA^® 500mg) and the adult indication for extended release mixed amphetamine salts (ADDERALL XR^®), the implementation of Shire’s internal reorganization and other risks and uncertainties detailed from time to time in Shire’s filings, including the Annual Report filed on Form 10-K, for the year ended December 31, 2003 by Shire, with the Securities and Exchange Commission.

The following are trademarks of Shire Pharmaceuticals Group plc or its subsidiaries, which are the subject of trademark registrations in certain countries.

ADDERALL XR^® (mixed amphetamine salts)
AGRYLIN^® (anagrelide hydrochloride)
AMATINE^® (midodrine hydrochloride)
BIPOTROL ^® (carbamazepine)
CALCICHEW^® (calcium carbonate)
CARBATROL^® (carbamazepine)
FOSRENOL^® (lanthanum carbonate)
FLUVIRAL^® S/F (split virion influenza vaccine)
PROAMATINE^® (midodrine hydrochloride)
TROXATYL^® (troxacitabine)
XAGRID^® (anagrelide hydrochloride)

The following are trademarks of third parties.

3TC^® (trademark of GlaxoSmithKline (GSK))
COMBIVIR^® (trademark of GSK)
EPIVIR^® (trademark of GSK)
HEPTOVIR^® (trademark of GSK)
METHYPATCH^® (trademark of Noven)
PENTASA^® (trademark of Ferring AS)
REMINYL^® (trademark of Johnson & Johnson)
TRIZIVIR^® (trademark of GSK)
ZEFFIX^® (trademark of GSK)

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

SHIRE PHARMACEUTICALS GROUP PLC
CONDENSED CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SHIRE PHARMACEUTICALS GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SHIRE PHARMACEUTICALS GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)
(Unaudited)

The components of accumulated other comprehensive income/(loss) as at March 31, 2004 and December 31, 2003, are as follows:

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SHIRE PHARMACEUTICALS GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SHIRE PHARMACEUTICALS GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

a) Description of Operations

Shire Pharmaceuticals Group plc (Shire) and its subsidiaries (collectively referred to as the Company or the Group) is a global pharmaceutical company with a strategic focus on meeting the needs of the specialist physician. The Company has a particular interest in innovative therapies that are prescribed by specialist doctors as opposed to primary care physicians.

The Company is focused on the development of late stage projects and marketed products in the areas of central nervous system (CNS), gastrointestinal (GI) and renal.

Geographically, the Company has operations in the world’s key pharmaceutical markets, namely North America and Europe. The Company’s business is organized across five operating segments: US, International (covering territories outside of the US), Research & Development (R&D), Biologics and Corporate. Revenues are derived primarily from three sources: sales of products by the Company’s own sales and marketing operations, royalties (where Shire has out-licensed products to third parties) and licensing and development fees.

Following a strategic review in 2003, the Company announced its new business model in July 2003. Shire will search, develop and market but will not invent. The Company will seek to acquire products with substantive patent protection rather than just three years’ Hatch-Waxman exclusivity. The Company will also focus its in-licensing and merger and acquisition (M&A) efforts on the US market, and obtain European rights whenever possible. As part of this strategy the Company has developed a plan to achieve closer interaction between development, marketing and sales.

The strategic review thoroughly evaluated the Group’s R&D pipeline and refocused resources on a number of projects, of which two are currently in Phase III and two in Phase II of development. This approach aims to deliver the combined benefit of increased returns and lower risks. Whilst Shire has refocused its R&D efforts to concentrate on areas where it has a commercial presence, it will be flexible in adding new therapeutic areas if appropriate product acquisition opportunities arise.

As a consequence of the change in strategy, the Company has announced:

• The exit from early stage therapeutic research (Lead Optimization), which was completed in the third quarter of 2003;
  
  
• A North American site consolidation which commenced in 2004; and
  
  
• The agreement to sell the Company’s Biologics (vaccines) business to ID Biomedical Corporation (IDB). The agreement is subject to various conditions including, Canadian anti-trust approval and consents under various Canadian Government contracts.

During the three months to March 31, 2004, the Company has advanced its plans to reduce the number of North American sites from fourteen to four, including the opening of a new US headquarters office in Wayne, Pennsylvania. The Company will close its sites in Newport, Kentucky and Rockville, Maryland. Shire’s world headquarters will continue to be located in Basingstoke, UK. There are currently elements of the plan that need to be finalized and these may impact the total estimated costs of the reorganization. The current estimated cost of $50 to $60million is shown in more detail in Note 9.

There are inherent risks associated with any significant organizational change, including the possibility of disruption to the Company's business or the loss of key personnel. Although, a project team has been set up to actively manage the process and the associated risks, delays to R&D projects, failure to attain sales targets or other disruption to the business could occur as a result of the reorganization.

The Company’s principal source of revenues include:

• in the US, ADDERALL XR for the treatment of ADHD, AGRYLIN for the treatment of elevated blood platelets, PENTASA for the treatment of ulcerative colitis and CARBATROL for the treatment of epilepsy. In addition, the Company receives royalties on sales of REMINYL for the treatment of alzheimer’s disease, marketed by Janssen Pharmaceutica NV (Janssen), and on EPIVIR, COMBIVIR and TRIZIVIR for the treatment of HIV/AIDS, marketed by GSK;
  

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• in the UK and the Republic of Ireland, the CALCICHEW range, used primarily as adjuncts in the treatment of osteoporosis, and REMINYL, which was co-promoted with Janssen-Cilag until March 31, 2004. On March 31, 2004, the Company acquired from Janssen the exclusive commercialization rights to REMINYL in the UK and Ireland;
  
  
• in Canada, 3TC for the treatment of HIV/AIDS, COMBIVIR and HEPTOVIR for the treatment of hepatitis (all marketed in partnership with GSK), AMATINE for the treatment of symptomatic orthostatic hypotension and FLUVIRAL S/F, a vaccine for the prevention of influenza. FLUVIRAL forms part of the vaccines business and will cease to be part of Shire’s product portfolio following its anticipated disposal to IDB.
  
  
• in the Rest of the World, royalties on the sales of ZEFFIX for the treatment of hepatitis B, marketed by GSK, and royalties on sales of REMINYL, marketed by Johnson & Johnson.
  

The Company has a number of projects in the later stages of development and in registration for marketing approval, including:

• FOSRENOL for the treatment of high blood phosphate levels associated with end-stage renal disease. The Company submitted the first regulatory submission for FOSRENOL under the European Mutual Recognition procedure on March 13, 2001, and a New Drug Application with the US Food and Drug Administration (FDA) on April 30, 2002. The Company received an approvable letter from the FDA, as announced on March 3, 2003, and received its first European approval from Reference Member State Sweden, on March 19, 2004. The next step by the FDA for FOSRENOL is anticipated by mid-year 2004;
  
  
• XAGRID (trade name of AGRYLIN in the EU) for the treatment of elevated blood platelets. On July 25, 2003, the Company received a positive opinion from the European Committee for Proprietary Medicinal Products (CPMP) for XAGRID. An extended review process is underway within the CPMP in considering the issuance of licenses under the Orphan Drug designation. The next anticipated step of the CPMP on this issue is mid-year 2004;
  
  
• Adult indication for ADDERALL XR. The Company received an approvable letter from the FDA on October 20, 2003, for the treatment of adult ADHD. Responses have been filed to the questions raised in the approvable letter and the next action date by the FDA on this response is expected mid-year 2004;
  
  
• METHYPATCH, a transdermal delivery system for the once daily treatment of ADHD. Shire and Noven are to undertake further clinical investigations to assist the FDA in addressing the questions raised in their ‘Not Approvable’ letter issued on April 28, 2003;
  
  
• BIPOTROL for bipolar disorder. In February 2004 Shire filed a New Drug Application with the US FDA for this indication;
  
  
• PENTASA 500mg for the treatment of ulcerative colitis. In March 2004 Shire filed a New Drug Application with the FDA for this indication;
  
  
• SPD503 (guanfacine) for ADHD, which is in Phase III clinical trials; and
  
  
• SPD476 for ulcerative colitis, which is in Phase III clinical trials.
  

b) Basis of Presentation

These interim financial statements, which include the operations of the Company, and the financial information included in this Form 10-Q, are unaudited. They have been prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP) and Securities and Exchange Commission regulations for interim reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. However, such information includes all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary to fairly state the results of the interim periods. Interim results are not necessarily indicative of results to be expected for the full year.

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The December 31, 2003 balance sheet was derived from audited financial statements but does not include all disclosures required by US GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading.

These interim financial statements should be read in conjunction with the Company’s consolidated balance sheets as of December 31, 2003 and 2002, and the related consolidated statements of operations, cash flows and changes in shareholders’ equity for each of the three years in the period ended December 31, 2003.

c) Employee stock plans

The Company accounts for its stock options using the intrinsic-value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB No. 25). Accordingly, compensation cost of stock options is measured as the excess, if any, of the quoted market price of Shire’s stock at the measurement date over the option exercise price and is charged to operations over the vesting period. For plans where the measurement date occurs after the grant date, referred to as variable plans, compensation cost is re-measured on the basis of the current market value of Shire stock at the end of each reporting period. Shire recognizes compensation expense for variable plans with performance conditions if achievement of those conditions becomes probable. As required by SFAS No. 123, “Accounting for Stock Based on Compensation” (SFAS No. 123), the Company has included in these financial statements the required pro forma disclosures as if the fair-value method of accounting had been applied.

At March 31, 2004, the Company had seven stock-based employee compensation plans, which are described more fully in the Company’s 2003 Form 10-K.

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation.

In December 2003, the Financial Accounting Standards Board (FASB) issued a revision to FASB Interpretation No. 46 “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51” (FIN 46R or the Interpretation). FIN 46R clarifies the application of Accounting Research Bulletin No. 51 “Consolidated Financial Statements” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. FIN 46R requires the consolidation of these entities, known as variable interest entities, by the primary beneficiary of the entity. The primary beneficiary is the entity, if any, that will absorb a majority of the entity’s expected losses or receive a majority of the entity’s expected residual returns, or both.

Among other changes, FIN 46R (a) clarified some requirements of the original FIN 46 issued in January 2003, (b) eased some implementation problems and (c) added new exceptions. FIN 46R deferred the effective date of the Interpretation for public companies to the end of the first reporting period that ends after March 15, 2004 except that all public companies must, at a minimum, apply the provisions of the Interpretation to all entities that were previously considered

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“special purpose entities” under the FASB literature prior to the issuance of FIN 46R by the end of the first reporting period ending after December 15, 2003. The adoption of FIN 46R had no impact on the Company.

e) New Accounting Pronouncements

In March 2004, the Emerging Issues Task Force (EITF) reached a consensus on Issue 03-01, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” (EITF 03-01 or the Issue). EITF 03-01 is applicable to (a) debt and equity securities within the scope of Statement of Financial Accounting Standards (SFAS) No. 115, (b) debt and equity securities within the scope of SFAS No. 124 and that are held by an investor that reports a performance indicator, and (c) equity securities not within the scope of SFAS No. 115 and not accounted for under the Accounting Principles Board Opinion 18's equity method (e.g., cost method investments). EITF 03-01 provides a step model to determine whether an investment is impaired and if an impairment is other-than-temporary. In addition, it requires that investors provide certain disclosures for cost method investments and, if applicable, other information related specifically to cost method investments, such as the aggregate carrying amount of cost method investments, the aggregate amount of cost method investments that the investor did not evaluate for impairment because an impairment indicator was not present, and the situations under which the fair value of a cost method investment is not estimated. The disclosures relating to cost method investments should not be aggregated with other types of investments. The EITF 03-01 impairment model shall be applied prospectively to all current and future investments within the scope of the Issue, effective in reporting periods beginning after June 15, 2004. The disclosure requirements are effective for annual periods for fiscal years ending after June 15, 2004.

2. Analysis of revenue, operating income and reportable segments

The Company has disclosed segment information for the individual reporting segments of the business, based on the way in which the business is managed and controlled. The Company’s principal reporting segments are by operational function, each being managed and monitored separately and each serving different markets. The Company evaluates performance based on operating income. The Company does not have inter-segment transactions.

The US segment represents Shire’s commercial operations in the United States and the International segment represents the commercial operations in the Rest of the World. The Biologics segment represents the vaccine operations in Canada and the research and development center in the United States. The R&D segment represents all research and development costs incurred by the Company throughout the world. Corporate represents the royalty business that is managed at the corporate office and certain costs that are managed at the corporate office and not allocated to the other segments.

(1) Depreciation of manufacturing plants is included within cost of product sales. Depreciation and amortization relating to R&D assets are included within US and International segments.

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(2) Total assets and long-lived assets in the Biologics segment relate to the research and development center in the US.

(1) Included within the selling, general and administrative costs for the Corporate segment for the three months to March 31, 2003 is $7.2 million in respect of the former Chief Executive’s departure.

(2) Depreciation of manufacturing plants is included within cost of product sales. Depreciation and amortization relating to R&D assets are included within US and International segments.

(3) Total assets and long-lived assets in the Biologics segment relate to the research and development center in the US.

3. Earnings per share

Basic earnings per share is