content: FORM 10-Q
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934
                         For the Quarter Ended June 30, 2002
  
  
                           Commission File Number: 0-29630
  
                           SHIRE PHARMACEUTICALS GROUP PLC
               (Exact name of registrant as specified in its charter)
  
  
                      England and Wales                           98-0359573
                (State or other jurisdiction                   (I.R.S. Employer
              of incorporation or organization)              Identification No.)
  
      Hampshire International Business Park, Chineham,
               Basingstoke, Hampshire, England                     RG24 8EP
          (Address of principal executive offices)                (Zip Code)
  
                                   44 1256 894 000
                (Registrant's telephone number, including area code)
  
  
  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 the number of shares outstanding of each of the issuer's classes of
  Common Stock, as of the latest practical date.
  
              Class                         Outstanding at August 6, 2002
  
  Common Stock: Ordinary Shares                      483,355,570
  
  
  
  <PAGE>
  
  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 and
  commercialization, patents, government regulation and approval, including but
  not limited to the expected product approval date of lanthanum carbonate
  (FOSRENOL(TM)/FOZNOL(TM)), the impact of competitive products, including but not
  limited to the impact of same on Shire's ADHD franchise, and other risks and
  uncertainties detailed from time to time in our filings, including the Annual
  Report filed on Form 10-K by Shire with the Securities and Exchange Commission.
  
  
  
  
  
  
  
  
  <PAGE>
  
  
  
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  Financial Statements
  
  <TABLE>
  <CAPTION>
  
                           SHIRE PHARMACEUTICALS GROUP PLC
                             CONSOLIDATED BALANCE SHEETS
           (In thousands of U.S. dollars, except share and per share data)
  
                                                                                       (Unaudited)
                                                                                          June 30,          December 31,
                                                                                              2002                  2001
  ASSETS                                                                               -----------           -----------
  Current assets:
  <S>                                                                                      <C>                   <C>
  Cash and cash equivalents                                                                714,523               118,040
  Marketable securities and other current asset investments                                225,890               723,911
  Accounts receivable, net                                                                 144,711               193,913
  Inventories, net                                                                          57,791                46,690
  Deferred tax asset                                                                        26,811                19,430
  Prepaid expenses and other current assets                                                 36,746                38,571
                                                                                      ------------          ------------
  Total current assets                                                                   1,206,472             1,140,555
  
  Investments                                                                               72,533                68,743
  Property, plant and equipment, net                                                       117,662               113,347
  Intangible assets, net                                                                   567,808               549,044
  Deferred tax asset                                                                         9,926                12,874
  Other assets                                                                              25,599                26,168
                                                                                      ------------          ------------
  Total assets                                                                           2,000,000             1,910,731
                                                                                      ------------          ------------
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
  Current instalments of long-term debt                                                      2,270                 4,325
  Accounts and notes payable                                                               150,631               167,152
  Unearned income                                                                                -                17,409
  Other current liabilities                                                                 11,422                42,730
                                                                                      ------------          ------------
  Total current liabilities                                                                164,323               231,616
  Long-term debt, excluding current instalments                                            401,953               402,481
  Other long-term liabilities                                                               12,855                13,645
                                                                                      ------------          ------------
  Total liabilities                                                                        579,131               647,742
                                                                                      ------------          ------------
  Shareholders' equity:
  Common stock, 5p par value: 800,000,000 shares authorized; and
  483,068,965 shares issued and outstanding (2001: 481,817,487)                             39,932                39,861
  Exchangeable shares: 5,881,066 shares issued and outstanding (2001:
  5,978,902)                                                                               272,855               277,386
  Additional paid-in capital                                                             1,023,347             1,014,796
  Accumulated other comprehensive losses                                                  (55,329)              (93,009)
  Accumulated surplus                                                                      140,064                23,955
                                                                                      ------------          ------------
  Total shareholders' equity                                                             1,420,869             1,262,989
                                                                                      ------------          ------------
  Total liabilities and shareholders' equity                                             2,000,000             1,910,731
                                                                                      ------------          ------------
  The accompanying notes are an integral part of these financial statements.
  
  </TABLE>
  
  <PAGE>
  
  
  
  <TABLE>
  <CAPTION>
  
                           SHIRE PHARMACEUTICALS GROUP PLC
                          CONSOLIDATED STATEMENTS OF INCOME
           (In thousands of U.S. dollars, except share and per share data)
                                     (Unaudited)
  
  
                                                    3 months to      3 months to      6 months to       6 months to
                                                       June 30,         June 30,         June 30,          June 30,
                                                           2002             2001             2002              2001
                                                   ------------     ------------     ------------      ------------
  <S>                                                   <C>              <C>              <C>               <C>
  Product sales                                         212,915          168,577          415,633           320,091
  Licensing and development                                 923              244            1,605             3,286
  Royalties                                              40,512           39,172           80,088            72,063
  Other revenues                                          (212)              471                5               746
                                                   ------------     ------------     ------------      ------------
  Total revenues                                        254,138          208,464          497,331           396,186
  
  Costs and expenses:
  Cost of revenues                                     (31,174)         (26,659)         (57,685)          (55,044)
  Research and development                             (46,802)         (41,827)         (96,531)          (79,511)
  Selling, general and administrative
  (inclusive of stock option compensation
  charge of  $152,000, $232,000, ($150,000)
  and $2,352,000 respectively)                         (98,473)         (75,165)        (192,550)         (144,326)
  Asset impairments and restructuring charges                 -         (85,447)                -          (85,447)
  Merger transaction expenses                                 -         (83,470)                -          (83,470)
  Losses on dispositions of assets                        (116)          (8,098)            (116)           (8,098)
                                                   ------------     ------------     ------------      ------------
  Total operating expenses                            (176,565)        (320,666)        (346,882)         (455,896)
                                                   ------------     ------------     ------------      ------------
  Operating income/(loss)                                77,573        (112,202)          150,449          (59,710)
  
  Interest income                                         4,820            4,471            9,551             9,611
  Interest expense                                      (1,796)          (1,684)          (3,773)           (4,682)
  Other income, net                                         945            2,909            2,830             3,679
                                                   ------------     ------------     ------------      ------------
  Total other income, net                                 3,969            5,696            8,608             8,608
                                                    -----------      -----------      -----------       -----------
  Income/(loss) before income taxes                      81,542        (106,506)          159,057          (51,102)
  
  Income taxes                                         (22,235)         (17,685)         (42,948)          (31,624)
                                                   ------------     ------------     ------------      ------------
  Net income/(loss)                                      59,307        (124,191)          116,109          (82,726)
                                                   ------------     ------------     ------------      ------------
  
  Net income/(loss) per share:
  Basic                                                   11.9c          (25.3c)            23.2c           (16.9c)
  Diluted                                                 11.6c          (25.3c)            22.6c           (16.9c)
  
  Weighted average number of shares:
  Basic                                             500,365,947      489,977,184      500,147,383       489,205,296
  Diluted                                           523,990,414      489,977,184      525,324,877       489,205,296
  
  </TABLE>
  
  
  <PAGE>
  
  
  <TABLE>
  <CAPTION>
  
                           SHIRE PHARMACEUTICALS GROUP PLC
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
                                                                                            6 months to      6 months to
                                                                                               June 30,         June 30,
                                                                                                   2002             2001
  Cash flows from operating activities:                                                 ---------------  ---------------
  <S>                                                                                           <C>             <C>
  Net income/(loss)                                                                             116,109         (82,726)
  Adjustments to reconcile net income/(loss) to net cash provided by operating
  activities:
  Depreciation and amortization                                                                  22,312           22,027
  Stock option compensation                                                                       (150)            2,352
  Tax benefit of stock option compensation charged directly to equity                               689            3,307
  Non cash exchange gains and losses                                                              1,672          (5,031)
  Write-down of long-term investments                                                             2,500           24,937
  Write-down of intangible assets                                                                     -           20,890
  Write-down of net assets of business transferred under contractual arrangements                     -           30,811
  
  Loss on sale of fixed assets                                                                      116            8,098
  Changes in assets and liabilities:
  Decrease in accounts receivable                                                                53,404           17,735
  (Increase)/decrease in inventory                                                              (9,987)            1,671
  (Increase)/decrease in deferred tax asset                                                     (4,433)           13,768
  Decrease/(increase) in prepayments and other current asset investments                          4,328         (13,414)
  Decrease in other assets                                                                          569            1,064
  (Decrease)/increase in accounts and notes payable                                            (24,543)           34,957
  Decrease in unearned income                                                                  (17,409)                -
  Decrease in other current liabilities                                                        (26,609)          (7,186)
  Decrease in other long-term liabilities                                                         (790)          (1,757)
                                                                                        ---------------  ---------------
  Net cash provided by operating activities                                                     117,778           71,503
                                                                                        ---------------  ---------------
  Cash flows from investing activities:
  Redemption of marketable securities                                                                 -           38,754
  Decrease in short-term deposits                                                               498,021           98,342
  Purchase of long-term investments                                                             (3,086)         (11,107)
  Purchase of intangible assets                                                                (19,040)         (32,035)
  Purchase of fixed assets                                                                      (7,648)          (6,044)
  Proceeds from sale of other assets                                                                  -              547
  Proceeds from sale of fixed assets                                                                  -            1,200
                                                                                        ---------------  ---------------
  Net cash provided by investing activities                                                     468,247           89,657
                                                                                        ---------------  ---------------
  
  Cash flows from financing activities:
  Payments on long-term debt and notes                                                          (2,583)        (201,876)
  Proceeds from issue of common stock, net of expenses                                                -             (17)
  Proceeds from exercise of options                                                               3,552           23,201
                                                                                        ---------------   --------------
  Net cash provided by/(used in) financing activities                                               969        (178,692)
                                                                                        ---------------   --------------
  Effect of foreign exchange rate changes on cash and cash equivalents                            9,489          (3,910)
                                                                                        ---------------   --------------
  Net increase/(decrease) in cash and cash equivalents                                          596,483         (21,442)
  Cash and cash equivalents at beginning of period                                              118,040           93,266
                                                                                        ---------------   --------------
  Cash and cash equivalents at end of period                                                    714,523           71,824
                                                                                        ---------------   --------------
  
  </TABLE>
  
  <PAGE>
  
  <TABLE>
  <CAPTION>
  
                CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
  
                                                    3 months to      3 months to       6 months to      6 months to
                                                       June 30,         June 30,          June 30,         June 30,
                                                           2002             2001              2002             2001
                                                   ------------     ------------      ------------     ------------
  <S>                                                    <C>           <C>                 <C>             <C>
  Net income/(loss)                                      59,307        (124,191)           116,109         (82,726)
  Foreign currency translation adjustments               43,644            2,609            37,680         (29,563)
  Unrealized holding gains/(losses) on
  non-current investments                                     -               14                 -            (196)
                                                   ------------     ------------      ------------     ------------
  Comprehensive income/(loss)                           102,951        (121,568)           153,789        (112,485)
                                                   ------------     ------------      ------------     ------------
  
  </TABLE>
  
  There are no tax effects related to the items included above.
  
  
  
  <PAGE>
  
  
                           SHIRE PHARMACEUTICALS GROUP PLC
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  
  1. Summary of Significant Accounting Policies
  
  a) Description of Operations and Principles of Consolidation
  
  Shire Pharmaceuticals Group plc (the Company) is an international specialty
  pharmaceutical company with a strategic focus on three therapeutic areas:
  central nervous system disorders, oncology and anti-infectives. The Company's
  strategy is further supported by two technology platforms, drug delivery and
  biologics.
  
  The Company has sales and marketing subsidiaries with a portfolio of products
  targeting the U.S., Canada, the U.K., the Republic of Ireland, France, Germany,
  Italy and Spain. Shire also covers other significant pharmaceutical markets
  indirectly through distributors. The business is operated and managed within
  three individual operating segments: U.S., International and global research and
  development. Within these segments, revenues are derived primarily from three
  sources: sales of products by the Company's own sales and marketing operations,
  royalties and licensing and development fees.
  
  The Company is referred to as "specialty" because its principal products tend to
  be prescribed by specialists as opposed to primary care physicians. The
  Company's main approach is to start projects in-house through research and
  advanced drug delivery or to in-license projects, and then to develop them and
  launch them using its sales and marketing capability in eight of the key world
  markets (to complete its geographic coverage of the key world pharmaceutical
  markets, Shire intends to build a presence in Japan by 2004). The Company seeks
  to protect the intellectual property upon which it relies through a range of
  patents and patent applications (both its own and those of its licensors).
  
  The Company's principal products include:
  
       o    in the U.S., ADDERALL XR(TM) and ADDERALL(TM) for the treatment of
            Attention Deficit Hyperactivity Disorder (ADHD); AGRYLIN(TM) for the
            treatment of elevated blood platelets; PENTASA(TM) for the treatment
            of ulcerative colitis; CARBATROL(TM) for the treatment of epilepsy;
            and PROAMATINE(TM) for the treatment of postural hypotension. In
            addition, the Company receives royalties on sales of REMINYL* for the
            treatment of Alzheimer's disease, marketed by Johnson & Johnson, and
            on EPIVIR**, COMBIVIR** and TRIZIVIR** for the treatment of HIV/AIDS
            and EPIVIR-HBV** for the treatment of hepatitis B, each marketed by
            GlaxoSmithKline;
  
       o    in the U.K. and the Republic of Ireland, the CALCICHEW(TM)range, used
            primarily as adjuncts in the treatment of osteoporosis, and REMINYL,
            which was launched in September 2000 and is co-promoted by
            Janssen-Cilag;
  
       o    in Canada, 3TC** for the treatment of HIV/AIDS, COMBIVIR and
            HEPTOVIR** (all marketed in partnership with GlaxoSmithKline);
            AMATINE(TM); SECOND LOOK(TM), a breast cancer diagnostics product for
            which the Company received FDA approval in January 2002; and FLUVIRAL
            S/F(TM), a vaccine for the prevention of influenza; and
  
       o    in the Rest of the World, royalties on the sales of ZEFFIX** for the
            treatment of hepatitis B, marketed by GlaxoSmithKline, and royalties
            on sales of REMINYL from Janssen Pharmaceutica.
  
  In addition, the Company has a number of products in late stage development
  including FOSRENOL(TM) (FOZNOL(TM)) for the treatment of high blood phosphate
  levels associated with kidney failure and TROXATYL(TM) for the treatment of
  leukemia and pancreatic cancer. 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 U.S. FDA on April 30, 2002.
  
  
  <PAGE>
  
  The accompanying consolidated financial statements include the accounts of Shire
  Pharmaceuticals Group plc and all its subsidiary undertakings after elimination
  of intercompany accounts and transactions.
  
  *        Registered trademark of Johnson and Johnson
  **       Registered trademark of GlaxoSmithKline
  (TM)     Unless otherwise indicated, all product names set out in this document
           are trademarks of Shire or companies within the Shire Group, many of
           which are the subject of trademark registrations in certain
           territories.
  
  b) Basis of Presentation
  
  The accompanying consolidated financial statements, which include the operations
  of the Company and its wholly owned subsidiaries and the financial information
  included herein, are unaudited. They have been prepared in accordance with
  generally accepted accounting principles in the United States and Securities and
  Exchange Commission regulations for interim reporting. Certain information and
  footnote disclosures normally included in financial statements prepared in
  accordance with generally accepted accounting principles in the United States
  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. These consolidated
  financial statements should be read in conjunction with the Company's audited
  consolidated financial statements for the three years ended December 31, 2001
  and notes thereto. The results for the period ended June 30, 2002 are not
  necessarily indicative of the results that may be expected for the year ending
  December 31, 2002.
  
  c) New Accounting Pronouncements
  
  In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
  Obligations. SFAS No. 143 requires that the fair value of a liability for asset
  retirement obligations be recognized in the period in which it is incurred if a
  reasonable estimate of the fair value can be made. The associated asset
  retirement costs are capitalized as part of the carrying amount of the related
  long-lived asset. SFAS No. 143 is effective for financial statements issued for
  fiscal years beginning after June 15, 2002. The Company has assessed the
  potential impact of the adoption of SFAS No. 143 and concluded that there is no
  impact.
  
  
  2. Inventory
                                            June 30,           December 31,
                                                2002                   2001
                                               $'000                  $'000
                                      --------------         --------------
  Finished goods                              24,961                 19,880
  Work-in-process                             21,352                 18,262
  Raw materials                               11,478                  8,548
                                      --------------         --------------
                                              57,791                 46,690
                                      --------------         --------------
  
  
  
  <PAGE>
  
  
  
  3. Analysis of revenue, operating income and reportable segments
  
  The Company has disclosed segment information for the individual operating areas
  of the business based on the way in which the business is managed and
  controlled. Shire's principal reporting segments are U.S., International and
  Global Research and Development, each being managed and monitored separately.
  The Company evaluates performance based on operating income.
  
  <TABLE>
  <CAPTION>
  
  Three months ended June 30, 2002                            U.S.    International             R&D            Total
                                                             $'000            $'000           $'000            $'000
                                                        ----------       ----------      ----------       ----------
  <S>                                                       <C>              <C>             <C>             <C>
  Product sales                                            179,949           32,966               -          212,915
  Licensing and development                                    662              261               -              923
  Royalties                                                      7           40,505               -           40,512
  Other revenues                                                 -            (212)               -            (212)
                                                        ----------       ----------      ----------       ----------
  Total revenues                                           180,618           73,520               -          254,138
                                                        ----------       ----------      ----------       ----------
  
  Cost of revenues                                          18,521           12,653               -           31,174
  Research and development                                       -                -          46,802           46,802
  Selling, general and administrative                       57,292           29,042               -           86,334
  Depreciation and amortization                              7,534            4,605               -           12,139
  Loss on dispositions of assets                               116                -               -              116
                                                        ----------       ----------      ----------       ----------
  Total operating expenses                                  83,463           46,300          46,802          176,565
                                                        ----------       ----------      ----------       ----------
  Operating income/(loss)                                   97,155           27,220        (46,802)           77,573
                                                        ----------       ----------      ----------       ----------
  
  Three months ended June 30, 2001                            U.S.    International             R&D            Total
                                                             $'000            $'000           $'000            $'000
                                                        ----------       ----------      ----------       ----------
  Product sales                                            141,648           26,929               -          168,577
  Licensing and development                                    244                -               -              244
  Royalties                                                    120           39,052               -           39,172
  Other revenues                                                 -              471               -              471
                                                        ----------       ----------      ----------       ----------
  Total revenues                                           142,012           66,452               -          208,464
                                                        ----------       ----------      ----------       ----------
  
  Cost of revenues                                          17,616            9,043               -           26,659
  Research and development                                       -                -          41,827           41,827
  Selling, general and administrative                       45,580           18,381               -           63,961
  Depreciation and amortization                              5,410            5,794               -           11,204
  Asset impairments and restructuring charges                    -           85,447               -           85,447
  Merger transaction expenses                                    -           83,470               -           83,470
  Losses on dispositions of assets                               -            8,098               -            8,098
                                                        ----------       ----------      ----------       ----------
  Total operating expenses                                  68,606          210,233          41,827          320,666
                                                        ----------       ----------      ----------       ----------
  Operating income/(loss)                                   73,406        (143,781)        (41,827)        (112,202)
                                                        ----------       ----------      ----------       ----------
  
  </TABLE>
  
  <PAGE>
  
  
  
  <TABLE>
  <CAPTION>
  
  Six months ended June 30, 2002                              U.S.    International             R&D             Total
                                                             $'000            $'000           $'000             $'000
                                                        ----------       ----------      ----------        ----------
  <S>                                                      <C>               <C>             <C>              <C>
  Product sales                                            353,473           62,160               -           415,633
  Licensing and development                                  1,203              402               -             1,605
  Royalties                                                    221           79,867               -            80,088
  Other revenues                                                 -                5               -                 5
                                                        ----------       ----------      ----------        ----------
  Total revenues                                           354,897          142,434               -           497,331
                                                        ----------       ----------      ----------        ----------
  
  Cost of revenues                                          32,941           24,744               -            57,685
  Research and development                                       -                -          96,531            96,531
  Selling, general and administrative                      113,743           56,495               -           170,238
  Depreciation and amortization                             13,479            8,833               -            22,312
  Loss on dispositions of assets                               116                -               -               116
                                                        ----------       ----------      ----------        ----------
  Total operating expenses                                 160,279           90,072          96,531           346,882
                                                        ----------       ----------      ----------        ----------
  Operating income/(loss)                                  194,618           52,362        (96,531)           150,449
                                                        ----------       ----------      ----------        ----------
  
  Six months ended June 30, 2001                              U.S.    International             R&D             Total
                                                             $'000            $'000           $'000             $'000
                                                        ----------       ----------      ----------        ----------
  Product sales                                            268,452           51,639               -           320,091
  Licensing and development                                  2,329              957               -             3,286
  Royalties                                                    180           71,883               -            72,063
  Other revenues                                                 -              746               -               746
                                                        ----------       ----------      ----------        ----------
  Total revenues                                           270,961          125,225               -           396,186
                                                        ----------       ----------      ----------        ----------
  
  Cost of revenues                                          35,493           19,551               -            55,044
  Research and development                                       -                -          79,511            79,511
  Selling, general and administrative                       81,986           40,313               -           122,299
  Depreciation and amortization                              9,870           12,157               -            22,027
  Asset impairments and restructuring charges                    -           85,447               -            85,447
  Merger transaction expenses                                    -           83,470               -            83,470
  Losses on dispositions of assets                               -            8,098               -             8,098
                                                        ----------       ----------      ----------        ----------
  Total operating expenses                                 127,349          249,036          79,511           455,896
                                                        ----------       ----------      ----------        ----------
  Operating income/(loss)                                  143,612        (123,811)        (79,511)          (59,710)
                                                        ----------       ----------      ----------        ----------
  </TABLE>
  
  <PAGE>
  
  
  
  4. Net income/(loss) per share
  
  Basic net income/(loss) per share is based upon the net income/(loss) available
  to common stockholders divided by the weighted-average number of common shares
  outstanding during the period. Diluted net income/(loss) per share is based upon
  net income/(loss) available to common stockholders divided by the
  weighted-average number of common shares outstanding during the period and
  adjusted for the effect of all dilutive potential common shares that were
  outstanding during the period.
  
  The following table sets forth the computation of basic and diluted net
  income/(loss) per share:
  
  <TABLE>
  <CAPTION>
  
                                                          3 months to      3 months to      6 months to     6 months to
                                                             June 30,         June 30,         June 30,        June 30,
                                                                 2002             2001             2002            2001
                                                                $'000            $'000            $'000           $'000
                                                     ----------------  ---------------- ---------------- ----------------
  <S>                                                          <C>           <C>                <C>            <C>
  Numerator for basic net income/(loss) per share              59,307        (124,191)          116,109        (82,726)
  Interest charged on convertible debt, net of tax              1,411                -            2,808               -
                                                     ----------------  ---------------- ---------------- ----------------
  Numerator for diluted net income/(loss) per share            60,718        (124,191)          118,917        (82,726)
                                                     ----------------  ---------------- ---------------- ----------------
  
                                                               No. of           No. of    No. of shares   No. of shares
  Weighted average number of shares:                           shares           shares
                                                     ----------------  ---------------- ---------------- ----------------
  Basic  - weighted average number of shares              500,365,947      489,977,184      500,147,383     489,205,296
  Effect of dilutive stock options                          2,357,078                -        3,910,105               -
  Warrants                                                  1,144,179                -        1,144,179               -
  Convertible debt                                         20,123,210                -       20,123,210               -
                                                     ----------------  ---------------- ---------------- ----------------
  Diluted - weighted average number of shares             523,990,414      489,977,184      525,324,877     489,205,296
                                                     ----------------  ---------------- ---------------- ----------------
  Basic net income/(loss) per share                             11.9c          (25.3c)            23.2c         (16.9c)
                                                     ----------------  ---------------- ---------------- ----------------
  Diluted net income/(loss) per share                           11.6c          (25.3c)            22.6c         (16.9c)
                                                     ----------------  ---------------- ---------------- ----------------
  
  </TABLE>
  
  The calculation of weighted average number of shares for the three and six
  months ended June 30, 2001 does not include share options, warrants or
  convertible debt because their inclusion in a loss making period would be
  anti-dilutive.
  
  5. Goodwill and Other Intangible Assets - Adoption of Statement 142
  
  SFAS No. 142 is effective for fiscal years beginning after December 15, 2001.
  The statement directs that goodwill and intangible assets that have indefinite
  useful lives will not be amortized but rather will be tested at least annually
  for impairment. Intangible assets that have finite useful lives will continue to
  be amortized over their useful lives, but without the constraint of an arbitrary
  ceiling.
  
  a) Goodwill
  A reconciliation table for the results for the three and six months ended June
  30, 2001 is provided to exclude the effect of goodwill amortization in
  accordance with transitional disclosures relating to SFAS 142. Results for the
  three and six months ended June 30, 2002 have been prepared in accordance with
  SFAS 142.
  
  
  <PAGE>
  
  A transitional assessment of goodwill impairment as of January 1, 2002 has been
  completed. The Company has concluded that the fair value of its individual
  reporting units exceeds the carrying value of the net assets including goodwill,
  and hence no adjusting entry is necessary.
  
  <TABLE>
  <CAPTION>
  
                                                          3 months to      3 months to      6 months to     6 months to
                                                        June 30, 2002    June 30, 2001    June 30, 2002   June 30, 2001
                                                                $'000            $'000            $'000           $'000
                                                     ----------------  ---------------- ---------------- ----------------
  <S>                                                          <C>           <C>                <C>            <C>
  Reported net income/(loss)                                   59,307        (124,191)          116,109        (82,726)
  Add back: Goodwill amortization                                   -            2,650                -           5,349
                                                     ----------------  ---------------- ---------------- ----------------
  Adjusted net income/(loss)                                   59,307        (121,541)          116,109        (77,377)
  Interest charged on convertible debt, net of tax              1,411                -            2,808               -
                                                     ----------------  ---------------- ---------------- ----------------
  Numerator for diluted net income/(loss) per share            60,718        (121,541)          118,917        (77,377)
                                                     ----------------  ---------------- ---------------- ----------------
  
                                                               No. of           No. of    No. of shares   No. of shares
  Weighted average number of shares:                           shares           shares
                                                     ----------------  ---------------- ---------------- ----------------
  Basic                                                   500,365,947      489,977,184      500,147,383     489,205,296
  Diluted                                                 523,990,414      489,977,184      525,324,877     489,205,296
  
  Basic earnings per share:
  Reported net income/(loss)                                    11.9c          (25.3c)            23.2c         (16.9c)
  Goodwill amortization (net of tax effect)                         -             0.5c                -            1.1c
                                                     ----------------  ---------------- ---------------- ----------------
  Adjusted net income/(loss)                                    11.9c          (24.8c)            23.2c         (15.8c)
                                                     ----------------  ---------------- ---------------- ----------------
  Diluted earnings per share:
  Reported net income/(loss)                                    11.6c          (25.3c)            22.6c         (16.9c)
  Goodwill amortization (net of tax effect)                         -             0.5c                -            1.1c
                                                     ----------------  ---------------- ---------------- ----------------
  Adjusted net income/(loss)                                    11.6c          (24.8c)            22.6c         (15.8c)
                                                     ----------------  ---------------- ---------------- ----------------
  
  </TABLE>
  
  The calculation of the diluted weighted average number of shares for the three
  and six months ended June 30, 2001 excludes the effects of share options,
  warrants and convertible debt because their inclusion in a loss making period
  would be anti-dilutive.
  
  There is no tax effect related to the inclusion of goodwill amortization in the
  earnings calculation disclosed above.
  
  b) Intangible fixed assets
  
                                                    June 30,            June 30,
                                                        2002                2001
                                                       $'000               $'000
                                                ------------        ------------
  Intellectual property rights acquired              485,036             464,817
  Less: Accumulated amortization                   (100,878)            (75,190)
                                                ------------        ------------
                                                     384,158             389,627
                                                ------------        ------------
  
  The useful economic lives of all intangible assets have been reassessed in
  accordance with SFAS 142.
  
  
  <PAGE>
  
  Management estimates that the annual amortization charge in respect of
  intangible fixed assets held at June 30, 2002 will be approximately $35 million
  for each of the five years to June 30, 2007. Estimated amortization expense can
  be affected by various factors including future acquisitions and disposals of
  product rights.
  
  6. Consolidated statement of changes in shareholders' equity
  
  <TABLE>
  <CAPTION>
  
                                                                                              Accumu-
                                                           Exchan-                            lated
                                     Common    Exchan-     geable                             other         Total
                         Common      Stock     geable      shares      Additional   Accumu-   compre-    sharehold-
                         Stock       No.       shares      No.         paid-in      lated     hensive       ers'
                         Amount      Shares    Amount      shares      capital      surplus   losses       equity
                         $'000       000's     $'000       000's       $'000        $'000     $'000         $'000
                       ----------- ----------- ----------- ---------- ------------ ---------- ---------- -------------
  <S>                      <C>        <C>         <C>          <C>       <C>           <C>      <C>          <C>
  As at January 1,
  2002                     39,861     481,817     277,386      5,979     1,014,796     23,955   (93,009)     1,262,989
  Net income                    -           -           -          -             -    116,109          -       116,109
  Foreign currency
  translation                   -           -           -          -             -          -     37,680        37,680
  Exchange of
  exchangeable shares           -         294     (4,531)       (98)         4,531          -          -             -
  Options exercised            71         958           -          -         3,482          -          -         3,553
  Stock option
  compensation                  -           -           -          -         (150)          -          -         (150)
  Tax benefit
  associated with
  exercise of stock
  options                       -           -           -          -           688          -          -           688
                       ----------- ----------- -----------------------------------------------------------------------
  
  As at June 30, 2002      39,932     483,069     272,855      5,881     1,023,347    140,064   (55,329)     1,420,869
                       ----------- ----------- ----------------------------------------------------------------------
  
  </TABLE>
  
  Each exchangeable share is exchangeable into 3 ordinary shares or one ADS.
  
  7. Contingent liabilities
  
  (i) Phentermine
  
  Shire US Inc. (SUS) is a defendant in twelve lawsuits still pending in both U.S.
  federal and state courts which seek damages for, among other things, personal
  injury arising from phentermine products supplied for the treatment of obesity
  by SUS and several other pharmaceutical companies. SUS, formerly known as Shire
  Richwood Inc., has been sued as a manufacturer and distributor of phentermine,
  an anorectic used in the short-term treatment of obesity and one of the products
  addressed by the lawsuits. The suits relate to phentermine either alone or
  together with fenfluramine or dexenfluramine. The lawsuits generally allege the
  following claims: the defendants marketed phentermine and other products for the
  treatment of obesity and misled users about the products and dangers associated
  with them; the defendants failed adequately to test phentermine individually and
  when taken in combination with the other drugs; and the defendants knew or
  should have known about the negative effects of the drugs and should have
  informed the public about such risks and/or failed to provide appropriate
  warning labels. SUS has been named as a defendant in a total of approximately
  3,800 such phentermine lawsuits, but in all but the twelve cases referenced
  above, SUS has been dismissed as a defendant.
  
  SUS became involved with phentermine through its acquisition of certain assets
  of Rexar Pharmacal Corporation (Rexar) in January 1994. In addition to SUS
  potentially incurring liability as a result of its own production of Oby-Cap, a
  phentermine product, the plaintiffs may additionally seek to impose liability on
  SUS as successor to Rexar. SUS intends vigorously to defend all the lawsuits and
  pursue all available reasonable defenses. SUS denies liability on a number of
  grounds including lack of
  
  
  <PAGE>
  
  scientific evidence that phentermine, properly prescribed, causes the alleged
  side effects and that SUS did not promote phentermine for long-term combined use
  as part of the "fen/phen" diet. Accordingly, SUS intends to defend vigorously
  any and all claims made against the Group in respect of phentermine and believes
  that liability is neither probable nor quantifiable at this stage of litigation.
  Legal expenses have been paid by Eon Labs Manufacturing Inc. (Eon), the supplier
  to SUS, or Eon's insurance carriers but such insurance is now exhausted. Eon has
  agreed to defend and indemnify SUS in this litigation pursuant to an agreement
  dated November 30, 2000 between Eon and SUS.
  
  At the present stage of litigation, Shire is unable to estimate the level of
  future legal costs after taking into account any available product liability
  insurance and enforceable indemnities. To the extent that any legal costs are
  not covered by insurance or available indemnities, these will be expensed as
  incurred.
  
  (ii) ADDERALL
  
  On September 22, 2000, a lawsuit was filed against Shire in the United States
  District Court for the District of North Dakota. The suit involves an incident
  in 1999 in which a young North Dakota man, Ryan Ehlis, shot and killed his
  infant daughter and wounded himself, allegedly as a result of a psychotic
  reaction to ADDERALL. Mr Ehlis' physician had prescribed ADDERALL for the
  treatment of ADHD. Trial is set to commence in August 2002.Shire intends to
  vigorously defend such action.
  
  On October 3, 2001, a lawsuit was filed against Shire in Boone County Kentucky
  Circuit Court. The suit involves an automobile accident that is alleged to have
  been the result of a psychotic episode experienced by the driver of the car
  following an ingestion of ADDERALL. As a result of the accident, the driver's
  young son was killed. Shire has filed an answer to this lawsuit and intends to
  vigorously defend such action.
  
  On July 27, 2001, Shire received service of a complaint filed in state court in
  Texas that alleged that ADDERALL caused or contributed to a stroke. The
  plaintiff, an adult female aged 39, was prescribed ADDERALL as treatment for her
  ADHD. The complaint alleges that the plaintiff used ADDERALL during the period
  from January 1999 to September 1999. Also named as defendants are two doctors
  who were involved in diagnosing the plaintiff's ADHD and for prescribing
  ADDERALL for its treatment. Trial is set to commence in November 2002. Shire
  intends to vigorously defend such action.
  
  Shire filed a Complaint against Barr Laboratories, Inc. on April 30, 2002 in the
  District Court of New Jersey. In the Complaint, Shire requested a preliminary
  and permanent injunction to prevent Barr from marketing a mixed amphetamine salt
  product in a trade dress similar to that of ADDERALL. Shire requested that Barr
  recall all such products and also asked for damages. In connection with the
  preliminary injunction, Barr has moved to dismiss the Complaint. A hearing on
  the preliminary injunction was held on June 3, 2002. The decision from the
  District Court is pending.
  
  (iii) AGRYLIN
  
  SUS has been named as a defendant in a lawsuit filed in a Texas state court
  involving AGRYLIN. The complaint was served on Shire on December 26, 2001.
  Shire's contract manufacturer for AGRYLIN, Mallinckrodt, Inc., is also a named
  defendant.
  
  The complaint alleges that the Plaintiff suffered a debilitating stroke due to
  the fact that the Plaintiff was allegedly unable to procure this product in some
  fashion. Shire has filed an answer to the complaint in which it denies the
  allegations in the Plaintiffs original petition. Shire intends to vigorously
  defend such action.
  
  (iv) Emory
  
  Shire BioChem was involved in worldwide patent disputes with Emory University
  (Emory) relating to lamivudine wherein Shire BioChem opposed certain patents and
  patent applications of Emory and wherein Emory opposed certain patents and
  patent applications of Shire BioChem. Further detail regarding these disputes is
  provided below. In November 2001, Shire and GlaxoSmithKline (GSK) signed an
  agreement as to the key terms of a global settlement agreement with Emory. In
  May 2002 the parties finalized the Settlement Agreement. Pursuant to the
  Settlement Agreement, Emory has
  
  
  <PAGE>
  
  granted Shire and GSK an exclusive license under Emory's patent rights for
  lamivudine. The Settlement Agreement provides for the resolution of the below
  noted worldwide patent disputes between the parties relating to lamivudine. The
  settlement involves an upfront payment to Emory by Shire of $2.5 million and a
  royalty payment from Shire of 0.5% on worldwide sales of lamivudine over an 11
  year period commencing on January 1, 2001 and a licence under Shire's FTC patent
  rights, in consideration for the settlement of all claims against Shire and GSK
  relating to lamivudine. The total cost to Shire in 2001 of the settlement
  (including upfront payment) was $7.7 million.
  
  Emory filed oppositions to two of Shire BioChem's granted patent applications in
  Europe which cover oxathiolane nucleosides including lamivudine and dioxolane
  nucleosides, including troxacitabine, related nucleoside analogues and use of
  these analogues for treating viral infections. In oral hearings held in 1999,
  both of these oppositions were dismissed by the Opposition Division of the
  European Patent Office. Emory is not pursuing its appeal of the decision
  relating to oxathiolanes.
  
  Emory had filed an appeal against the dioxolane-related decision in the European
  Patent Office but this appeal has been withdrawn in July 2002. This appeal was
  withdrawn by Emory pursuant to a Binding Material Terms Agreement executed in
  July 2002 by Shire BioChem , Shire, the University of Georgia Research
  Foundation (Georgia) and Triangle Pharmaceuticals Inc. (Triangle). Pursuant to
  the Agreement Shire will grant an exclusive royalty bearing license to Emory,
  sub licensable to Triangle, for certain dioxolane nucleoside analogs, including
  diamino purine dioxolane (DAPD). Emory, Georgia and Triangle will grant an
  exclusive royalty bearing license to Shire for certain dioxolane nucleosides,
  including SPD 756 .The compounds the subject of these licences are in
  development. A low royalty will be payable by Shire upon commercialization of
  SPD 756 .The Binding Material Terms Agreement provides for the resolution of
  worldwide patent disputes relating to the licensed patents.
  
  Emory has filed revocation actions in Australia and South Korea against Shire
  BioChem's granted patents covering lamivudine. Shire BioChem has aggressively
  defended these patents. In accordance with the Settlement Agreement, Emory has
  agreed to withdraw these proceedings relating to lamivudine.
  
  On July 23, 1996, Emory filed a complaint in the U.S. alleging infringement from
  the commercialization of EPIVIR by Shire BioChem and GSK, Shire BioChem's
  exclusive licensee in the U.S., of an Emory U.S. patent granted that same day.
  Shire BioChem considers this patent infringement suit to be without merit and
  has successfully challenged the validity of Emory's patent in the below noted
  interference proceedings.
  
  On May 19, 1998, the United States Patent and Trademark Office (USPTO) declared
  an interference between the Emory patent that is the subject of the above
  mentioned lawsuit and a pending patent application of Shire BioChem. The Board
  of Patent Appeals and Interferences issued a decision on December 21, 2000
  invalidating Emory's patent. Emory had appealed the decision. Pursuant to the
  Settlement Agreement, the infringement suit and Emory's appeal from the
  interference decision were dismissed in June 2002.
  
  Emory has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. Shire BioChem and GSK filed an
  opposition to this grant. An examined patent application filed by Emory claiming
  lamivudine was successfully opposed by Shire BioChem in Australia and Norway.
  Emory has filed an appeal from the Australian decision in the Federal Court of
  Australia. Shire BioChem also filed an appeal from certain portions of the
  decision. These proceedings will be resolved in accordance with the Settlement
  Agreement. An examined patent application filed by Emory claiming lamivudine was
  opposed by Shire BioChem and GSK in South Korea and such Emory claims to
  lamivudine were cancelled by the South Korean Patent Office. Emory has appealed
  this decision. Shire BioChem is aware that Emory has filed patent applications
  in other countries, which Shire BioChem believes may claim similar subject
  matter. All such patent applications and related disputes will be subject to the
  Settlement Agreement.
  
  (v) Yale
  
  On November 23, 1999, the USPTO declared an interference between Shire's
  hepatitis B patent for lamivudine and a patent application filed by Yale
  University (Yale) claiming methods of treating
  
  
  <PAGE>
  
  hepatitis B using lamivudine. The Company believes that this application is
  licensed to Vion Pharmaceuticals, Inc. (Vion), formerly known as OncoRx, Inc., a
  New Haven, Connecticut-based, U.S. company. On March 28, 2002, the Board of
  Patent Appeals and Interferences issued an order awarding priority to the
  Company's patent. Yale has not appealed from the Board's judgement and the
  Company is not aware of corresponding patent applications by Yale or Vion in
  countries other than the US.
  
  On April 14, 2000, the USPTO declared a further interference between BioChem's
  hepatitis B patent for lamivudine and a patent application by GSK claiming
  methods of treating hepatitis B using lamivudine. There is no guarantee that
  Shire will be successful in this interference and that Shire's patent will be
  maintained.
  
  (vi) Commitments
  
  The Company has undertaken to subscribe to interests in companies and
  partnerships for amounts totalling $39.6 million. As at June 30, 2002 an amount
  of $23.4 million (June 30, 2001: $21.0 million) has been subscribed.
  
  (vii) FLUVIRAL
  
  The Company has signed a ten-year contract with the Government of Canada to
  assure a state of readiness in the case of an influenza pandemic (worldwide
  epidemic) and to provide influenza vaccine for all Canadian citizens in such an
  event. Under the contract, Shire Biologics will also supply the Government of
  Canada with a substantial proportion of its annual influenza vaccine
  requirements over the ten-year period. Subject to mutual agreement, the contract
  can be renewed for a further period of between one and ten years from 2011.
  
  The concept of a state of readiness against an influenza pandemic requires the
  development of sufficient infrastructure and capacity in Canada to provide 100%
  of domestic vaccine needs in the event of an influenza pandemic. Canada would
  require 32 million doses of single-strain (monovalent) flu vaccine within a
  production period of 16 weeks. Shire Biologics will therefore begin expanding
  its current production capacity in order to meet this objective within a
  five-year period.
  
  Shire Biologics is committed to Cdn$4.5 million (approximately $3.0 million) of
  capital expenditure on immoveables for the purpose of achieving the level of
  pandemic readiness required. In addition, a performance bond equal to Cdn$17.5
  million (approximately $11.5 million) has been established to ensure that in the
  event of default by Shire Biologics, adequate funds will be available to
  complete the work according to the terms of the contract.
  
  (viii) Other matters
  
  In addition, the Company is involved in other claims and lawsuits in the normal
  course of business. It is not possible at this time to determine the ultimate
  outcome of any of these claims.
  
  
  <PAGE>
  
  
  ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
          of Operations
  
  Results of operations for the three months ended June 30, 2002, as compared with
  those for the three months ended June 30, 2001
  
  Overview of financial results
  
  Total revenues for the three months ended June 30, 2002 increased by 22 per cent
  to $254.1 million as compared to the three months ended June 30, 2001. The
  Company recorded a second quarter net income of $59.3 million (2001: net loss
  $124.2 million after one time merger related expenses and restructuring charges
  of $177.0 million).
  
  Sales and marketing
  
  Product sales of $212.9 million, which represented 84 per cent of total revenues
  for the second quarter 2002, increased by 26 per cent over second quarter 2001
  product sales of $168.6 million. Product sales in the U.S. continue to represent
  a significant percentage of our worldwide sales, 85 per cent in the three months
  ended June 30, 2002 (2001: 84 per cent).
  
  The Company manages and controls the sales and marketing operations on
  geographic lines. The following table presents the Company's net product sales
  by individual operating segment:
  
  Product sales by segment         3 months to       3 months to
                                 June 30, 2002     June 30, 2001
                                         $'000             $'000         % change
  
  United States                        179,949           141,648              +27
  International                         32,966            26,929              +22
                                  ------------      ------------     ------------
  Total product sales                  212,915           168,577              +26
                                  ------------      ------------     ------------
  
  
  Second quarter combined sales of ADDERALL XR and ADDERALL, marketed in the U.S.
  for the treatment of Attention Deficit Hyperactivity Disorder (ADHD), were
  $104.1 million, representing growth of 50 per cent over the second quarter of
  2001. ADDERALL XR and ADDERALL had a 26 per cent share of the prescription
  market for ADHD in the U.S. in June 2002 compared to 33 per cent in June 2001.
  
  Sales of AGRYLIN, the only U.S. product licensed for the treatment of essential
  thrombocythemia were $29.4 million, a 14 per cent increase over second quarter
  2001 sales of $25.8 million. Shire achieved a prescription share of 26 per cent
  of the total U.S. AGRYLIN market (including Hydrea (a trademark of Bristol Myers
  Squibb Company) and generic hydroxyurea), in June 2002 compared to 21 per cent
  in June 2001.
  
  Sales of PENTASA, licensed for the treatment of ulcerative colitis, were $21.5
  million for the second quarter 2002, 13 per cent higher than the comparable
  period last year. PENTASA had an 18 per cent share of the oral
  mesalamine/obsalazine market in June 2002, consistent with June 2001.
  
  Sales of PROAMATINE, for the treatment of postural hypotension, were $10.9
  million, 3 per cent higher than second quarter 2001 sales of $10.5 million. The
  U.S. prescription market for PROAMATINE and FLORINEF(TM) prescriptions indicates
  that PROAMATINE had a 24 per cent share in June 2002, consistent with June 2001.
  
  CARBATROL containing carbamazapine for the treatment of epilepsy, recorded sales
  growth of 27 per cent from sales of $9.9 million in the three months ended June
  30, 2001 to $12.6 million in the three months ended June 30, 2002. This
  translates to 36 per cent of the U.S. extended release carbamazepine
  prescription market in June 2002, compared to 34 per cent in June 2001.
  
  
  
  <PAGE>
  
  Royalties
  
  Royalties increased by $1.3 million in the three months ended June 30, 2002, up
  3 per cent from the three months ended June 30, 2001, to $40.5 million. The
  Company receives royalties from GlaxoSmithKline on the worldwide sales of 3TC
  (for the treatment of HIV infection / AIDS), and ZEFFIX (an oral treatment for
  chronic hepatitis B), with the exception of Canada where a commercialization
  partnership with GSK exists. The Company also receives royalties from J&J on
  sales of REMINYL, for the treatment of Alzheimer's Disease.
  
  Cost of revenues
  
  Gross margin on product sales increased from 84 per cent for the three months
  ended June 30, 2001 to 85 per cent for the three months ended June 30, 2002.
  This is a reflection of the product mix as the higher margin products, ADDERALL
  XR, ADDERALL and AGRYLIN, represented approximately 63 per cent of total product
  sales in the three months ended June 30, 2002 compared to 56 per cent in the
  three months ended June 30, 2001. Improved pricing in respect of the ADHD
  franchise has also contributed to the higher gross margin for the three months
  ended June 30, 2002.
  
  Research and development
  
  R&D expenditure increased 12 per cent to $46.8 million for the three months
  ended June 30, 2002 (2001: $41.8 million). R&D expenditure in second quarter
  2002 represented 18 per cent of revenues compared to 20 per cent in second
  quarter 2001.
  
  Selling, general and administrative expenses
  
  Selling, general and administrative expenses, excluding the effects of a stock
  option compensation charge of $0.2 million (2001: $0.2 million) and depreciation
  and amortization of $12.1 million (2001: $11.2 million), increased by 35 per
  cent to $86.1 million for the three months ended June 30, 2002 (2001: $63.7
  million). This reflects the high promotional spend associated with the ADDERALL
  XR launch. As a percentage of product sales, selling, general and administrative
  costs represented 40 per cent for the second quarter 2002 (2001: 38%).
  
  Interest income and expense
  
  For the three months ended June 30, 2002, the Company received interest income
  of $4.8 million (Q2 2001: $4.5 million). Interest expense increased from $1.7
  million to $1.8 million.
  
  Income taxes
  
  For the three months ended June 30, 2002 income taxes increased $4.5 million to
  $22.2 million from $17.7 million for the three months ended June 30, 2001. The
  Company's effective tax rate before the stock compensation charge was 27 per
  cent for the three months ended June 30, 2002 (Q2 2001: 25 per cent before stock
  compensation charge and exceptional items). The Company has recorded net
  deferred tax assets of $36.7 million (June 30, 2001: $32.3 million). Realization
  is dependent upon generating sufficient taxable income to utilize such assets.
  Although realization on these assets is not assured, management believes it is
  more likely than not that the deferred tax assets will be realized.
  
  Results of operations for the six months ended June 30, 2002, as compared with
  those for the six months ended June 30, 2001
  
  Overview of financial results
  
  Total revenues for the six months ended June 30, 2002 increased by 26 per cent
  to $497.3 million as compared to the six months ended June 30, 2001. The Company
  recorded a half year net income of $116.1 million (2001: net loss $82.7 million
  after one time merger related expenses and restructuring charges of $177.0
  million).
  
  
  
  <PAGE>
  
  Sales and marketing
  
  Product sales of $415.6 million, which represented 84 per cent of total
  revenues, increased by 30 per cent over half year 2001 product sales of $320.1
  million. Product sales in the U.S. continue to represent a significant
  percentage of our worldwide product sales, 85 per cent in the six months ended
  June 30, 2002 (2001: 84 per cent).
  
  The Company manages and controls the sales and marketing operations on
  geographic lines. The following table presents the Company's net product sales
  by individual operating segment:
  
  Product sales by segment         6 months to       6 months to
                                      June 30,          June 30,
                                          2002              2001
                                         $'000             $'000         % change
  
  United States                        353,473           268,452              +32
  International                         62,160            51,639              +20
                                  ------------      ------------     ------------
  Total product sales                  415,633           320,091              +30
                                  ------------      ------------     ------------
  
  Cost of revenues
  
  Gross margin on product sales increased from 83 per cent for the six months
  ended June 30, 2001 to 86 per cent for the six months ended June 30, 2002. The
  main reason for this is that higher margin products represented a higher
  proportion of total sales in the current period.
  
  Research and development
  
  Research and development expenditure increased 21 per cent to $96.5 million for
  the six months ended June 30, 2002 (2001: $79.5 million). R&D expenditure in
  half year 2002 represented 19 per cent of revenues compared to 20 per cent in
  first half year 2001.
  
  Selling, general and administrative expenses
  
  Selling, general and administrative expenses, excluding the effects of a stock
  option compensation credit of $0.2 million (2001: charge $2.4 million) and
  depreciation and amortization of $22.3 million (2001: $22.0 million), increased
  by 42 per cent to $170.4 million for the six months ended June 30, 2002 (2001:
  $119.9 million). This reflects the high promotional spend associated with the
  ADDERALL XR launch. As a percentage of product sales, selling, general and
  administrative costs represented 41 per cent for the half year 2002 (2001: 37%).
  
  Interest income and expense
  
  For the six months ended June 30, 2002, the Company received interest income of
  $9.6 million (Q2 2001: $9.6 million). Interest expense decreased from $4.7
  million to $3.8 million. This decrease reflects an improved debt profile
  resulting from the repayment of a $125 million term loan in May 2001 and the
  subsequent issue of the $400 million convertible notes in August 2001, which
  bear interest at the comparatively lower fixed rate of 2% per annum.
  
  Income taxes
  
  For the six months ended June 30, 2002 income taxes increased $11.3 million to
  $42.9 million from $31.6 million for the six months ended June 30, 2001. The
  Company's effective tax rate before the stock compensation credit was 27 per
  cent for the six months ended June 30, 2002 (2001: 25 per cent). The Company has
  recorded net deferred tax assets of $36.7million. Realization is dependent upon
  generating sufficient taxable income to utilize such assets. Although
  realization on these assets is not assured, management believes it is more
  likely than not that the deferred tax assets will be realized.
  
  
  <PAGE>
  
  Liquidity and Financial Condition
  
  The Company's funding requirements depend on a number of factors, including the
  Company's product development programs, business and product acquisitions, the
  level of resources required for the expansion of marketing capabilities as the
  product base expands, increased investment in accounts receivable and inventory
  which may arise as sales levels increase, competitive and technological
  developments, the timing and cost of obtaining required regulatory approvals for
  new products and the continuing revenues generated from sales of its key
  products.
  
  At June 30, 2002, the Company had net cash funds available as follows:
  
                                                    June 30,         December 31,
                                                        2002                 2001
                                                       $'000                $'000
                                              --------------       --------------
  Cash and cash equivalents                          714,523              118,040
  Marketable securities and other current
    asset investments                                225,890              723,911
  Debt                                             (404,223)            (406,806)
                                              --------------       --------------
  Net cash                                           536,190              435,145
                                              --------------       --------------
  
  Net cash provided by operating activities for the six months ended June 30, 2002
  was $117.8 million compared to $71.5 million for the six months ended June 30,
  2001.
  
  Investing activities provided $468.2 million for the six months ended June 30,
  2002 (2001: $89.7 million). This was due to an inflow of $498.0 million of cash
  by reducing funds placed on short-term deposit, and outflows in respect of
  capital expenditure on long-term investments, intangible assets and fixed assets
  of $29.8 million.
  
  Investing activities for the six months ended June 30, 2001 included $137.1
  million from the redemption of marketable securities and reduction in cash
  placed on short-term deposit, and outflows in respect of net capital expenditure
  on long-term investments, intangible assets and fixed assets of $47.4 million.
  
  Financing activities provided $1.0 million for the six months ended June 30,
  2002 (2001: used $178.7 million). The $1.0 million inflow included $3.6 million
  received from exercises of employee stock options and $2.6 million in repayments
  of long-term debt.
  
  Financing activities for the six months ended June 30, 2001 included a $23.2
  million inflow from exercises of employee stock options and repayments of
  long-term debt totalling $201.9 million.
  
  Capital expenditure
  
  Capital expenditure on tangible fixed assets for the six months ended June 30,
  2002 was $7.6 million, which was primarily laboratory and computer equipment
  purchased across the Group. Other capital expenditure related to the purchase of
  long-term investments ($3.1 million) and intangible assets ($19.0 million). The
  expenditure on intangible assets was in respect of SOLARAZE(TM), a product
  purchased from Skye Pharma plc and Bioglan Pharma plc (in administration) in May
  2002 for the treatment of a skin condition related to excessive exposure to the
  sun, actinic keratosis.
  
  Capital expenditure on tangible fixed assets for the six months ended June 30,
  2001 was $6.0 million, which included $1.7 million of equipment related to the
  Company's new head office facility occupied from March 2001. Expenditure was
  offset by $1.2 million in proceeds received on the disposal of the Toronto
  facility. Other capital expenditure related to the purchase of long-term
  investments ($11.1 million) and $32.0 million for new products, including
  MONOCID(TM) and INDURGAN(TM) marketed by the Company's Italian and Spanish
  operations respectively.
  
  
  
  <PAGE>
  
  ITEM 3.  Qualitative and Quantitative Disclosures about Market Risk
  
  Item 7A of the Group's Annual Report on Form 10-K for the year ended December
  31, 2001 contains a detailed discussion of the Group's market risk exposure in
  relation to interest rate market risk and foreign exchange market risk. There
  have been no material changes in the Group's market risk exposure since December
  31, 2001.
  
  
  PART II.   OTHER INFORMATION
  
  ITEM 1. LEGAL PROCEEDINGS
  
  (i) Phentermine
  
  Shire US Inc. (SUS) is a defendant in twelve lawsuits still pending in both U.S.
  federal and state courts which seek damages for, among other things, personal
  injury arising from phentermine products supplied for the treatment of obesity
  by SUS and several other pharmaceutical companies. SUS, formerly known as Shire
  Richwood Inc., has been sued as a manufacturer and distributor of phentermine,
  an anorectic used in the short-term treatment of obesity and one of the products
  addressed by the lawsuits. The suits relate to phentermine either alone or
  together with fenfluramine or dexenfluramine. The lawsuits generally allege the
  following claims: the defendants marketed phentermine and other products for the
  treatment of obesity and misled users about the products and dangers associated
  with them; the defendants failed adequately to test phentermine individually and
  when taken in combination with the other drugs; and the defendants knew or
  should have known about the negative effects of the drugs and should have
  informed the public about such risks and/or failed to provide appropriate
  warning labels. SUS has been named as a defendant in a total of approximately
  3,800 such phentermine lawsuits, but in all but the twelve cases referenced
  above, SUS has been dismissed as a defendant.
  
  SUS became involved with phentermine through its acquisition of certain assets
  of Rexar Pharmacal Corporation (Rexar) in January 1994. In addition to SUS
  potentially incurring liability as a result of its own production of Oby-Cap, a
  phentermine product, the plaintiffs may additionally seek to impose liability on
  SUS as successor to Rexar. SUS intends vigorously to defend all the lawsuits and
  pursue all available reasonable defenses. SUS denies liability on a number of
  grounds including lack of scientific evidence that phentermine, properly
  prescribed, causes the alleged side effects and that SUS did not promote
  phentermine for long-term combined use as part of the "fen/phen" diet.
  Accordingly, SUS intends to defend vigorously any and all claims made against
  the Group in respect of phentermine and believes that liability is neither
  probable nor quantifiable at this stage of litigation. Legal expenses have been
  paid by Eon Labs Manufacturing Inc. (Eon), the supplier to SUS, or Eon's
  insurance carriers but such insurance is now exhausted. Eon has agreed to defend
  and indemnify SUS in this litigation pursuant to an agreement dated November 30,
  2000 between Eon and SUS.
  
  At the present stage of litigation, Shire is unable to estimate the level of
  future legal costs after taking into account any available product liability
  insurance and enforceable indemnities. To the extent that any legal costs are
  not covered by insurance or available indemnities, these will be expensed as
  incurred.
  
  (ii) ADDERALL
  
  On September 22, 2000, a lawsuit was filed against Shire in the United States
  District Court for the District of North Dakota. The suit involves an incident
  in 1999 in which a young North Dakota man, Ryan Ehlis, shot and killed his
  infant daughter and wounded himself, allegedly as a result of a psychotic
  reaction to ADDERALL. Mr Ehlis' physician had prescribed ADDERALL for the
  treatment of ADHD. Trial is set to commence in August 2002.Shire intends to
  vigorously defend such action.
  
  On October 3, 2001, a lawsuit was filed against Shire in Boone County Kentucky
  Circuit Court. The suit involves an automobile accident that is alleged to have
  been the result of a psychotic episode experienced by the driver of the car
  following an ingestion of ADDERALL. As a result of the accident,
  
  
  <PAGE>
  
  the driver's young son was killed. Shire has filed an answer to this lawsuit and
  intends to vigorously defend such action.
  
  On July 27, 2001, Shire received service of a complaint filed in state court in
  Texas that alleged that ADDERALL caused or contributed to a stroke. The
  plaintiff, an adult female aged 39, was prescribed ADDERALL as treatment for her
  ADHD. The complaint alleges that the plaintiff used ADDERALL during the period
  from January 1999 to September 1999. Also named as defendants are two doctors
  who were involved in diagnosing the plaintiff's ADHD and for prescribing
  ADDERALL for its treatment. Trial is set to commence in November 2002. Shire
  intends to vigorously defend such action.
  
  Shire filed a Complaint against Barr Laboratories, Inc. on April 30, 2002 in the
  District Court of New Jersey. In the Complaint, Shire requested a preliminary
  and permanent injunction to prevent Barr from marketing a mixed amphetamine salt
  product in a trade dress similar to that of ADDERALL. Shire requested that Barr
  recall all such products and also asked for damages. In connection with the
  preliminary injunction, Barr has moved to dismiss the Complaint. A hearing on
  the preliminary injunction was held on June 3, 2002. The decision from the
  District Court is pending.
  
  (iii) AGRYLIN
  
  SUS has been named as a defendant in a lawsuit filed in a Texas state court
  involving AGRYLIN. The complaint was served on Shire on December 26, 2001.
  Shire's contract manufacturer for AGRYLIN, Mallinckrodt, Inc., is also a named
  defendant.
  
  The complaint alleges that the Plaintiff suffered a debilitating stroke due to
  the fact that the Plaintiff was allegedly unable to procure this product in some
  fashion. Shire has filed an answer to the complaint in which it denies the
  allegations in the Plaintiffs original petition. Shire intends to vigorously
  defend such action.
  
  (iv) Emory
  
  Shire BioChem was involved in worldwide patent disputes with Emory University
  (Emory) relating to lamivudine wherein Shire BioChem opposed certain patents and
  patent applications of Emory and wherein Emory opposed certain patents and
  patent applications of Shire BioChem. Further detail regarding these disputes is
  provided below. In November 2001, Shire and GlaxoSmithKline (GSK) signed an
  agreement as to the key terms of a global settlement agreement with Emory. In
  May 2002 the parties finalized the Settlement Agreement. Pursuant to the
  Settlement Agreement, Emory has granted Shire and GSK an exclusive license under
  Emory's patent rights for lamivudine. The Settlement Agreement provides for the
  resolution of the below noted worldwide patent disputes between the parties
  relating to lamivudine. The settlement involves an upfront payment to Emory by
  Shire of $2.5 million and a royalty payment from Shire of 0.5% on worldwide
  sales of lamivudine over an 11 year period commencing on January 1, 2001 and a
  licence under Shire's FTC patent rights, in consideration for the settlement of
  all claims against Shire and GSK relating to lamivudine. The total cost to Shire
  in 2001 of the settlement (including upfront payment) was $7.7 million.
  
  Emory filed oppositions to two of Shire BioChem's granted patent applications in
  Europe which cover oxathiolane nucleosides including lamivudine and dioxolane
  nucleosides, including troxacitabine, related nucleoside analogues and use of
  these analogues for treating viral infections. In oral hearings held in 1999,
  both of these oppositions were dismissed by the Opposition Division of the
  European Patent Office. Emory is not pursuing its appeal of the decision
  relating to oxathiolanes.
  
  Emory had filed an appeal against the dioxolane-related decision in the European
  Patent Office but this appeal has been withdrawn in July 2002. This appeal was
  withdrawn by Emory pursuant to a Binding Material Terms Agreement executed in
  July 2002 by Shire BioChem , Shire, the University of Georgia Research
  Foundation (Georgia) and Triangle Pharmaceuticals Inc. (Triangle). Pursuant to
  the Agreement Shire will grant an exclusive royalty bearing license to Emory,
  sub licensable to Triangle, for certain dioxolane nucleoside analogs, including
  diamino purine dioxolane (DAPD). Emory, Georgia and Triangle will grant an
  exclusive royalty bearing license to Shire for certain dioxolane nucleosides,
  including SPD 756. The compounds the subject of these licences are in
  development. A low royalty will be payable by Shire upon commercialization of
  SPD 756. The Binding
  
  
  <PAGE>
  
  Material Terms Agreement provides for the resolution of worldwide patent
  disputes relating to the licensed patents.
  
  Emory has filed revocation actions in Australia and South Korea against Shire
  BioChem's granted patents covering lamivudine. Shire BioChem has aggressively
  defended these patents. In accordance with the Settlement Agreement, Emory has
  agreed to withdraw these proceedings relating to lamivudine .
  
  On July 23, 1996, Emory filed a complaint in the U.S. alleging infringement from
  the commercialization of EPIVIR by Shire BioChem and GSK, Shire BioChem's
  exclusive licensee in the U.S., of an Emory U.S. patent granted that same day.
  Shire BioChem considers this patent infringement suit to be without merit and
  has successfully challenged the validity of Emory's patent in the below noted
  interference proceedings.
  
  On May 19, 1998, the United States Patent and Trademark Office (USPTO) declared
  an interference between the Emory patent that is the subject of the above
  mentioned lawsuit and a pending patent application of Shire BioChem. The Board
  of Patent Appeals and Interferences issued a decision on December 21, 2000
  invalidating Emory's patent. Emory had appealed the decision. Pursuant to the
  Settlement Agreement, the infringement suit and Emory's appeal from the
  interference decision were dismissed in June 2002.
  
  Emory has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. Shire BioChem and GSK filed an
  opposition to this grant. An examined patent application filed by Emory claiming
  lamivudine was successfully opposed by Shire BioChem in Australia and Norway.
  Emory has filed an appeal from the Australian decision in the Federal Court of
  Australia. Shire BioChem also filed an appeal from certain portions of the
  decision. These proceedings will be resolved in accordance with the Settlement
  Agreement. An examined patent application filed by Emory claiming lamivudine was
  opposed by Shire BioChem and GSK in South Korea and such Emory claims to
  lamivudine were cancelled by the South Korean Patent Office. Emory has appealed
  this decision. Shire BioChem is aware that Emory has filed patent applications
  in other countries, which Shire BioChem believes may claim similar subject
  matter. All such patent applications and related disputes will be subject to the
  Settlement Agreement.
  
  (v) Yale
  
  On November 23, 1999, the USPTO declared an interference between Shire's
  hepatitis B patent for lamivudine and a patent application filed by Yale
  University (Yale) claiming methods of treating hepatitis B using lamivudine. The
  Company believes that this application is licensed to Vion Pharmaceuticals, Inc.
  (Vion), formerly known as OncoRx, Inc., a New Haven, Connecticut-based, U.S.
  company. On March 28, 2002, the Board of Patent Appeals and Interferences issued
  an order awarding priority to the Company's patent. Yale has not appealed from
  the Board's judgement and the Company is not aware of corresponding patent
  applications by Yale or Vion in countries other than the US.
  
  On April 14, 2000, the USPTO declared a further interference between BioChem's
  hepatitis B patent for lamivudine and a patent application by GSK claiming
  methods of treating hepatitis B using lamivudine. There is no guarantee that
  Shire will be successful in this interference and that Shire's patent will be
  maintained.
  
  (vi) Other matters
  
  In addition, the Company is involved in other claims and lawsuits in the normal
  course of business. It is not possible at this time to determine the ultimate
  outcome of any of these claims.
  
  
  ITEM 2. CHANGES IN SECURITIES
  
  None
  
  <PAGE>
  
  
  ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
  None
  
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
  An Annual General Meeting of Shareholders was held on June 13, 2002. The
  following resolutions were adopted by the margins indicated:
  
  1. Ordinary resolution to receive and consider the report of the directors' and
  financial statements for the year ended December 31, 2001.
  
         For              Against                Open           Abstentions
     245,429,708         1,802,805            2,267,661          1,747,921
  
  2. Ordinary resolution to re-elect Dr James Henry Cavanaugh as Director.
  
         For              Against                Open           Abstentions
     231,781,418         2,183,014            2,272,167          15,011,496
  
  3. Ordinary resolution to re-elect Dr Barry John Price as Director.
  
         For             Against                 Open           Abstentions
     246,587,213         296,039              2,270,467          2,094,376
  
  4. Ordinary resolution to re-elect Mr Ronald Nordmann as Director.
  
         For             Against                 Open           Abstentions
     246,614,399         298,336              2,270,467          2,064,893
  
  5. Ordinary resolution to re-appoint Arthur Andersen as Auditors and authorize
  the Directors to fix their remuneration.
  
         For              Against                Open           Abstentions
     226,964,936         14,545,268           2,268,767          7,469,124
  
  6. Ordinary resolution to receive the Report of the Remuneration Committee for
  the financial year ended 31 December 2001.
  
         For              Against                Open           Abstentions
     238,243,329         7,318,020            2,270,197          3,416,549
  
  7. Ordinary resolution to authorize the directors pursuant to Section 80 of the
  Companies Act 1985 to exercise all or any powers of the Company to allot
  relevant securities up to an aggregate nominal amount equal to 331/3 per cent of
  the total share capital of the Company in issue on 13 February 2002 and for a
  period expiring five years after the date of the passing of this resolution.
  
         For              Against                Open           Abstentions
     245,831,434         1,338,023            2,270,566          1,808,072
  
  8. Special resolution to empower the Directors pursuant to Section 95 of the
  Companies Act 1985 and subject to the passing of the resolution detailed in
  point 7 above, to allot equity securities of the Company pursuant to the
  authority conferred by the passing of that resolution, as if section 89(1) of
  the Companies Act 1985 did not apply to such allotments, provided that this
  power shall expire five years after the date of passing the resolution and that
  it is limited to certain equity securities and that it is limited 5 per cent of
  the issued share capital at the date of the last published accounts of the
  Company.
  
         For              Against                Open           Abstentions
     246,765,968         1,691,295            2,272,950           517,882
  
  
  <PAGE>
  
  9. Ordinary resolution to authorize the directors to amend the rules of the
  Shire Pharmaceuticals Group plc Employee Stock Purchase Plan (ESPP) to allow all
  full and part-time employees to be eligible to participate in the ESPP with
  immediate effect.
  
         For              Against                Open           Abstentions
     228,655,295         17,344,911           2,271,267          2,976,622
  
  10. Special resolution to generally and unconditionally authorize the directors
  to make market purchases of not more than 48,259,763 ordinary shares of 5p each
  in its share capital at not less than 5 p per share and not more than 5% above
  the average of the middle market quotations for the ordinary shares in the
  Company taken from the London Stock Exchange Daily Official List for the 5
  business days immediately preceding the day on which the shares are contracted
  to be purchased provided that this authority shall expire at the conclusion of
  the next Annual General Meeting of the Company.
  
         For             Against                 Open           Abstentions
     247,097,682         129,214              2,270,617          1,750,582
  
  The following Directors continued in their term of office:
  
  Dr Francesco Bellini
  Dr Bernard Canavan*
  The Hon James Grant
  Mr Angus Russell
  Mr Rolf Stahel
  Dr Wilson Totten
  Mr Gerard Veilleux
  
  * Shire regrets to announce that Dr Canavan died on August 11, 2002.
  
  ITEM 5. OTHER INFORMATION
  
  None
  
  
  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
  
  (a)  Reports on Form 8-K
  
       During the second quarter ended June 30, 2002, the following reports on
       Form 8-K were filed by the Company with the Securities and Exchange
       Commission:
  
       Form 8-K (Item 5 - Other Events), date of earliest event reported May 3,
       2002, with respect to determination of foreign private issuer status.
  
       Form 8-K (Item 5 - Other Events, and Item 7 - Financial Statements and
       Exhibits), date of earliest event reported May 7, 2002, with respect to
       Notice of Annual General Meeting and Form of Proxy.
  
       Form 8-K (Item 5 - Other Events), date of earliest event reported May 15,
       2002, with respect to press release announcement.
  
       Form 8-K (Item 5 - Other Events, and Item 7 - Financial Statements and
       Exhibits), date of earliest event reported May 22, 2002, with respect to
       the published transcript of an investor presentation held in Philadelphia,
       Pennsylvania.
  
       During the period between June 30, 2002 and the filing of this form 10-Q,
       the following report on Form 8-K was filed by the Company with the
       Securities and Exchange Commission:
  
  
  <PAGE>
  
       Form 8-K (Item 4 - Changes in the Registrant's Certifying Accountant), on
       July 31, 2002 Arthur Andersen informed Shire Pharmaceuticals Group plc (the
       Registrant) that it would no longer be able to serve as the Registrant's
       independent auditors and submitted its letter of resignation. The
       Registrant subsequently engaged the services of Deloitte & Touche effective
       July 31, 2002.
  
  
  SIGNATURES
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  Registrant has duly caused this Report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
  SHIRE PHARMACEUTICALS GROUP PLC
  (Registrant)
  
  
  
  
  Date:    August 14, 2002                    By:      /s/ Angus C Russell
                                                       ---------------------------
                                                       Angus C Russell
                                                       Group Finance Director
  
  
  
  Date:    August 14, 2002                    By:      /s/ Rolf Stahel
                                                       ---------------------------
                                                       Rolf Stahel
                                                       Chief Executive
  
  
  <PAGE>
  
  
                                    Certification
                            Accompanying Form 10-Q Report
                         of Shire Pharmaceuticals Group plc
              Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                  (Chapter 63, Title 18 U.S.C. ss.1350(a) and (b))
  
  
       Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chapter 63,
  Title 18 U.S.C. ss.1350(a) and (b)), each of the undersigned hereby certifies
  that, to the best of their respective knowledge and belief, the Quarterly Report
  on Form 10-Q for the period ended June 30, 2002 of Shire Pharmaceuticals Group
  plc ("Company") fully complies with the requirements of Section 13(a) or
  Section 15(d) of the Securities Exchange Act of 1934 and that the information
  contained in such Report fairly presents, in all material respects, the
  financial condition and results of operations of the Company.
  
  
  
  Dated:  August 14, 2002          /s/ Rolf Stahel
                                   ---------------------------------
                                   Rolf Stahel
                                   Chief Executive
                                   Shire Pharmaceuticals Group plc
  
  
  Dated:  August 14, 2002          /s/ Angus C Russell
                                   ---------------------------------
                                   Angus C. Russell
                                   Group Finance Director
                                   Shire Pharmaceuticals Group plc
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text: FORM 10-Q
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934
                         For the Quarter Ended June 30, 2002
  
                           Commission File Number: 0-29630
  
                           SHIRE PHARMACEUTICALS GROUP PLC
               (Exact name of registrant as specified in its charter)
  
                      England and Wales                           98-0359573
                (State or other jurisdiction                   (I.R.S. Employer
              of incorporation or organization)              Identification No.)
  
      Hampshire International Business Park, Chineham,
               Basingstoke, Hampshire, England                     RG24 8EP
          (Address of principal executive offices)                (Zip Code)
  
                                   44 1256 894 000
                (Registrant's telephone number, including area code)
  
  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 the number of shares outstanding of each of the issuer's classes of
  Common Stock, as of the latest practical date.
  
              Class                         Outstanding at August 6, 2002
  
  Common Stock: Ordinary Shares                      483,355,570
  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 and
  commercialization, patents, government regulation and approval, including but
  not limited to the expected product approval date of lanthanum carbonate
  (FOSRENOL(TM)/FOZNOL(TM)), the impact of competitive products, including but not
  limited to the impact of same on Shire's ADHD franchise, and other risks and
  uncertainties detailed from time to time in our filings, including the Annual
  Report filed on Form 10-K by Shire with the Securities and Exchange Commission.
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  Financial Statements
  SHIRE PHARMACEUTICALS GROUP PLC
                             CONSOLIDATED BALANCE SHEETS
           (In thousands of U.S. dollars, except share and per share data)
  
                                                                                       (Unaudited)
                                                                                          June 30,          December 31,
                                                                                              2002                  2001
  ASSETS                                                                               -----------           -----------
  Current assets:
  Cash and cash equivalents                                                                714,523               118,040
  Marketable securities and other current asset investments                                225,890               723,911
  Accounts receivable, net                                                                 144,711               193,913
  Inventories, net                                                                          57,791                46,690
  Deferred tax asset                                                                        26,811                19,430
  Prepaid expenses and other current assets                                                 36,746                38,571
                                                                                      ------------          ------------
  Total current assets                                                                   1,206,472             1,140,555
  
  Investments                                                                               72,533                68,743
  Property, plant and equipment, net                                                       117,662               113,347
  Intangible assets, net                                                                   567,808               549,044
  Deferred tax asset                                                                         9,926                12,874
  Other assets                                                                              25,599                26,168
                                                                                      ------------          ------------
  Total assets                                                                           2,000,000             1,910,731
                                                                                      ------------          ------------
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
  Current instalments of long-term debt                                                      2,270                 4,325
  Accounts and notes payable                                                               150,631               167,152
  Unearned income                                                                                -                17,409
  Other current liabilities                                                                 11,422                42,730
                                                                                      ------------          ------------
  Total current liabilities                                                                164,323               231,616
  Long-term debt, excluding current instalments                                            401,953               402,481
  Other long-term liabilities                                                               12,855                13,645
                                                                                      ------------          ------------
  Total liabilities                                                                        579,131               647,742
                                                                                      ------------          ------------
  Shareholders' equity:
  Common stock, 5p par value: 800,000,000 shares authorized; and
  483,068,965 shares issued and outstanding (2001: 481,817,487)                             39,932                39,861
  Exchangeable shares: 5,881,066 shares issued and outstanding (2001:
  5,978,902)                                                                               272,855               277,386
  Additional paid-in capital                                                             1,023,347             1,014,796
  Accumulated other comprehensive losses                                                  (55,329)              (93,009)
  Accumulated surplus                                                                      140,064                23,955
                                                                                      ------------          ------------
  Total shareholders' equity                                                             1,420,869             1,262,989
                                                                                      ------------          ------------
  Total liabilities and shareholders' equity                                             2,000,000             1,910,731
                                                                                      ------------          ------------
  The accompanying notes are an integral part of these financial statements.
  SHIRE PHARMACEUTICALS GROUP PLC
                          CONSOLIDATED STATEMENTS OF INCOME
           (In thousands of U.S. dollars, except share and per share data)
                                     (Unaudited)
  
                                                    3 months to      3 months to      6 months to       6 months to
                                                       June 30,         June 30,         June 30,          June 30,
                                                           2002             2001             2002              2001
                                                   ------------     ------------     ------------      ------------
  Product sales                                         212,915          168,577          415,633           320,091
  Licensing and development                                 923              244            1,605             3,286
  Royalties                                              40,512           39,172           80,088            72,063
  Other revenues                                          (212)              471                5               746
                                                   ------------     ------------     ------------      ------------
  Total revenues                                        254,138          208,464          497,331           396,186
  
  Costs and expenses:
  Cost of revenues                                     (31,174)         (26,659)         (57,685)          (55,044)
  Research and development                             (46,802)         (41,827)         (96,531)          (79,511)
  Selling, general and administrative
  (inclusive of stock option compensation
  charge of  $152,000, $232,000, ($150,000)
  and $2,352,000 respectively)                         (98,473)         (75,165)        (192,550)         (144,326)
  Asset impairments and restructuring charges                 -         (85,447)                -          (85,447)
  Merger transaction expenses                                 -         (83,470)                -          (83,470)
  Losses on dispositions of assets                        (116)          (8,098)            (116)           (8,098)
                                                   ------------     ------------     ------------      ------------
  Total operating expenses                            (176,565)        (320,666)        (346,882)         (455,896)
                                                   ------------     ------------     ------------      ------------
  Operating income/(loss)                                77,573        (112,202)          150,449          (59,710)
  
  Interest income                                         4,820            4,471            9,551             9,611
  Interest expense                                      (1,796)          (1,684)          (3,773)           (4,682)
  Other income, net                                         945            2,909            2,830             3,679
                                                   ------------     ------------     ------------      ------------
  Total other income, net                                 3,969            5,696            8,608             8,608
                                                    -----------      -----------      -----------       -----------
  Income/(loss) before income taxes                      81,542        (106,506)          159,057          (51,102)
  
  Income taxes                                         (22,235)         (17,685)         (42,948)          (31,624)
                                                   ------------     ------------     ------------      ------------
  Net income/(loss)                                      59,307        (124,191)          116,109          (82,726)
                                                   ------------     ------------     ------------      ------------
  
  Net income/(loss) per share:
  Basic                                                   11.9c          (25.3c)            23.2c           (16.9c)
  Diluted                                                 11.6c          (25.3c)            22.6c           (16.9c)
  
  Weighted average number of shares:
  Basic                                             500,365,947      489,977,184      500,147,383       489,205,296
  Diluted                                           523,990,414      489,977,184      525,324,877       489,205,296
  SHIRE PHARMACEUTICALS GROUP PLC
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
                                                                                            6 months to      6 months to
                                                                                               June 30,         June 30,
                                                                                                   2002             2001
  Cash flows from operating activities:                                                 ---------------  ---------------
  Net income/(loss)                                                                             116,109         (82,726)
  Adjustments to reconcile net income/(loss) to net cash provided by operating
  activities:
  Depreciation and amortization                                                                  22,312           22,027
  Stock option compensation                                                                       (150)            2,352
  Tax benefit of stock option compensation charged directly to equity                               689            3,307
  Non cash exchange gains and losses                                                              1,672          (5,031)
  Write-down of long-term investments                                                             2,500           24,937
  Write-down of intangible assets                                                                     -           20,890
  Write-down of net assets of business transferred under contractual arrangements                     -           30,811
  
  Loss on sale of fixed assets                                                                      116            8,098
  Changes in assets and liabilities:
  Decrease in accounts receivable                                                                53,404           17,735
  (Increase)/decrease in inventory                                                              (9,987)            1,671
  (Increase)/decrease in deferred tax asset                                                     (4,433)           13,768
  Decrease/(increase) in prepayments and other current asset investments                          4,328         (13,414)
  Decrease in other assets                                                                          569            1,064
  (Decrease)/increase in accounts and notes payable                                            (24,543)           34,957
  Decrease in unearned income                                                                  (17,409)                -
  Decrease in other current liabilities                                                        (26,609)          (7,186)
  Decrease in other long-term liabilities                                                         (790)          (1,757)
                                                                                        ---------------  ---------------
  Net cash provided by operating activities                                                     117,778           71,503
                                                                                        ---------------  ---------------
  Cash flows from investing activities:
  Redemption of marketable securities                                                                 -           38,754
  Decrease in short-term deposits                                                               498,021           98,342
  Purchase of long-term investments                                                             (3,086)         (11,107)
  Purchase of intangible assets                                                                (19,040)         (32,035)
  Purchase of fixed assets                                                                      (7,648)          (6,044)
  Proceeds from sale of other assets                                                                  -              547
  Proceeds from sale of fixed assets                                                                  -            1,200
                                                                                        ---------------  ---------------
  Net cash provided by investing activities                                                     468,247           89,657
                                                                                        ---------------  ---------------
  
  Cash flows from financing activities:
  Payments on long-term debt and notes                                                          (2,583)        (201,876)
  Proceeds from issue of common stock, net of expenses                                                -             (17)
  Proceeds from exercise of options                                                               3,552           23,201
                                                                                        ---------------   --------------
  Net cash provided by/(used in) financing activities                                               969        (178,692)
                                                                                        ---------------   --------------
  Effect of foreign exchange rate changes on cash and cash equivalents                            9,489          (3,910)
                                                                                        ---------------   --------------
  Net increase/(decrease) in cash and cash equivalents                                          596,483         (21,442)
  Cash and cash equivalents at beginning of period                                              118,040           93,266
                                                                                        ---------------   --------------
  Cash and cash equivalents at end of period                                                    714,523           71,824
                                                                                        ---------------   --------------
  CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
                                                    3 months to      3 months to       6 months to      6 months to
                                                       June 30,         June 30,          June 30,         June 30,
                                                           2002             2001              2002             2001
                                                   ------------     ------------      ------------     ------------
  Net income/(loss)                                      59,307        (124,191)           116,109         (82,726)
  Foreign currency translation adjustments               43,644            2,609            37,680         (29,563)
  Unrealized holding gains/(losses) on
  non-current investments                                     -               14                 -            (196)
                                                   ------------     ------------      ------------     ------------
  Comprehensive income/(loss)                           102,951        (121,568)           153,789        (112,485)
                                                   ------------     ------------      ------------     ------------
  There are no tax effects related to the items included above.
  SHIRE PHARMACEUTICALS GROUP PLC
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  
  1. Summary of Significant Accounting Policies
  
  a) Description of Operations and Principles of Consolidation
  
  Shire Pharmaceuticals Group plc (the Company) is an international specialty
  pharmaceutical company with a strategic focus on three therapeutic areas:
  central nervous system disorders, oncology and anti-infectives. The Company's
  strategy is further supported by two technology platforms, drug delivery and
  biologics.
  
  The Company has sales and marketing subsidiaries with a portfolio of products
  targeting the U.S., Canada, the U.K., the Republic of Ireland, France, Germany,
  Italy and Spain. Shire also covers other significant pharmaceutical markets
  indirectly through distributors. The business is operated and managed within
  three individual operating segments: U.S., International and global research and
  development. Within these segments, revenues are derived primarily from three
  sources: sales of products by the Company's own sales and marketing operations,
  royalties and licensing and development fees.
  
  The Company is referred to as "specialty" because its principal products tend to
  be prescribed by specialists as opposed to primary care physicians. The
  Company's main approach is to start projects in-house through research and
  advanced drug delivery or to in-license projects, and then to develop them and
  launch them using its sales and marketing capability in eight of the key world
  markets (to complete its geographic coverage of the key world pharmaceutical
  markets, Shire intends to build a presence in Japan by 2004). The Company seeks
  to protect the intellectual property upon which it relies through a range of
  patents and patent applications (both its own and those of its licensors).
  
  The Company's principal products include:
  
       o    in the U.S., ADDERALL XR(TM) and ADDERALL(TM) for the treatment of
            Attention Deficit Hyperactivity Disorder (ADHD); AGRYLIN(TM) for the
            treatment of elevated blood platelets; PENTASA(TM) for the treatment
            of ulcerative colitis; CARBATROL(TM) for the treatment of epilepsy;
            and PROAMATINE(TM) for the treatment of postural hypotension. In
            addition, the Company receives royalties on sales of REMINYL* for the
            treatment of Alzheimer's disease, marketed by Johnson & Johnson, and
            on EPIVIR**, COMBIVIR** and TRIZIVIR** for the treatment of HIV/AIDS
            and EPIVIR-HBV** for the treatment of hepatitis B, each marketed by
            GlaxoSmithKline;
  
       o    in the U.K. and the Republic of Ireland, the CALCICHEW(TM)range, used
            primarily as adjuncts in the treatment of osteoporosis, and REMINYL,
            which was launched in September 2000 and is co-promoted by
            Janssen-Cilag;
  
       o    in Canada, 3TC** for the treatment of HIV/AIDS, COMBIVIR and
            HEPTOVIR** (all marketed in partnership with GlaxoSmithKline);
            AMATINE(TM); SECOND LOOK(TM), a breast cancer diagnostics product for
            which the Company received FDA approval in January 2002; and FLUVIRAL
            S/F(TM), a vaccine for the prevention of influenza; and
  
       o    in the Rest of the World, royalties on the sales of ZEFFIX** for the
            treatment of hepatitis B, marketed by GlaxoSmithKline, and royalties
            on sales of REMINYL from Janssen Pharmaceutica.
  
  In addition, the Company has a number of products in late stage development
  including FOSRENOL(TM) (FOZNOL(TM)) for the treatment of high blood phosphate
  levels associated with kidney failure and TROXATYL(TM) for the treatment of
  leukemia and pancreatic cancer. 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 U.S. FDA on April 30, 2002.
  The accompanying consolidated financial statements include the accounts of Shire
  Pharmaceuticals Group plc and all its subsidiary undertakings after elimination
  of intercompany accounts and transactions.
  
  *        Registered trademark of Johnson and Johnson
  **       Registered trademark of GlaxoSmithKline
  (TM)     Unless otherwise indicated, all product names set out in this document
           are trademarks of Shire or companies within the Shire Group, many of
           which are the subject of trademark registrations in certain
           territories.
  
  b) Basis of Presentation
  
  The accompanying consolidated financial statements, which include the operations
  of the Company and its wholly owned subsidiaries and the financial information
  included herein, are unaudited. They have been prepared in accordance with
  generally accepted accounting principles in the United States and Securities and
  Exchange Commission regulations for interim reporting. Certain information and
  footnote disclosures normally included in financial statements prepared in
  accordance with generally accepted accounting principles in the United States
  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. These consolidated
  financial statements should be read in conjunction with the Company's audited
  consolidated financial statements for the three years ended December 31, 2001
  and notes thereto. The results for the period ended June 30, 2002 are not
  necessarily indicative of the results that may be expected for the year ending
  December 31, 2002.
  
  c) New Accounting Pronouncements
  
  In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
  Obligations. SFAS No. 143 requires that the fair value of a liability for asset
  retirement obligations be recognized in the period in which it is incurred if a
  reasonable estimate of the fair value can be made. The associated asset
  retirement costs are capitalized as part of the carrying amount of the related
  long-lived asset. SFAS No. 143 is effective for financial statements issued for
  fiscal years beginning after June 15, 2002. The Company has assessed the
  potential impact of the adoption of SFAS No. 143 and concluded that there is no
  impact.
  
  2. Inventory
                                            June 30,           December 31,
                                                2002                   2001
                                               $'000                  $'000
                                      --------------         --------------
  Finished goods                              24,961                 19,880
  Work-in-process                             21,352                 18,262
  Raw materials                               11,478                  8,548
                                      --------------         --------------
                                              57,791                 46,690
                                      --------------         --------------
  3. Analysis of revenue, operating income and reportable segments
  
  The Company has disclosed segment information for the individual operating areas
  of the business based on the way in which the business is managed and
  controlled. Shire's principal reporting segments are U.S., International and
  Global Research and Development, each being managed and monitored separately.
  The Company evaluates performance based on operating income.
  Three months ended June 30, 2002                            U.S.    International             R&D            Total
                                                             $'000            $'000           $'000            $'000
                                                        ----------       ----------      ----------       ----------
  Product sales                                            179,949           32,966               -          212,915
  Licensing and development                                    662              261               -              923
  Royalties                                                      7           40,505               -           40,512
  Other revenues                                                 -            (212)               -            (212)
                                                        ----------       ----------      ----------       ----------
  Total revenues                                           180,618           73,520               -          254,138
                                                        ----------       ----------      ----------       ----------
  
  Cost of revenues                                          18,521           12,653               -           31,174
  Research and development                                       -                -          46,802           46,802
  Selling, general and administrative                       57,292           29,042               -           86,334
  Depreciation and amortization                              7,534            4,605               -           12,139
  Loss on dispositions of assets                               116                -               -              116
                                                        ----------       ----------      ----------       ----------
  Total operating expenses                                  83,463           46,300          46,802          176,565
                                                        ----------       ----------      ----------       ----------
  Operating income/(loss)                                   97,155           27,220        (46,802)           77,573
                                                        ----------       ----------      ----------       ----------
  
  Three months ended June 30, 2001                            U.S.    International             R&D            Total
                                                             $'000            $'000           $'000            $'000
                                                        ----------       ----------      ----------       ----------
  Product sales                                            141,648           26,929               -          168,577
  Licensing and development                                    244                -               -              244
  Royalties                                                    120           39,052               -           39,172
  Other revenues                                                 -              471               -              471
                                                        ----------       ----------      ----------       ----------
  Total revenues                                           142,012           66,452               -          208,464
                                                        ----------       ----------      ----------       ----------
  
  Cost of revenues                                          17,616            9,043               -           26,659
  Research and development                                       -                -          41,827           41,827
  Selling, general and administrative                       45,580           18,381               -           63,961
  Depreciation and amortization                              5,410            5,794               -           11,204
  Asset impairments and restructuring charges                    -           85,447               -           85,447
  Merger transaction expenses                                    -           83,470               -           83,470
  Losses on dispositions of assets                               -            8,098               -            8,098
                                                        ----------       ----------      ----------       ----------
  Total operating expenses                                  68,606          210,233          41,827          320,666
                                                        ----------       ----------      ----------       ----------
  Operating income/(loss)                                   73,406        (143,781)        (41,827)        (112,202)
                                                        ----------       ----------      ----------       ----------
  Six months ended June 30, 2002                              U.S.    International             R&D             Total
                                                             $'000            $'000           $'000             $'000
                                                        ----------       ----------      ----------        ----------
  Product sales                                            353,473           62,160               -           415,633
  Licensing and development                                  1,203              402               -             1,605
  Royalties                                                    221           79,867               -            80,088
  Other revenues                                                 -                5               -                 5
                                                        ----------       ----------      ----------        ----------
  Total revenues                                           354,897          142,434               -           497,331
                                                        ----------       ----------      ----------        ----------
  
  Cost of revenues                                          32,941           24,744               -            57,685
  Research and development                                       -                -          96,531            96,531
  Selling, general and administrative                      113,743           56,495               -           170,238
  Depreciation and amortization                             13,479            8,833               -            22,312
  Loss on dispositions of assets                               116                -               -               116
                                                        ----------       ----------      ----------        ----------
  Total operating expenses                                 160,279           90,072          96,531           346,882
                                                        ----------       ----------      ----------        ----------
  Operating income/(loss)                                  194,618           52,362        (96,531)           150,449
                                                        ----------       ----------      ----------        ----------
  
  Six months ended June 30, 2001                              U.S.    International             R&D             Total
                                                             $'000            $'000           $'000             $'000
                                                        ----------       ----------      ----------        ----------
  Product sales                                            268,452           51,639               -           320,091
  Licensing and development                                  2,329              957               -             3,286
  Royalties                                                    180           71,883               -            72,063
  Other revenues                                                 -              746               -               746
                                                        ----------       ----------      ----------        ----------
  Total revenues                                           270,961          125,225               -           396,186
                                                        ----------       ----------      ----------        ----------
  
  Cost of revenues                                          35,493           19,551               -            55,044
  Research and development                                       -                -          79,511            79,511
  Selling, general and administrative                       81,986           40,313               -           122,299
  Depreciation and amortization                              9,870           12,157               -            22,027
  Asset impairments and restructuring charges                    -           85,447               -            85,447
  Merger transaction expenses                                    -           83,470               -            83,470
  Losses on dispositions of assets                               -            8,098               -             8,098
                                                        ----------       ----------      ----------        ----------
  Total operating expenses                                 127,349          249,036          79,511           455,896
                                                        ----------       ----------      ----------        ----------
  Operating income/(loss)                                  143,612        (123,811)        (79,511)          (59,710)
                                                        ----------       ----------      ----------        ----------
  4. Net income/(loss) per share
  
  Basic net income/(loss) per share is based upon the net income/(loss) available
  to common stockholders divided by the weighted-average number of common shares
  outstanding during the period. Diluted net income/(loss) per share is based upon
  net income/(loss) available to common stockholders divided by the
  weighted-average number of common shares outstanding during the period and
  adjusted for the effect of all dilutive potential common shares that were
  outstanding during the period.
  
  The following table sets forth the computation of basic and diluted net
  income/(loss) per share:
  3 months to      3 months to      6 months to     6 months to
                                                             June 30,         June 30,         June 30,        June 30,
                                                                 2002             2001             2002            2001
                                                                $'000            $'000            $'000           $'000
                                                     ----------------  ---------------- ---------------- ----------------
  Numerator for basic net income/(loss) per share              59,307        (124,191)          116,109        (82,726)
  Interest charged on convertible debt, net of tax              1,411                -            2,808               -
                                                     ----------------  ---------------- ---------------- ----------------
  Numerator for diluted net income/(loss) per share            60,718        (124,191)          118,917        (82,726)
                                                     ----------------  ---------------- ---------------- ----------------
  
                                                               No. of           No. of    No. of shares   No. of shares
  Weighted average number of shares:                           shares           shares
                                                     ----------------  ---------------- ---------------- ----------------
  Basic  - weighted average number of shares              500,365,947      489,977,184      500,147,383     489,205,296
  Effect of dilutive stock options                          2,357,078                -        3,910,105               -
  Warrants                                                  1,144,179                -        1,144,179               -
  Convertible debt                                         20,123,210                -       20,123,210               -
                                                     ----------------  ---------------- ---------------- ----------------
  Diluted - weighted average number of shares             523,990,414      489,977,184      525,324,877     489,205,296
                                                     ----------------  ---------------- ---------------- ----------------
  Basic net income/(loss) per share                             11.9c          (25.3c)            23.2c         (16.9c)
                                                     ----------------  ---------------- ---------------- ----------------
  Diluted net income/(loss) per share                           11.6c          (25.3c)            22.6c         (16.9c)
                                                     ----------------  ---------------- ---------------- ----------------
  The calculation of weighted average number of shares for the three and six
  months ended June 30, 2001 does not include share options, warrants or
  convertible debt because their inclusion in a loss making period would be
  anti-dilutive.
  
  5. Goodwill and Other Intangible Assets - Adoption of Statement 142
  
  SFAS No. 142 is effective for fiscal years beginning after December 15, 2001.
  The statement directs that goodwill and intangible assets that have indefinite
  useful lives will not be amortized but rather will be tested at least annually
  for impairment. Intangible assets that have finite useful lives will continue to
  be amortized over their useful lives, but without the constraint of an arbitrary
  ceiling.
  
  a) Goodwill
  A reconciliation table for the results for the three and six months ended June
  30, 2001 is provided to exclude the effect of goodwill amortization in
  accordance with transitional disclosures relating to SFAS 142. Results for the
  three and six months ended June 30, 2002 have been prepared in accordance with
  SFAS 142.
  A transitional assessment of goodwill impairment as of January 1, 2002 has been
  completed. The Company has concluded that the fair value of its individual
  reporting units exceeds the carrying value of the net assets including goodwill,
  and hence no adjusting entry is necessary.
  3 months to      3 months to      6 months to     6 months to
                                                        June 30, 2002    June 30, 2001    June 30, 2002   June 30, 2001
                                                                $'000            $'000            $'000           $'000
                                                     ----------------  ---------------- ---------------- ----------------
  Reported net income/(loss)                                   59,307        (124,191)          116,109        (82,726)
  Add back: Goodwill amortization                                   -            2,650                -           5,349
                                                     ----------------  ---------------- ---------------- ----------------
  Adjusted net income/(loss)                                   59,307        (121,541)          116,109        (77,377)
  Interest charged on convertible debt, net of tax              1,411                -            2,808               -
                                                     ----------------  ---------------- ---------------- ----------------
  Numerator for diluted net income/(loss) per share            60,718        (121,541)          118,917        (77,377)
                                                     ----------------  ---------------- ---------------- ----------------
  
                                                               No. of           No. of    No. of shares   No. of shares
  Weighted average number of shares:                           shares           shares
                                                     ----------------  ---------------- ---------------- ----------------
  Basic                                                   500,365,947      489,977,184      500,147,383     489,205,296
  Diluted                                                 523,990,414      489,977,184      525,324,877     489,205,296
  
  Basic earnings per share:
  Reported net income/(loss)                                    11.9c          (25.3c)            23.2c         (16.9c)
  Goodwill amortization (net of tax effect)                         -             0.5c                -            1.1c
                                                     ----------------  ---------------- ---------------- ----------------
  Adjusted net income/(loss)                                    11.9c          (24.8c)            23.2c         (15.8c)
                                                     ----------------  ---------------- ---------------- ----------------
  Diluted earnings per share:
  Reported net income/(loss)                                    11.6c          (25.3c)            22.6c         (16.9c)
  Goodwill amortization (net of tax effect)                         -             0.5c                -            1.1c
                                                     ----------------  ---------------- ---------------- ----------------
  Adjusted net income/(loss)                                    11.6c          (24.8c)            22.6c         (15.8c)
                                                     ----------------  ---------------- ---------------- ----------------
  The calculation of the diluted weighted average number of shares for the three
  and six months ended June 30, 2001 excludes the effects of share options,
  warrants and convertible debt because their inclusion in a loss making period
  would be anti-dilutive.
  
  There is no tax effect related to the inclusion of goodwill amortization in the
  earnings calculation disclosed above.
  
  b) Intangible fixed assets
  
                                                    June 30,            June 30,
                                                        2002                2001
                                                       $'000               $'000
                                                ------------        ------------
  Intellectual property rights acquired              485,036             464,817
  Less: Accumulated amortization                   (100,878)            (75,190)
                                                ------------        ------------
                                                     384,158             389,627
                                                ------------        ------------
  
  The useful economic lives of all intangible assets have been reassessed in
  accordance with SFAS 142.
  Management estimates that the annual amortization charge in respect of
  intangible fixed assets held at June 30, 2002 will be approximately $35 million
  for each of the five years to June 30, 2007. Estimated amortization expense can
  be affected by various factors including future acquisitions and disposals of
  product rights.
  
  6. Consolidated statement of changes in shareholders' equity
  Accumu-
                                                           Exchan-                            lated
                                     Common    Exchan-     geable                             other         Total
                         Common      Stock     geable      shares      Additional   Accumu-   compre-    sharehold-
                         Stock       No.       shares      No.         paid-in      lated     hensive       ers'
                         Amount      Shares    Amount      shares      capital      surplus   losses       equity
                         $'000       000's     $'000       000's       $'000        $'000     $'000         $'000
                       ----------- ----------- ----------- ---------- ------------ ---------- ---------- -------------
  As at January 1,
  2002                     39,861     481,817     277,386      5,979     1,014,796     23,955   (93,009)     1,262,989
  Net income                    -           -           -          -             -    116,109          -       116,109
  Foreign currency
  translation                   -           -           -          -             -          -     37,680        37,680
  Exchange of
  exchangeable shares           -         294     (4,531)       (98)         4,531          -          -             -
  Options exercised            71         958           -          -         3,482          -          -         3,553
  Stock option
  compensation                  -           -           -          -         (150)          -          -         (150)
  Tax benefit
  associated with
  exercise of stock
  options                       -           -           -          -           688          -          -           688
                       ----------- ----------- -----------------------------------------------------------------------
  
  As at June 30, 2002      39,932     483,069     272,855      5,881     1,023,347    140,064   (55,329)     1,420,869
                       ----------- ----------- ----------------------------------------------------------------------
  Each exchangeable share is exchangeable into 3 ordinary shares or one ADS.
  
  7. Contingent liabilities
  
  (i) Phentermine
  
  Shire US Inc. (SUS) is a defendant in twelve lawsuits still pending in both U.S.
  federal and state courts which seek damages for, among other things, personal
  injury arising from phentermine products supplied for the treatment of obesity
  by SUS and several other pharmaceutical companies. SUS, formerly known as Shire
  Richwood Inc., has been sued as a manufacturer and distributor of phentermine,
  an anorectic used in the short-term treatment of obesity and one of the products
  addressed by the lawsuits. The suits relate to phentermine either alone or
  together with fenfluramine or dexenfluramine. The lawsuits generally allege the
  following claims: the defendants marketed phentermine and other products for the
  treatment of obesity and misled users about the products and dangers associated
  with them; the defendants failed adequately to test phentermine individually and
  when taken in combination with the other drugs; and the defendants knew or
  should have known about the negative effects of the drugs and should have
  informed the public about such risks and/or failed to provide appropriate
  warning labels. SUS has been named as a defendant in a total of approximately
  3,800 such phentermine lawsuits, but in all but the twelve cases referenced
  above, SUS has been dismissed as a defendant.
  
  SUS became involved with phentermine through its acquisition of certain assets
  of Rexar Pharmacal Corporation (Rexar) in January 1994. In addition to SUS
  potentially incurring liability as a result of its own production of Oby-Cap, a
  phentermine product, the plaintiffs may additionally seek to impose liability on
  SUS as successor to Rexar. SUS intends vigorously to defend all the lawsuits and
  pursue all available reasonable defenses. SUS denies liability on a number of
  grounds including lack of
  scientific evidence that phentermine, properly prescribed, causes the alleged
  side effects and that SUS did not promote phentermine for long-term combined use
  as part of the "fen/phen" diet. Accordingly, SUS intends to defend vigorously
  any and all claims made against the Group in respect of phentermine and believes
  that liability is neither probable nor quantifiable at this stage of litigation.
  Legal expenses have been paid by Eon Labs Manufacturing Inc. (Eon), the supplier
  to SUS, or Eon's insurance carriers but such insurance is now exhausted. Eon has
  agreed to defend and indemnify SUS in this litigation pursuant to an agreement
  dated November 30, 2000 between Eon and SUS.
  
  At the present stage of litigation, Shire is unable to estimate the level of
  future legal costs after taking into account any available product liability
  insurance and enforceable indemnities. To the extent that any legal costs are
  not covered by insurance or available indemnities, these will be expensed as
  incurred.
  
  (ii) ADDERALL
  
  On September 22, 2000, a lawsuit was filed against Shire in the United States
  District Court for the District of North Dakota. The suit involves an incident
  in 1999 in which a young North Dakota man, Ryan Ehlis, shot and killed his
  infant daughter and wounded himself, allegedly as a result of a psychotic
  reaction to ADDERALL. Mr Ehlis' physician had prescribed ADDERALL for the
  treatment of ADHD. Trial is set to commence in August 2002.Shire intends to
  vigorously defend such action.
  
  On October 3, 2001, a lawsuit was filed against Shire in Boone County Kentucky
  Circuit Court. The suit involves an automobile accident that is alleged to have
  been the result of a psychotic episode experienced by the driver of the car
  following an ingestion of ADDERALL. As a result of the accident, the driver's
  young son was killed. Shire has filed an answer to this lawsuit and intends to
  vigorously defend such action.
  
  On July 27, 2001, Shire received service of a complaint filed in state court in
  Texas that alleged that ADDERALL caused or contributed to a stroke. The
  plaintiff, an adult female aged 39, was prescribed ADDERALL as treatment for her
  ADHD. The complaint alleges that the plaintiff used ADDERALL during the period
  from January 1999 to September 1999. Also named as defendants are two doctors
  who were involved in diagnosing the plaintiff's ADHD and for prescribing
  ADDERALL for its treatment. Trial is set to commence in November 2002. Shire
  intends to vigorously defend such action.
  
  Shire filed a Complaint against Barr Laboratories, Inc. on April 30, 2002 in the
  District Court of New Jersey. In the Complaint, Shire requested a preliminary
  and permanent injunction to prevent Barr from marketing a mixed amphetamine salt
  product in a trade dress similar to that of ADDERALL. Shire requested that Barr
  recall all such products and also asked for damages. In connection with the
  preliminary injunction, Barr has moved to dismiss the Complaint. A hearing on
  the preliminary injunction was held on June 3, 2002. The decision from the
  District Court is pending.
  
  (iii) AGRYLIN
  
  SUS has been named as a defendant in a lawsuit filed in a Texas state court
  involving AGRYLIN. The complaint was served on Shire on December 26, 2001.
  Shire's contract manufacturer for AGRYLIN, Mallinckrodt, Inc., is also a named
  defendant.
  
  The complaint alleges that the Plaintiff suffered a debilitating stroke due to
  the fact that the Plaintiff was allegedly unable to procure this product in some
  fashion. Shire has filed an answer to the complaint in which it denies the
  allegations in the Plaintiffs original petition. Shire intends to vigorously
  defend such action.
  
  (iv) Emory
  
  Shire BioChem was involved in worldwide patent disputes with Emory University
  (Emory) relating to lamivudine wherein Shire BioChem opposed certain patents and
  patent applications of Emory and wherein Emory opposed certain patents and
  patent applications of Shire BioChem. Further detail regarding these disputes is
  provided below. In November 2001, Shire and GlaxoSmithKline (GSK) signed an
  agreement as to the key terms of a global settlement agreement with Emory. In
  May 2002 the parties finalized the Settlement Agreement. Pursuant to the
  Settlement Agreement, Emory has
  granted Shire and GSK an exclusive license under Emory's patent rights for
  lamivudine. The Settlement Agreement provides for the resolution of the below
  noted worldwide patent disputes between the parties relating to lamivudine. The
  settlement involves an upfront payment to Emory by Shire of $2.5 million and a
  royalty payment from Shire of 0.5% on worldwide sales of lamivudine over an 11
  year period commencing on January 1, 2001 and a licence under Shire's FTC patent
  rights, in consideration for the settlement of all claims against Shire and GSK
  relating to lamivudine. The total cost to Shire in 2001 of the settlement
  (including upfront payment) was $7.7 million.
  
  Emory filed oppositions to two of Shire BioChem's granted patent applications in
  Europe which cover oxathiolane nucleosides including lamivudine and dioxolane
  nucleosides, including troxacitabine, related nucleoside analogues and use of
  these analogues for treating viral infections. In oral hearings held in 1999,
  both of these oppositions were dismissed by the Opposition Division of the
  European Patent Office. Emory is not pursuing its appeal of the decision
  relating to oxathiolanes.
  
  Emory had filed an appeal against the dioxolane-related decision in the European
  Patent Office but this appeal has been withdrawn in July 2002. This appeal was
  withdrawn by Emory pursuant to a Binding Material Terms Agreement executed in
  July 2002 by Shire BioChem , Shire, the University of Georgia Research
  Foundation (Georgia) and Triangle Pharmaceuticals Inc. (Triangle). Pursuant to
  the Agreement Shire will grant an exclusive royalty bearing license to Emory,
  sub licensable to Triangle, for certain dioxolane nucleoside analogs, including
  diamino purine dioxolane (DAPD). Emory, Georgia and Triangle will grant an
  exclusive royalty bearing license to Shire for certain dioxolane nucleosides,
  including SPD 756 .The compounds the subject of these licences are in
  development. A low royalty will be payable by Shire upon commercialization of
  SPD 756 .The Binding Material Terms Agreement provides for the resolution of
  worldwide patent disputes relating to the licensed patents.
  
  Emory has filed revocation actions in Australia and South Korea against Shire
  BioChem's granted patents covering lamivudine. Shire BioChem has aggressively
  defended these patents. In accordance with the Settlement Agreement, Emory has
  agreed to withdraw these proceedings relating to lamivudine.
  
  On July 23, 1996, Emory filed a complaint in the U.S. alleging infringement from
  the commercialization of EPIVIR by Shire BioChem and GSK, Shire BioChem's
  exclusive licensee in the U.S., of an Emory U.S. patent granted that same day.
  Shire BioChem considers this patent infringement suit to be without merit and
  has successfully challenged the validity of Emory's patent in the below noted
  interference proceedings.
  
  On May 19, 1998, the United States Patent and Trademark Office (USPTO) declared
  an interference between the Emory patent that is the subject of the above
  mentioned lawsuit and a pending patent application of Shire BioChem. The Board
  of Patent Appeals and Interferences issued a decision on December 21, 2000
  invalidating Emory's patent. Emory had appealed the decision. Pursuant to the
  Settlement Agreement, the infringement suit and Emory's appeal from the
  interference decision were dismissed in June 2002.
  
  Emory has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. Shire BioChem and GSK filed an
  opposition to this grant. An examined patent application filed by Emory claiming
  lamivudine was successfully opposed by Shire BioChem in Australia and Norway.
  Emory has filed an appeal from the Australian decision in the Federal Court of
  Australia. Shire BioChem also filed an appeal from certain portions of the
  decision. These proceedings will be resolved in accordance with the Settlement
  Agreement. An examined patent application filed by Emory claiming lamivudine was
  opposed by Shire BioChem and GSK in South Korea and such Emory claims to
  lamivudine were cancelled by the South Korean Patent Office. Emory has appealed
  this decision. Shire BioChem is aware that Emory has filed patent applications
  in other countries, which Shire BioChem believes may claim similar subject
  matter. All such patent applications and related disputes will be subject to the
  Settlement Agreement.
  
  (v) Yale
  
  On November 23, 1999, the USPTO declared an interference between Shire's
  hepatitis B patent for lamivudine and a patent application filed by Yale
  University (Yale) claiming methods of treating
  hepatitis B using lamivudine. The Company believes that this application is
  licensed to Vion Pharmaceuticals, Inc. (Vion), formerly known as OncoRx, Inc., a
  New Haven, Connecticut-based, U.S. company. On March 28, 2002, the Board of
  Patent Appeals and Interferences issued an order awarding priority to the
  Company's patent. Yale has not appealed from the Board's judgement and the
  Company is not aware of corresponding patent applications by Yale or Vion in
  countries other than the US.
  
  On April 14, 2000, the USPTO declared a further interference between BioChem's
  hepatitis B patent for lamivudine and a patent application by GSK claiming
  methods of treating hepatitis B using lamivudine. There is no guarantee that
  Shire will be successful in this interference and that Shire's patent will be
  maintained.
  
  (vi) Commitments
  
  The Company has undertaken to subscribe to interests in companies and
  partnerships for amounts totalling $39.6 million. As at June 30, 2002 an amount
  of $23.4 million (June 30, 2001: $21.0 million) has been subscribed.
  
  (vii) FLUVIRAL
  
  The Company has signed a ten-year contract with the Government of Canada to
  assure a state of readiness in the case of an influenza pandemic (worldwide
  epidemic) and to provide influenza vaccine for all Canadian citizens in such an
  event. Under the contract, Shire Biologics will also supply the Government of
  Canada with a substantial proportion of its annual influenza vaccine
  requirements over the ten-year period. Subject to mutual agreement, the contract
  can be renewed for a further period of between one and ten years from 2011.
  
  The concept of a state of readiness against an influenza pandemic requires the
  development of sufficient infrastructure and capacity in Canada to provide 100%
  of domestic vaccine needs in the event of an influenza pandemic. Canada would
  require 32 million doses of single-strain (monovalent) flu vaccine within a
  production period of 16 weeks. Shire Biologics will therefore begin expanding
  its current production capacity in order to meet this objective within a
  five-year period.
  
  Shire Biologics is committed to Cdn$4.5 million (approximately $3.0 million) of
  capital expenditure on immoveables for the purpose of achieving the level of
  pandemic readiness required. In addition, a performance bond equal to Cdn$17.5
  million (approximately $11.5 million) has been established to ensure that in the
  event of default by Shire Biologics, adequate funds will be available to
  complete the work according to the terms of the contract.
  
  (viii) Other matters
  
  In addition, the Company is involved in other claims and lawsuits in the normal
  course of business. It is not possible at this time to determine the ultimate
  outcome of any of these claims.
  ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
          of Operations
  
  Results of operations for the three months ended June 30, 2002, as compared with
  those for the three months ended June 30, 2001
  
  Overview of financial results
  
  Total revenues for the three months ended June 30, 2002 increased by 22 per cent
  to $254.1 million as compared to the three months ended June 30, 2001. The
  Company recorded a second quarter net income of $59.3 million (2001: net loss
  $124.2 million after one time merger related expenses and restructuring charges
  of $177.0 million).
  
  Sales and marketing
  
  Product sales of $212.9 million, which represented 84 per cent of total revenues
  for the second quarter 2002, increased by 26 per cent over second quarter 2001
  product sales of $168.6 million. Product sales in the U.S. continue to represent
  a significant percentage of our worldwide sales, 85 per cent in the three months
  ended June 30, 2002 (2001: 84 per cent).
  
  The Company manages and controls the sales and marketing operations on
  geographic lines. The following table presents the Company's net product sales
  by individual operating segment:
  
  Product sales by segment         3 months to       3 months to
                                 June 30, 2002     June 30, 2001
                                         $'000             $'000         % change
  
  United States                        179,949           141,648              +27
  International                         32,966            26,929              +22
                                  ------------      ------------     ------------
  Total product sales                  212,915           168,577              +26
                                  ------------      ------------     ------------
  
  Second quarter combined sales of ADDERALL XR and ADDERALL, marketed in the U.S.
  for the treatment of Attention Deficit Hyperactivity Disorder (ADHD), were
  $104.1 million, representing growth of 50 per cent over the second quarter of
  2001. ADDERALL XR and ADDERALL had a 26 per cent share of the prescription
  market for ADHD in the U.S. in June 2002 compared to 33 per cent in June 2001.
  
  Sales of AGRYLIN, the only U.S. product licensed for the treatment of essential
  thrombocythemia were $29.4 million, a 14 per cent increase over second quarter
  2001 sales of $25.8 million. Shire achieved a prescription share of 26 per cent
  of the total U.S. AGRYLIN market (including Hydrea (a trademark of Bristol Myers
  Squibb Company) and generic hydroxyurea), in June 2002 compared to 21 per cent
  in June 2001.
  
  Sales of PENTASA, licensed for the treatment of ulcerative colitis, were $21.5
  million for the second quarter 2002, 13 per cent higher than the comparable
  period last year. PENTASA had an 18 per cent share of the oral
  mesalamine/obsalazine market in June 2002, consistent with June 2001.
  
  Sales of PROAMATINE, for the treatment of postural hypotension, were $10.9
  million, 3 per cent higher than second quarter 2001 sales of $10.5 million. The
  U.S. prescription market for PROAMATINE and FLORINEF(TM) prescriptions indicates
  that PROAMATINE had a 24 per cent share in June 2002, consistent with June 2001.
  
  CARBATROL containing carbamazapine for the treatment of epilepsy, recorded sales
  growth of 27 per cent from sales of $9.9 million in the three months ended June
  30, 2001 to $12.6 million in the three months ended June 30, 2002. This
  translates to 36 per cent of the U.S. extended release carbamazepine
  prescription market in June 2002, compared to 34 per cent in June 2001.
  Royalties
  
  Royalties increased by $1.3 million in the three months ended June 30, 2002, up
  3 per cent from the three months ended June 30, 2001, to $40.5 million. The
  Company receives royalties from GlaxoSmithKline on the worldwide sales of 3TC
  (for the treatment of HIV infection / AIDS), and ZEFFIX (an oral treatment for
  chronic hepatitis B), with the exception of Canada where a commercialization
  partnership with GSK exists. The Company also receives royalties from J&J on
  sales of REMINYL, for the treatment of Alzheimer's Disease.
  
  Cost of revenues
  
  Gross margin on product sales increased from 84 per cent for the three months
  ended June 30, 2001 to 85 per cent for the three months ended June 30, 2002.
  This is a reflection of the product mix as the higher margin products, ADDERALL
  XR, ADDERALL and AGRYLIN, represented approximately 63 per cent of total product
  sales in the three months ended June 30, 2002 compared to 56 per cent in the
  three months ended June 30, 2001. Improved pricing in respect of the ADHD
  franchise has also contributed to the higher gross margin for the three months
  ended June 30, 2002.
  
  Research and development
  
  R&D expenditure increased 12 per cent to $46.8 million for the three months
  ended June 30, 2002 (2001: $41.8 million). R&D expenditure in second quarter
  2002 represented 18 per cent of revenues compared to 20 per cent in second
  quarter 2001.
  
  Selling, general and administrative expenses
  
  Selling, general and administrative expenses, excluding the effects of a stock
  option compensation charge of $0.2 million (2001: $0.2 million) and depreciation
  and amortization of $12.1 million (2001: $11.2 million), increased by 35 per
  cent to $86.1 million for the three months ended June 30, 2002 (2001: $63.7
  million). This reflects the high promotional spend associated with the ADDERALL
  XR launch. As a percentage of product sales, selling, general and administrative
  costs represented 40 per cent for the second quarter 2002 (2001: 38%).
  
  Interest income and expense
  
  For the three months ended June 30, 2002, the Company received interest income
  of $4.8 million (Q2 2001: $4.5 million). Interest expense increased from $1.7
  million to $1.8 million.
  
  Income taxes
  
  For the three months ended June 30, 2002 income taxes increased $4.5 million to
  $22.2 million from $17.7 million for the three months ended June 30, 2001. The
  Company's effective tax rate before the stock compensation charge was 27 per
  cent for the three months ended June 30, 2002 (Q2 2001: 25 per cent before stock
  compensation charge and exceptional items). The Company has recorded net
  deferred tax assets of $36.7 million (June 30, 2001: $32.3 million). Realization
  is dependent upon generating sufficient taxable income to utilize such assets.
  Although realization on these assets is not assured, management believes it is
  more likely than not that the deferred tax assets will be realized.
  
  Results of operations for the six months ended June 30, 2002, as compared with
  those for the six months ended June 30, 2001
  
  Overview of financial results
  
  Total revenues for the six months ended June 30, 2002 increased by 26 per cent
  to $497.3 million as compared to the six months ended June 30, 2001. The Company
  recorded a half year net income of $116.1 million (2001: net loss $82.7 million
  after one time merger related expenses and restructuring charges of $177.0
  million).
  Sales and marketing
  
  Product sales of $415.6 million, which represented 84 per cent of total
  revenues, increased by 30 per cent over half year 2001 product sales of $320.1
  million. Product sales in the U.S. continue to represent a significant
  percentage of our worldwide product sales, 85 per cent in the six months ended
  June 30, 2002 (2001: 84 per cent).
  
  The Company manages and controls the sales and marketing operations on
  geographic lines. The following table presents the Company's net product sales
  by individual operating segment:
  
  Product sales by segment         6 months to       6 months to
                                      June 30,          June 30,
                                          2002              2001
                                         $'000             $'000         % change
  
  United States                        353,473           268,452              +32
  International                         62,160            51,639              +20
                                  ------------      ------------     ------------
  Total product sales                  415,633           320,091              +30
                                  ------------      ------------     ------------
  
  Cost of revenues
  
  Gross margin on product sales increased from 83 per cent for the six months
  ended June 30, 2001 to 86 per cent for the six months ended June 30, 2002. The
  main reason for this is that higher margin products represented a higher
  proportion of total sales in the current period.
  
  Research and development
  
  Research and development expenditure increased 21 per cent to $96.5 million for
  the six months ended June 30, 2002 (2001: $79.5 million). R&D expenditure in
  half year 2002 represented 19 per cent of revenues compared to 20 per cent in
  first half year 2001.
  
  Selling, general and administrative expenses
  
  Selling, general and administrative expenses, excluding the effects of a stock
  option compensation credit of $0.2 million (2001: charge $2.4 million) and
  depreciation and amortization of $22.3 million (2001: $22.0 million), increased
  by 42 per cent to $170.4 million for the six months ended June 30, 2002 (2001:
  $119.9 million). This reflects the high promotional spend associated with the
  ADDERALL XR launch. As a percentage of product sales, selling, general and
  administrative costs represented 41 per cent for the half year 2002 (2001: 37%).
  
  Interest income and expense
  
  For the six months ended June 30, 2002, the Company received interest income of
  $9.6 million (Q2 2001: $9.6 million). Interest expense decreased from $4.7
  million to $3.8 million. This decrease reflects an improved debt profile
  resulting from the repayment of a $125 million term loan in May 2001 and the
  subsequent issue of the $400 million convertible notes in August 2001, which
  bear interest at the comparatively lower fixed rate of 2% per annum.
  
  Income taxes
  
  For the six months ended June 30, 2002 income taxes increased $11.3 million to
  $42.9 million from $31.6 million for the six months ended June 30, 2001. The
  Company's effective tax rate before the stock compensation credit was 27 per
  cent for the six months ended June 30, 2002 (2001: 25 per cent). The Company has
  recorded net deferred tax assets of $36.7million. Realization is dependent upon
  generating sufficient taxable income to utilize such assets. Although
  realization on these assets is not assured, management believes it is more
  likely than not that the deferred tax assets will be realized.
  Liquidity and Financial Condition
  
  The Company's funding requirements depend on a number of factors, including the
  Company's product development programs, business and product acquisitions, the
  level of resources required for the expansion of marketing capabilities as the
  product base expands, increased investment in accounts receivable and inventory
  which may arise as sales levels increase, competitive and technological
  developments, the timing and cost of obtaining required regulatory approvals for
  new products and the continuing revenues generated from sales of its key
  products.
  
  At June 30, 2002, the Company had net cash funds available as follows:
  
                                                    June 30,         December 31,
                                                        2002                 2001
                                                       $'000                $'000
                                              --------------       --------------
  Cash and cash equivalents                          714,523              118,040
  Marketable securities and other current
    asset investments                                225,890              723,911
  Debt                                             (404,223)            (406,806)
                                              --------------       --------------
  Net cash                                           536,190              435,145
                                              --------------       --------------
  
  Net cash provided by operating activities for the six months ended June 30, 2002
  was $117.8 million compared to $71.5 million for the six months ended June 30,
  2001.
  
  Investing activities provided $468.2 million for the six months ended June 30,
  2002 (2001: $89.7 million). This was due to an inflow of $498.0 million of cash
  by reducing funds placed on short-term deposit, and outflows in respect of
  capital expenditure on long-term investments, intangible assets and fixed assets
  of $29.8 million.
  
  Investing activities for the six months ended June 30, 2001 included $137.1
  million from the redemption of marketable securities and reduction in cash
  placed on short-term deposit, and outflows in respect of net capital expenditure
  on long-term investments, intangible assets and fixed assets of $47.4 million.
  
  Financing activities provided $1.0 million for the six months ended June 30,
  2002 (2001: used $178.7 million). The $1.0 million inflow included $3.6 million
  received from exercises of employee stock options and $2.6 million in repayments
  of long-term debt.
  
  Financing activities for the six months ended June 30, 2001 included a $23.2
  million inflow from exercises of employee stock options and repayments of
  long-term debt totalling $201.9 million.
  
  Capital expenditure
  
  Capital expenditure on tangible fixed assets for the six months ended June 30,
  2002 was $7.6 million, which was primarily laboratory and computer equipment
  purchased across the Group. Other capital expenditure related to the purchase of
  long-term investments ($3.1 million) and intangible assets ($19.0 million). The
  expenditure on intangible assets was in respect of SOLARAZE(TM), a product
  purchased from Skye Pharma plc and Bioglan Pharma plc (in administration) in May
  2002 for the treatment of a skin condition related to excessive exposure to the
  sun, actinic keratosis.
  
  Capital expenditure on tangible fixed assets for the six months ended June 30,
  2001 was $6.0 million, which included $1.7 million of equipment related to the
  Company's new head office facility occupied from March 2001. Expenditure was
  offset by $1.2 million in proceeds received on the disposal of the Toronto
  facility. Other capital expenditure related to the purchase of long-term
  investments ($11.1 million) and $32.0 million for new products, including
  MONOCID(TM) and INDURGAN(TM) marketed by the Company's Italian and Spanish
  operations respectively.
  ITEM 3.  Qualitative and Quantitative Disclosures about Market Risk
  
  Item 7A of the Group's Annual Report on Form 10-K for the year ended December
  31, 2001 contains a detailed discussion of the Group's market risk exposure in
  relation to interest rate market risk and foreign exchange market risk. There
  have been no material changes in the Group's market risk exposure since December
  31, 2001.
  
  PART II.   OTHER INFORMATION
  
  ITEM 1. LEGAL PROCEEDINGS
  
  (i) Phentermine
  
  Shire US Inc. (SUS) is a defendant in twelve lawsuits still pending in both U.S.
  federal and state courts which seek damages for, among other things, personal
  injury arising from phentermine products supplied for the treatment of obesity
  by SUS and several other pharmaceutical companies. SUS, formerly known as Shire
  Richwood Inc., has been sued as a manufacturer and distributor of phentermine,
  an anorectic used in the short-term treatment of obesity and one of the products
  addressed by the lawsuits. The suits relate to phentermine either alone or
  together with fenfluramine or dexenfluramine. The lawsuits generally allege the
  following claims: the defendants marketed phentermine and other products for the
  treatment of obesity and misled users about the products and dangers associated
  with them; the defendants failed adequately to test phentermine individually and
  when taken in combination with the other drugs; and the defendants knew or
  should have known about the negative effects of the drugs and should have
  informed the public about such risks and/or failed to provide appropriate
  warning labels. SUS has been named as a defendant in a total of approximately
  3,800 such phentermine lawsuits, but in all but the twelve cases referenced
  above, SUS has been dismissed as a defendant.
  
  SUS became involved with phentermine through its acquisition of certain assets
  of Rexar Pharmacal Corporation (Rexar) in January 1994. In addition to SUS
  potentially incurring liability as a result of its own production of Oby-Cap, a
  phentermine product, the plaintiffs may additionally seek to impose liability on
  SUS as successor to Rexar. SUS intends vigorously to defend all the lawsuits and
  pursue all available reasonable defenses. SUS denies liability on a number of
  grounds including lack of scientific evidence that phentermine, properly
  prescribed, causes the alleged side effects and that SUS did not promote
  phentermine for long-term combined use as part of the "fen/phen" diet.
  Accordingly, SUS intends to defend vigorously any and all claims made against
  the Group in respect of phentermine and believes that liability is neither
  probable nor quantifiable at this stage of litigation. Legal expenses have been
  paid by Eon Labs Manufacturing Inc. (Eon), the supplier to SUS, or Eon's
  insurance carriers but such insurance is now exhausted. Eon has agreed to defend
  and indemnify SUS in this litigation pursuant to an agreement dated November 30,
  2000 between Eon and SUS.
  
  At the present stage of litigation, Shire is unable to estimate the level of
  future legal costs after taking into account any available product liability
  insurance and enforceable indemnities. To the extent that any legal costs are
  not covered by insurance or available indemnities, these will be expensed as
  incurred.
  
  (ii) ADDERALL
  
  On September 22, 2000, a lawsuit was filed against Shire in the United States
  District Court for the District of North Dakota. The suit involves an incident
  in 1999 in which a young North Dakota man, Ryan Ehlis, shot and killed his
  infant daughter and wounded himself, allegedly as a result of a psychotic
  reaction to ADDERALL. Mr Ehlis' physician had prescribed ADDERALL for the
  treatment of ADHD. Trial is set to commence in August 2002.Shire intends to
  vigorously defend such action.
  
  On October 3, 2001, a lawsuit was filed against Shire in Boone County Kentucky
  Circuit Court. The suit involves an automobile accident that is alleged to have
  been the result of a psychotic episode experienced by the driver of the car
  following an ingestion of ADDERALL. As a result of the accident,
  the driver's young son was killed. Shire has filed an answer to this lawsuit and
  intends to vigorously defend such action.
  
  On July 27, 2001, Shire received service of a complaint filed in state court in
  Texas that alleged that ADDERALL caused or contributed to a stroke. The
  plaintiff, an adult female aged 39, was prescribed ADDERALL as treatment for her
  ADHD. The complaint alleges that the plaintiff used ADDERALL during the period
  from January 1999 to September 1999. Also named as defendants are two doctors
  who were involved in diagnosing the plaintiff's ADHD and for prescribing
  ADDERALL for its treatment. Trial is set to commence in November 2002. Shire
  intends to vigorously defend such action.
  
  Shire filed a Complaint against Barr Laboratories, Inc. on April 30, 2002 in the
  District Court of New Jersey. In the Complaint, Shire requested a preliminary
  and permanent injunction to prevent Barr from marketing a mixed amphetamine salt
  product in a trade dress similar to that of ADDERALL. Shire requested that Barr
  recall all such products and also asked for damages. In connection with the
  preliminary injunction, Barr has moved to dismiss the Complaint. A hearing on
  the preliminary injunction was held on June 3, 2002. The decision from the
  District Court is pending.
  
  (iii) AGRYLIN
  
  SUS has been named as a defendant in a lawsuit filed in a Texas state court
  involving AGRYLIN. The complaint was served on Shire on December 26, 2001.
  Shire's contract manufacturer for AGRYLIN, Mallinckrodt, Inc., is also a named
  defendant.
  
  The complaint alleges that the Plaintiff suffered a debilitating stroke due to
  the fact that the Plaintiff was allegedly unable to procure this product in some
  fashion. Shire has filed an answer to the complaint in which it denies the
  allegations in the Plaintiffs original petition. Shire intends to vigorously
  defend such action.
  
  (iv) Emory
  
  Shire BioChem was involved in worldwide patent disputes with Emory University
  (Emory) relating to lamivudine wherein Shire BioChem opposed certain patents and
  patent applications of Emory and wherein Emory opposed certain patents and
  patent applications of Shire BioChem. Further detail regarding these disputes is
  provided below. In November 2001, Shire and GlaxoSmithKline (GSK) signed an
  agreement as to the key terms of a global settlement agreement with Emory. In
  May 2002 the parties finalized the Settlement Agreement. Pursuant to the
  Settlement Agreement, Emory has granted Shire and GSK an exclusive license under
  Emory's patent rights for lamivudine. The Settlement Agreement provides for the
  resolution of the below noted worldwide patent disputes between the parties
  relating to lamivudine. The settlement involves an upfront payment to Emory by
  Shire of $2.5 million and a royalty payment from Shire of 0.5% on worldwide
  sales of lamivudine over an 11 year period commencing on January 1, 2001 and a
  licence under Shire's FTC patent rights, in consideration for the settlement of
  all claims against Shire and GSK relating to lamivudine. The total cost to Shire
  in 2001 of the settlement (including upfront payment) was $7.7 million.
  
  Emory filed oppositions to two of Shire BioChem's granted patent applications in
  Europe which cover oxathiolane nucleosides including lamivudine and dioxolane
  nucleosides, including troxacitabine, related nucleoside analogues and use of
  these analogues for treating viral infections. In oral hearings held in 1999,
  both of these oppositions were dismissed by the Opposition Division of the
  European Patent Office. Emory is not pursuing its appeal of the decision
  relating to oxathiolanes.
  
  Emory had filed an appeal against the dioxolane-related decision in the European
  Patent Office but this appeal has been withdrawn in July 2002. This appeal was
  withdrawn by Emory pursuant to a Binding Material Terms Agreement executed in
  July 2002 by Shire BioChem , Shire, the University of Georgia Research
  Foundation (Georgia) and Triangle Pharmaceuticals Inc. (Triangle). Pursuant to
  the Agreement Shire will grant an exclusive royalty bearing license to Emory,
  sub licensable to Triangle, for certain dioxolane nucleoside analogs, including
  diamino purine dioxolane (DAPD). Emory, Georgia and Triangle will grant an
  exclusive royalty bearing license to Shire for certain dioxolane nucleosides,
  including SPD 756. The compounds the subject of these licences are in
  development. A low royalty will be payable by Shire upon commercialization of
  SPD 756. The Binding
  Material Terms Agreement provides for the resolution of worldwide patent
  disputes relating to the licensed patents.
  
  Emory has filed revocation actions in Australia and South Korea against Shire
  BioChem's granted patents covering lamivudine. Shire BioChem has aggressively
  defended these patents. In accordance with the Settlement Agreement, Emory has
  agreed to withdraw these proceedings relating to lamivudine .
  
  On July 23, 1996, Emory filed a complaint in the U.S. alleging infringement from
  the commercialization of EPIVIR by Shire BioChem and GSK, Shire BioChem's
  exclusive licensee in the U.S., of an Emory U.S. patent granted that same day.
  Shire BioChem considers this patent infringement suit to be without merit and
  has successfully challenged the validity of Emory's patent in the below noted
  interference proceedings.
  
  On May 19, 1998, the United States Patent and Trademark Office (USPTO) declared
  an interference between the Emory patent that is the subject of the above
  mentioned lawsuit and a pending patent application of Shire BioChem. The Board
  of Patent Appeals and Interferences issued a decision on December 21, 2000
  invalidating Emory's patent. Emory had appealed the decision. Pursuant to the
  Settlement Agreement, the infringement suit and Emory's appeal from the
  interference decision were dismissed in June 2002.
  
  Emory has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. Shire BioChem and GSK filed an
  opposition to this grant. An examined patent application filed by Emory claiming
  lamivudine was successfully opposed by Shire BioChem in Australia and Norway.
  Emory has filed an appeal from the Australian decision in the Federal Court of
  Australia. Shire BioChem also filed an appeal from certain portions of the
  decision. These proceedings will be resolved in accordance with the Settlement
  Agreement. An examined patent application filed by Emory claiming lamivudine was
  opposed by Shire BioChem and GSK in South Korea and such Emory claims to
  lamivudine were cancelled by the South Korean Patent Office. Emory has appealed
  this decision. Shire BioChem is aware that Emory has filed patent applications
  in other countries, which Shire BioChem believes may claim similar subject
  matter. All such patent applications and related disputes will be subject to the
  Settlement Agreement.
  
  (v) Yale
  
  On November 23, 1999, the USPTO declared an interference between Shire's
  hepatitis B patent for lamivudine and a patent application filed by Yale
  University (Yale) claiming methods of treating hepatitis B using lamivudine. The
  Company believes that this application is licensed to Vion Pharmaceuticals, Inc.
  (Vion), formerly known as OncoRx, Inc., a New Haven, Connecticut-based, U.S.
  company. On March 28, 2002, the Board of Patent Appeals and Interferences issued
  an order awarding priority to the Company's patent. Yale has not appealed from
  the Board's judgement and the Company is not aware of corresponding patent
  applications by Yale or Vion in countries other than the US.
  
  On April 14, 2000, the USPTO declared a further interference between BioChem's
  hepatitis B patent for lamivudine and a patent application by GSK claiming
  methods of treating hepatitis B using lamivudine. There is no guarantee that
  Shire will be successful in this interference and that Shire's patent will be
  maintained.
  
  (vi) Other matters
  
  In addition, the Company is involved in other claims and lawsuits in the normal
  course of business. It is not possible at this time to determine the ultimate
  outcome of any of these claims.
  
  ITEM 2. CHANGES IN SECURITIES
  
  None
  ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
  None
  
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
  An Annual General Meeting of Shareholders was held on June 13, 2002. The
  following resolutions were adopted by the margins indicated:
  
  1. Ordinary resolution to receive and consider the report of the directors' and
  financial statements for the year ended December 31, 2001.
  
         For              Against                Open           Abstentions
     245,429,708         1,802,805            2,267,661          1,747,921
  
  2. Ordinary resolution to re-elect Dr James Henry Cavanaugh as Director.
  
         For              Against                Open           Abstentions
     231,781,418         2,183,014            2,272,167          15,011,496
  
  3. Ordinary resolution to re-elect Dr Barry John Price as Director.
  
         For             Against                 Open           Abstentions
     246,587,213         296,039              2,270,467          2,094,376
  
  4. Ordinary resolution to re-elect Mr Ronald Nordmann as Director.
  
         For             Against                 Open           Abstentions
     246,614,399         298,336              2,270,467          2,064,893
  
  5. Ordinary resolution to re-appoint Arthur Andersen as Auditors and authorize
  the Directors to fix their remuneration.
  
         For              Against                Open           Abstentions
     226,964,936         14,545,268           2,268,767          7,469,124
  
  6. Ordinary resolution to receive the Report of the Remuneration Committee for
  the financial year ended 31 December 2001.
  
         For              Against                Open           Abstentions
     238,243,329         7,318,020            2,270,197          3,416,549
  
  7. Ordinary resolution to authorize the directors pursuant to Section 80 of the
  Companies Act 1985 to exercise all or any powers of the Company to allot
  relevant securities up to an aggregate nominal amount equal to 331/3 per cent of
  the total share capital of the Company in issue on 13 February 2002 and for a
  period expiring five years after the date of the passing of this resolution.
  
         For              Against                Open           Abstentions
     245,831,434         1,338,023            2,270,566          1,808,072
  
  8. Special resolution to empower the Directors pursuant to Section 95 of the
  Companies Act 1985 and subject to the passing of the resolution detailed in
  point 7 above, to allot equity securities of the Company pursuant to the
  authority conferred by the passing of that resolution, as if section 89(1) of
  the Companies Act 1985 did not apply to such allotments, provided that this
  power shall expire five years after the date of passing the resolution and that
  it is limited to certain equity securities and that it is limited 5 per cent of
  the issued share capital at the date of the last published accounts of the
  Company.
  
         For              Against                Open           Abstentions
     246,765,968         1,691,295            2,272,950           517,882
  9. Ordinary resolution to authorize the directors to amend the rules of the
  Shire Pharmaceuticals Group plc Employee Stock Purchase Plan (ESPP) to allow all
  full and part-time employees to be eligible to participate in the ESPP with
  immediate effect.
  
         For              Against                Open           Abstentions
     228,655,295         17,344,911           2,271,267          2,976,622
  
  10. Special resolution to generally and unconditionally authorize the directors
  to make market purchases of not more than 48,259,763 ordinary shares of 5p each
  in its share capital at not less than 5 p per share and not more than 5% above
  the average of the middle market quotations for the ordinary shares in the
  Company taken from the London Stock Exchange Daily Official List for the 5
  business days immediately preceding the day on which the shares are contracted
  to be purchased provided that this authority shall expire at the conclusion of
  the next Annual General Meeting of the Company.
  
         For             Against                 Open           Abstentions
     247,097,682         129,214              2,270,617          1,750,582
  
  The following Directors continued in their term of office:
  
  Dr Francesco Bellini
  Dr Bernard Canavan*
  The Hon James Grant
  Mr Angus Russell
  Mr Rolf Stahel
  Dr Wilson Totten
  Mr Gerard Veilleux
  
  * Shire regrets to announce that Dr Canavan died on August 11, 2002.
  
  ITEM 5. OTHER INFORMATION
  
  None
  
  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
  
  (a)  Reports on Form 8-K
  
       During the second quarter ended June 30, 2002, the following reports on
       Form 8-K were filed by the Company with the Securities and Exchange
       Commission:
  
       Form 8-K (Item 5 - Other Events), date of earliest event reported May 3,
       2002, with respect to determination of foreign private issuer status.
  
       Form 8-K (Item 5 - Other Events, and Item 7 - Financial Statements and
       Exhibits), date of earliest event reported May 7, 2002, with respect to
       Notice of Annual General Meeting and Form of Proxy.
  
       Form 8-K (Item 5 - Other Events), date of earliest event reported May 15,
       2002, with respect to press release announcement.
  
       Form 8-K (Item 5 - Other Events, and Item 7 - Financial Statements and
       Exhibits), date of earliest event reported May 22, 2002, with respect to
       the published transcript of an investor presentation held in Philadelphia,
       Pennsylvania.
  
       During the period between June 30, 2002 and the filing of this form 10-Q,
       the following report on Form 8-K was filed by the Company with the
       Securities and Exchange Commission:
  Form 8-K (Item 4 - Changes in the Registrant's Certifying Accountant), on
       July 31, 2002 Arthur Andersen informed Shire Pharmaceuticals Group plc (the
       Registrant) that it would no longer be able to serve as the Registrant's
       independent auditors and submitted its letter of resignation. The
       Registrant subsequently engaged the services of Deloitte & Touche effective
       July 31, 2002.
  
  SIGNATURES
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  Registrant has duly caused this Report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
  SHIRE PHARMACEUTICALS GROUP PLC
  (Registrant)
  
  Date:    August 14, 2002                    By:      /s/ Angus C Russell
                                                       ---------------------------
                                                       Angus C Russell
                                                       Group Finance Director
  
  Date:    August 14, 2002                    By:      /s/ Rolf Stahel
                                                       ---------------------------
                                                       Rolf Stahel
                                                       Chief Executive
  Certification
                            Accompanying Form 10-Q Report
                         of Shire Pharmaceuticals Group plc
              Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                  (Chapter 63, Title 18 U.S.C. ss.1350(a) and (b))
  
       Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chapter 63,
  Title 18 U.S.C. ss.1350(a) and (b)), each of the undersigned hereby certifies
  that, to the best of their respective knowledge and belief, the Quarterly Report
  on Form 10-Q for the period ended June 30, 2002 of Shire Pharmaceuticals Group
  plc ("Company") fully complies with the requirements of Section 13(a) or
  Section 15(d) of the Securities Exchange Act of 1934 and that the information
  contained in such Report fairly presents, in all material respects, the
  financial condition and results of operations of the Company.
  
  Dated:  August 14, 2002          /s/ Rolf Stahel
                                   ---------------------------------
                                   Rolf Stahel
                                   Chief Executive
                                   Shire Pharmaceuticals Group plc
  
  Dated:  August 14, 2002          /s/ Angus C Russell
                                   ---------------------------------
                                   Angus C. Russell
                                   Group Finance Director
                                   Shire Pharmaceuticals Group plc