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 September 30, 2001
  
                           Commission File Number: 0-29630
  
                           SHIRE PHARMACEUTICALS GROUP PLC
               (Exact name of registrant as specified in its charter)
  
                      England and Wales                          Applied for
                (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 November 13, 2001
  
   Common Stock: Ordinary Shares                        479,403,984
  
  
  <PAGE>
  
  
  THE "SAFE HARBOR" STATEMENT UNDER SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
  1934 (AMENDED) AND SECTION 27A OF THE SECURITIES ACT OF 1933 (AMENDED). The
  statements in this Form 10-Q that are not historical facts are forward-looking
  statements that involve risks and uncertainties, including but not limited to,
  risks associated with the inherent uncertainty of pharmaceutical research,
  product development and commercialization, the impact of competitive products,
  patents, and other risks and uncertainties, including those detailed from time
  to time in periodic reports, 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)
  
                                                                September 30,          December 31,
                                                                         2001                  2000
                                                                  (Unaudited)
  ASSETS                                                          -----------           -----------
  Current assets:
  <S>                                                                 <C>                    <C>
  Cash and cash equivalents                                           514,998                93,266
  Marketable securities and other current asset
    investments                                                       260,964               370,425
  Accounts receivable, net                                            142,650               144,175
  Inventories, net                                                     50,032                49,612
  Deferred tax asset                                                    8,288                26,990
  Prepaid expenses and other current assets                            24,389                11,385
                                                                 ------------          ------------
  Total current assets                                              1,001,321               695,853
  
  Investments                                                          61,276                74,314
  Property, plant and equipment, net                                  112,577               131,224
  Intangible assets, net                                              560,010               578,436
  Net assets of business transferred under
    contractual arrangements                                            3,831                35,850
  Deferred tax asset                                                   15,108                 6,543
  Other assets                                                         18,983                26,275
                                                                 ------------          ------------
  Total assets                                                      1,773,106             1,548,495
                                                                 ------------          ------------
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
  Current instalments of long-term debt                                 4,393                81,811
  Accounts and notes payable                                          158,145               113,446
  Other current liabilities                                            15,016                32,593
                                                                 ------------          ------------
  Total current liabilities                                           177,554               227,850
  Long-term debt, excluding current instalments                       393,491               132,063
  Other long-term liabilities                                          11,188                14,196
                                                                 ------------          ------------
  Total liabilities                                                   582,233               374,109
                                                                 ------------          ------------
  Shareholders' equity:
  Common stock, 5p par value: 800,000,000 shares
  authorized; and 477,927,959 shares issued and
  outstanding (2000: 488,015,304)                                      36,702                40,292
  Exchangeable shares: 6,117,944 shares issued and
  outstanding (2000: nil)                                             277,328                     -
  Additional paid-in capital                                          993,460             1,209,448
  Accumulated other comprehensive losses                             (77,197)              (60,550)
  Accumulated deficit                                                (39,420)              (14,804)
                                                                 ------------          ------------
  Total shareholders' equity                                        1,190,873             1,174,386
                                                                 ------------          ------------
  Total liabilities and shareholders' equity                        1,773,106             1,548,495
                                                                 ------------          ------------
  </TABLE>
  
  The balance sheet as at December 31, 2000 has been restated to include the
  results of BioChem Pharma Inc., the merger with whom was accounted for as a
  pooling of interests in accordance with APB 16, Accounting for Business
  Combinations. The accompanying notes are an integral part of these financial
  statements.
  
  <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          9 months         9 months
                                                  September 30,    September 30,                to               to
                                                           2001             2000     September 30,    September 30,
                                                                                              2001             2000
                                                   ------------     ------------      ------------     ------------
  <S>                                                   <C>              <C>               <C>              <C>
  Product sales                                         180,254          142,113           506,125          379,353
  Licensing and development                                 943            5,063             4,229           14,344
  Royalties                                              37,103           31,890           107,793           95,553
  Other revenues                                            784              257             1,530              731
                                                   ------------     ------------      ------------     ------------
  Total revenues                                        219,084          179,323           619,677          489,981
  
  Costs and expenses:
  Cost of revenues                                     (28,036)         (32,134)          (85,021)         (77,231)
  Research and development                             (41,327)         (44,487)         (120,838)        (121,969)
  Selling, general and administrative
  (inclusive of stock option compensation
  charge of  $51,000, $206,000, $2,403,000
  and $23,688,000 respectively)                        (72,585)         (53,616)         (218,376)        (182,912)
  Asset impairments and restructuring charges                 -                -          (85,447)                -
  Merger transaction expenses                                 -                -          (83,470)                -
  (Losses)/gains on dispositions of assets              (2,028)              214          (10,126)              479
                                                   ------------     ------------      ------------     ------------
  Total operating expenses                              143,976          130,023           603,278          381,633
                                                   ------------     ------------      ------------     ------------
  Operating income                                       75,108           49,300            16,399          108,348
  
  Interest income                                         4,651            5,064            14,286           13,259
  Interest expense                                        (989)          (3,275)           (5,671)         (11,663)
  Other (expense)/income, net                             (844)            4,050             1,809          106,503
                                                   ------------     ------------      ------------     ------------
  Total other income, net                                 2,818            5,839            10,424          108,099
                                                    -----------      -----------      ------------     ------------
  Income before income taxes                             77,926           55,139            26,823          216,447
  
  Income taxes                                         (19,815)         (11,963)          (51,439)         (32,045)
                                                   ------------     ------------      ------------     ------------
  Net income/(loss)                                      58,111           43,176          (24,616)          184,402
                                                   ------------     ------------      ------------     ------------
  
  Net income/(loss) per share:
  Basic                                                   11.8c             8.9c            (5.0c)            38.3c
  Diluted                                                 11.5c             8.7c            (5.0c)            37.3c
  
  Weighted average number of shares:
  Basic                                             493,790,267      485,406,226       490,750,414      481,488,865
  Diluted                                           503,914,740      497,036,041       490,750,414      493,737,179
  </TABLE>
  
  The results for the three and nine months ended September 30, 2000 have been
  restated to include the results of BioChem Pharma Inc., the merger with whom was
  accounted for as a pooling of interests in accordance with APB 16, Accounting
  for Business Combinations.
  
  
  
  <PAGE>
  
  
  <TABLE>
  <CAPTION>
                           SHIRE PHARMACEUTICALS GROUP PLC
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
                                                                              9 months to      9 months to
                                                                            September 30,    September 30,
                                                                                     2001             2000
                                                                          ---------------  ---------------
  <S>                                                                            <C>               <C>
  Cash flows from operating activities:
  Net (loss)/income                                                              (24,616)          184,402
  Adjustments to reconcile net (loss)/income to net cash provided by
  operating activities:
  Depreciation and amortization                                                    33,753           28,045
  Stock option compensation                                                         2,403           23,688
  Tax benefit of stock option compensation charged directly to equity               3,307           10,972
  Non cash exchange gains and losses                                             (15,167)          (2,996)
  Write-down of long term investments                                              24,937                -
  Write-down of intangible assets                                                  20,890            7,061
  Write-down of net assets of business transferred under contractual
  arrangements                                                                     30,811                -
  Gain on sale of long term investments                                                 -        (104,984)
  Loss/(gain) on sale of fixed assets                                               8,112            (479)
  Loss on sale of intangible assets                                                 2,014                -
  Share of loss in company subject to significant influence                             -            1,464
  Changes in assets and liabilities:
  Decrease/(increase) in accounts receivable                                        1,551         (42,064)
  Decrease/(increase) in inventory                                                  (420)              278
  Decrease in deferred tax asset                                                   10,137            7,604
  (Increase)/decrease in prepayments and other current asset investments         (13,004)            1,429
  Decrease/(increase) in other assets                                               8,500             (18)
  Increase/(decrease) in accounts and notes payable                                44,699         (60,542)
  Decrease in other current liabilities                                          (17,577)                -
  Decrease in other long term liabilities                                         (3,008)              (4)
                                                                          ---------------  ---------------
  Net cash provided by operating activities                                       117,322           53,856
                                                                          ---------------  ---------------
  Cash flows from investing activities:
  (Investment in)/redemption of marketable securities                            (18,450)           75,205
  Decrease in cash placed on short-term deposit                                   127,911                -
  Purchase of temporary investments                                                     -        (232,743)
  Purchase of long term investments                                              (13,216)         (15,606)
  Maturity of long term investments                                                     -          113,793
  Expenses of acquisition of subsidiaries                                               -            (657)
  Purchase of intangible assets                                                  (33,519)         (21,894)
  Purchase of fixed assets                                                        (6,305)         (21,173)
  Purchase of other assets                                                              -            (606)
  Proceeds from sale of long term investments                                           -          124,145
  Proceeds from sale of fixed assets                                                7,043           12,093
  Proceeds from sale of intangible assets                                           4,556                -
  Collection on notes receivable                                                        -              766
                                                                          ---------------  ---------------
  Net cash provided by investing activities                                        68,020           33,323
                                                                          ---------------  ---------------
  
  <PAGE>
  
  Cash flows from financing activities:
  Proceeds from issue of long-term debt                                           391,000                -
  Repayment of long-term debt and capital leases                                (206,990)          (8,505)
  Proceeds from issue of common stock, net of expenses                              1,526            7,190
  Proceeds from exercise of options                                                50,514           43,047
                                                                          ---------------   --------------
  Net cash provided by financing activities                                       236,050           41,732
                                                                          ---------------   --------------
  
  
  Effect of foreign exchange rate changes on cash and cash equivalents                340          (5,303)
  Cash flows used in discontinued operations                                            -          (1,722)
                                                                          ---------------   --------------
  Net increase in cash and cash equivalents                                       421,732          121,886
  Cash and cash equivalents at beginning of period                                 93,266          102,503
                                                                          ---------------   --------------
  Cash and cash equivalents at end of period                                      514,998          224,389
                                                                          ---------------   --------------
  </TABLE>
  
  The cash flows for the nine months ended September 30, 2000 have been restated
  to include the cash flows of BioChem Pharma Inc., the merger with whom was
  accounted for as a pooling of interests in accordance with APB 16, Accounting
  for Business Combinations.
  
  
  <PAGE>
  
  
  <TABLE>
  <CAPTION>
                CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
  
                                                    3 months to       3 months to      9 months to      9 months to
                                                  September 30,     September 30,    September 30,    September 30,
                                                           2001              2000             2001             2000
                                                   ------------      ------------     ------------     ------------
  <S>                                                    <C>               <C>            <C>               <C>
  Net income/(loss)                                      58,111            43,176         (24,616)          184,402
  Foreign currency translation adjustments               13,424          (16,098)         (16,139)         (41,886)
  Unrealized holding (losses)/gains on
  marketable securities and non-current
  investments                                             (312)           (2,691)            (508)            1,356
                                                   ------------      ------------     ------------     ------------
  Comprehensive income/(loss)                            71,223            24,387         (41,263)          143,872
                                                   ------------      ------------     ------------     ------------
  </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 is an international specialty pharmaceutical company with a strategic
  focus on three therapeutic areas: central nervous system disorders, oncology and
  anti-infectives. Shire's strategy is further supported by two technology
  platforms, drug delivery and biologics.
  
  The Company has a global sales and marketing infrastructure with a broad
  portfolio of products and its own direct marketing capability in the U.S.,
  Canada, U.K., Republic of Ireland, France, Germany, Italy and Spain. Shire also
  covers other significant pharmaceutical markets indirectly through distributors.
  The business is managed within three individual operating segments: U.S.,
  International and global research and development. Within these segments,
  revenues are derived 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 it's principal products tend
  to be prescribed by specialists as opposed to primary care physicians. The
  Company's comparatively small sales force can promote specialty products
  effectively while it could not be expected to achieve the necessary coverage of
  primary care physicians. Shire's main approach is to in-license projects, to
  develop them and launch them using it's own sales force in the eight key world
  markets. 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 for the treatment of Attention Deficit
            Hyperactivity Disorder; Agrylin for the treatment of elevated blood
            platelets; Pentasa for the treatment of ulcerative colitis; Carbatrol
            for the treatment of epilepsy; and ProAmatine for the treatment of
            orthostatic 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., the Calcichew 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
            (marketed in partnership with GlaxoSmithKline); Amatine; Second Look,
            a breast cancer diagnostics product for which the Company hopes to
            receive FDA approval in 2001; and Fluviral S/F, a vaccine for the
            prevention of influenza; and
  
       o    in the rest of the world, the Company receives royalties on the sales
            of Zeffix for the treatment of hepatitis B, marketed by
            GlaxoSmithKline, and will receive royalties on sales of Reminyl from
            Janssen Pharmaceutica.
  
  In addition, the Company has a number of products in late stage development
  including Dirame for the treatment of moderate to severe pain, Foznol for the
  treatment of high blood phosphate levels associated with kidney failure and
  Troxatyl for the treatment of leukemia and solid tumors. The Company submitted
  the first regulatory submission for Foznol under the European Mutual Recognition
  procedure on March 13, 2001.
  
  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.
  
  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
  
  <PAGE>
  
  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, 2000
  and notes thereto. The results for the period ended September 30, 2001 are not
  necessarily indicative of the results that may be expected for the year ending
  December 31, 2001.
  
  c) New Accounting Pronouncements
  
  In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
  of Financial Accounting Standards ("SFAS") No. 141 "Business Combinations" and
  SFAS No. 142 "Goodwill and Other Intangible Assets". SFAS No. 141 requires the
  use of the purchase method of accounting for all business combinations initiated
  after June 30, 2001. Had the BioChem transaction been initiated after this date,
  it would have been required to be accounted for under the purchase method rather
  than the pooling of interests method. SFAS No. 141 requires intangible assets to
  be recognized if they arise from contractual or legal rights or are "separable",
  i.e., it is feasible that they may be sold, transferred, licensed, rented,
  exchanged or pledged. As a result, it is likely that more intangibles will be
  recognized under SFAS No. 141 than its predecessor, APB Opinion No. 16, although
  in some instances previously recognized intangibles will be subsumed into
  goodwill.
  
  SFAS No. 142 is effective for fiscal years beginning after December 15, 2001
  although goodwill on business combinations consummated after July 1, 2001 will
  not be amortized. On adoption the Company may need to record a cumulative effect
  adjustment to reflect the impairment of previously recognized intangible assets.
  In addition, goodwill recognized on prior business combinations will cease to be
  amortized. Had the Company adopted SFAS No. 142 at January 1, 2001 the Company
  would not have recorded a goodwill amortization charge of $8,089,000 for the
  nine months ended September 30, 2001. The Company has not determined the impact
  that these statements will have on intangible assets or whether a cumulative
  effect adjustment will be required upon adoption.
  
  In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
  Obligations. SFAS No. 143 requires 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 not yet assessed the
  potential impact of the adoption of SFAS No. 143.
  
  In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
  Disposal of Long-Lived Assets". SFAS No. 44 establishes a single accounting
  model for long-lived assets to be disposed of by sale consistent with the
  fundamental provisions of SFAS No. 121 "Accounting for the Impairment of
  Long-Lived Assets and for Long-Lived Assets to be Disposed Of". While it
  supersedes APB Opinion No. 30 "Reporting the Results of Operations - Reporting
  the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
  and Infrequently Occurring Events and Transactions" it retains the presentation
  of discontinued operations but broadens that presentation to include a component
  of an entity (rather than a segment of a business). However, discontinued
  operations are no longer recorded at net realizable value and future operating
  losses are no longer recognized before they occur. Under SFAS No. 144 there is
  no longer a requirement to allocate goodwill to long-lived assets to be tested
  for impairment. It also establishes a probability weighted cash flow estimation
  approach to deal with situations in which there are a range of cash flows that
  may be generated by the asset being tested for impairment. SFAS No. 144 also
  establishes criteria for determining when an asset should be treated as held for
  sale.
  
  SFAS No. 144 is effective for fiscal years beginning after December 15, 2001 and
  interim periods within those fiscal years, with early application encouraged.
  The provisions of the Statement are generally to be applied prospectively. The
  Company is currently assessing whether the adoption of SFAS No. 144 will have
  any impact on its results of operations or financial position.
  
  <PAGE>
  
  2.   Inventory
  
                                           September 30,          December 31,
                                                    2001                  2000
                                                   $'000                 $'000
                                          --------------        --------------
  Finished goods                                  27,487                24,118
  Work-in-process                                 17,311                12,544
  Raw materials                                    5,234                12,950
                                          --------------        --------------
                                                  50,032                49,612
                                          --------------        --------------
  
  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 September 30, 2001                     U.S.   International              R&D           Total
                                                           $'000           $'000            $'000           $'000
                                                      ----------      ----------       ----------      ----------
  <S>                                                    <C>              <C>          <C>                <C>
  Product sales                                          149,853          30,401                -         180,254
  Licensing and development                                  943               -                -             943
  Royalties                                                   44          37,059                -          37,103
  Other revenues                                               -             784                -             784
                                                      ----------      ----------       ----------      ----------
  Total revenues                                         150,840          68,244                -         219,084
                                                      ----------      ----------       ----------      ----------
  
  Cost of revenues                                        13,264          14,772                -          28,036
  Research and development                                     -               -           41,327          41,327
  Selling, general and administrative                     37,968          34,617                -          72,585
  Losses on dispositions of assets                         2,014              14                -           2,028
                                                      ----------      ----------       ----------      ----------
  Total operating expenses                              (53,246)        (49,403)         (41,327)       (143,976)
                                                      ----------      ----------       ----------      ----------
  Operating income/(loss)                                 97,594          18,841         (41,327)          75,108
                                                      ----------      ----------       ----------      ----------
  
  Three months ended September 30, 2000                     U.S.   International              R&D           Total
                                                           $'000           $'000            $'000           $'000
                                                      ----------      ----------       ----------      ----------
  Product sales                                          111,069          31,044                -         142,113
  Licensing and development                                  884           4,179                -           5,063
  Royalties                                                   92          31,798                -          31,890
  Other revenues                                               3             254                -             257
                                                      ----------      ----------       ----------      ----------
  Total revenues                                         112,048          67,275                -         179,323
                                                      ----------      ----------       ----------      ----------
  
  Cost of revenues                                        17,357          14,777                -          32,134
  Research and development                                     -               -           44,487          44,487
  Selling, general and administrative                     28,943          24,673                -          53,616
  Losses on dispositions of assets                           219           (433)                -           (214)
                                                      ----------      ----------       ----------      ----------
  Total operating expenses                              (46,519)        (39,017)         (44,487)       (130,023)
                                                      ----------      ----------       ----------      ----------
  
  <PAGE>
  
  Operating income/(loss)                                 65,529          28,258         (44,487)          49,300
                                                      ----------      ----------       ----------      ----------
  
  Nine months ended September 30, 2001                      U.S.    International             R&D             Total
                                                           $'000            $'000           $'000             $'000
                                                      ----------       ----------      ----------        ----------
  Product sales                                          418,305           87,820               -           506,125
  Licensing and development                                3,272              957               -             4,229
  Royalties                                                  224          107,569               -           107,793
  Other revenues                                               -            1,530               -             1,530
                                                      ----------       ----------      ----------        ----------
  Total revenues                                         421,801          197,876               -           619,677
                                                      ----------       ----------      ----------        ----------
  
  Cost of revenues                                        48,756           36,265               -            85,021
  Research and development                                     -                -         120,838           120,838
  Selling, general and administrative                    129,821           88,555               -           218,376
  Asset impairments and restructuring charges
                                                               -           85,447               -            85,447
  Merger transaction expenses                                  -           83,470               -            83,470
  Losses on dispositions of assets                         2,014            8,112               -            10,126
                                                      ----------       ----------      ----------        ----------
  Total operating expenses                             (180,591)        (301,849)       (120,838)         (603,278)
                                                      ----------       ----------      ----------        ----------
  Operating income/(loss)                                241,210        (103,973)       (120,838)            16,399
                                                      ----------       ----------      ----------        ----------
  
  
  Nine months ended September 30, 2000                      U.S.    International             R&D             Total
                                                           $'000            $'000           $'000             $'000
                                                      ----------       ----------      ----------        ----------
  Product sales                                          300,619           78,734               -           379,353
  Licensing and development                                2,874           11,470               -            14,344
  Royalties                                                  221           95,332               -            95,553
  Other revenues                                              16              715               -               731
                                                      ----------       ----------      ----------        ----------
  Total revenues                                         303,730          186,251               -           489,981
                                                      ----------       ----------      ----------        ----------
  
  Cost of revenues                                        42,794           34,437               -            77,231
  Research and development                                     -                -         121,969           121,969
  Selling, general and administrative                     88,083           94,829               -           182,912
  Gains on dispositions of assets                           (63)            (416)               -             (479)
                                                      ----------       ----------      ----------        ----------
  Total operating expenses                             (130,814)        (128,850)       (121,969)         (381,633)
                                                      ----------       ----------      ----------        ----------
  Operating income/(loss)                                172,916           57,401       (121,969)           108,348
                                                      ----------       ----------      ----------        ----------
  </TABLE>
  
  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.
  
  
  <PAGE>
  
  
  
  The following table sets forth the computation of basic and diluted net
  income/(loss) per share:
  
  <TABLE>
  <CAPTION>
                                                            3 months to       3 months to      9 months to       9 months to
                                                          September 30,     September 30,    September 30,     September 30,
                                                                   2001              2000             2001              2000
                                                                  $'000             $'000            $'000             $'000
                                                         --------------------------------  ---------------- ----------------
  <S>                                                            <C>               <C>            <C>                <C>
  Numerator for basic net income/(loss) per share                58,111            43,176         (24,616)           184,402
  Interest charged on convertible debt                               29                96                -                 -
  Tax on interest charged                                           (7)              (23)                -                 -
                                                         --------------------------------  ---------------- ----------------
  Numerator for diluted net income/(loss) per share              58,133            43,249         (24,616)           184,402
                                                         --------------------------------  ---------------- ----------------
  
  Weighted average number of shares:                      No. of shares     No. of shares    No. of shares     No. of shares
                                                         --------------------------------  ---------------- ----------------
  Basic  - weighted average number of shares                493,790,267       485,406,226      490,750,414       481,488,865
  Effect of dilutive stock options                            9,842,029        10,529,424                -        12,248,314
  Convertible debt                                              282,444         1,100,391                -                 -
                                                         --------------------------------  ---------------- ----------------
  Diluted - weighted average number of shares               503,914,740       497,036,041      490,750,414       493,737,179
                                                         --------------------------------  ---------------- ----------------
  Basic net income/(loss) per share                               11.8c              8.9c           (5.0c)             38.3c
                                                         --------------------------------  ---------------- ----------------
  Diluted net income/(loss) per share                             11.5c              8.7c           (5.0c)             37.3c
                                                         --------------------------------  ---------------- ----------------
  </TABLE>
  
  The calculation of the diluted weighted average number of shares for the nine
  months ended September 30, 2001 excludes the effects of dilutive stock options
  and convertible debt securities issued by the Company because these have an
  antidilutive effect on the calculation in a loss making period.
  
  The calculation of the diluted weighted average number of shares for the nine
  months ended September 30, 2000 excludes the effects of convertible debt because
  it has an antidilutive effect.
  
  5.   Restructuring
  
  In May 2001, the Company completed a merger with BioChem Pharma Inc.
  ("BioChem"), an international specialty pharmaceutical company based in
  Montreal, Canada. As a result of the merger, the Company recorded pre tax
  charges in the second quarter of 2001 totalling $177.0 million, comprising asset
  impairment and restructuring costs ($85.4 million), merger related transaction
  expenses ($83.5 million) and a loss from the sale of a manufacturing facility in
  Toronto, Canada ($8.1 million).
  
  The restructuring costs included an impairment charge of $20.9 million to adjust
  intangible asset values, primarily trademark and patent costs but also an
  element of product rights, to their estimated fair value. These charges are
  consistent with the Company's accounting policy to review periodically the
  carrying value of intangible assets and evaluate whether there has been any
  impairment in the carrying value of those intangibles as compared with estimated
  undiscounted future cash flows relating to those intangibles. Other asset
  impairment charges included the write down of long term unquoted investments
  ($24.9 million) and a write down of $30.8 million to a debenture held by
  BioChem, which was received on divestiture of its diagnostics subsidiary. These
  charges are consistent with the Company's policy to provide for other than
  temporary impairments in investment by reference to the fair value of the
  investment using established financial methodologies. There was also a total of
  $8.8 million recorded in respect of employee related costs.
  
  The employee terminations related to the closure of the Toronto facility and the
  elimination of duplicate positions across the combined organization. Shire's
  existing Canadian based sales and marketing operations in Toronto have been
  combined with those of BioChem in Laval. A total of 57 employees were identified
  to be terminated. As of September 30, 2001 all of the planned terminations were
  completed.
  
  <PAGE>
  
  6. Long-term debt
  
       (a)  During the first nine months of 2001, the Company made repayments of
            debt totalling $207 million.
  
       (b)  During the first nine months of 2001, Shire Finance Limited, a wholly
            owned subsidiary of the Company, issued $400 million in senior
            guaranteed convertible notes due 2011, guaranteed by the Company, with
            an interest rate of 2%. The Company incurred issuance costs of
            approximately $9 million in respect of these convertible notes.
  
  7. Consolidated statement of changes in shareholders' equity
  
  <TABLE>
  <CAPTION>
                                                                                                  Accumu-
                                                             Exchange-                             lated
                                      Common      Exchange-    able                                other       Total
                          Common      Stock         able      shares    Additional    Accumu-     compre-    sharehold-
                          Stock        No.         shares      No.        paid-in      late       hensive       ers'
                          Amount      000's        Amount     shares      capital    deficit      losses      equity
                          $'000       Shares       $'000      000's        $'000       $'000       $'000       $'000
                        ----------- ----------- ----------- ---------- -----------  ----------  ----------  ------------
  <S>                       <C>        <C>        <C>         <C>         <C>         <C>        <C>         <C>
  As at January 1,
  2001                      40,292     488,015          -           -     1,209,448   (14,804)    (60,550)   1,174,386
  
  Net loss                       -           -          -           -             -   (24,616)           -    (24,616)
  Foreign currency
  translation                    -           -          -           -             -          -    (16,139)    (16,139)
  
  Unrealized holding
  loss on non-current
  investments                    -           -          -           -             -          -       (508)       (508)
  
  Issue of shares for
  acquisitions             (6,522)    (51,478)    792,220      17,292     (785,698)          -           -           -
  
  Issue of shares for
  conversion of loan
  note                          22         295          -           -         1,522          -           -       1,544
  
  Exchange of
  exchangeable shares        2,368      33,522  (514,892)    (11,174)       512,524          -           -           -
  Options exercised            542       7,574          -           -        49,972          -           -      50,514
  Issuance costs                 -           -          -           -          (18)          -           -        (18)
  Stock option
  compensation                   -           -          -           -         2,403          -           -       2,403
  Tax benefit
  associated with
  exercise of stock
  options                        -           -          -           -         3,307          -           -       3,307
                        ----------- ----------- ----------- ---------- -----------  ----------  ----------  ------------
  As at September 30,
  2001                      36,702     477,928    277,328       6,118       993,460   (39,420)    (77,197)   1,190,873
                        ----------- ----------- ----------- ---------- -----------  ----------  ----------  ------------
  </TABLE>
  
  Each exchangeable share is exchangeable into 3 ordinary shares.
  
  8. Contingent liabilities
  
  (i) Phentermine
  
  Until April 1998, Shire Richwood Inc. ("SRI") distributed products containing
  phentermine, a prescription drug approved in the U.S. as a single agent for
  short term use in obesity. Contrary to the approved labeling of these products,
  physicians in the U.S. co-prescribed phentermine with fenfluramine or
  dexfenfluramine for management of obesity. This combination was popularly known
  as the "fen/phen" diet. In mid 1997, following
  
  
  <PAGE>
  
  concerns raised about cardiac valvular side effects alleged to be associated
  with this diet regime, the fenfluramine and dexfenfluramine elements of the
  "fen/phen" diet were withdrawn from the U.S. market. Although SRI has ceased to
  distribute phentermine, the drug remains both approved and available in the U.S.
  SRI and a number of other pharmaceutical companies are being sued for damages
  for personal injury and medical monitoring arising from phentermine used either
  alone or in combination. As of October 31, 2001, SRI was named as a defendant in
  approximately 3,784 lawsuits and had been dismissed from 3,538 of these cases.
  There were approximately 150 additional cases pending dismissal as of October
  31, 2001. In only 25 cases in which SRI remains as a defendant, has it been
  alleged in the complaint or subsequent discovery that the plaintiff had used
  SRI's particular product. Although there have been reports of substantial jury
  awards and settlements in respect of fenfluramine and/or dexfenfluramine, to
  date Shire is not aware of any jury awards made against, or any settlements made
  by, any phentermine defendant. Shire denies liability on a number of grounds
  including lack of scientific evidence that phentermine, properly prescribed,
  causes the alleged side effects and that SRI did not promote phentermine for
  long term combined use as the "fen/phen" diet. Accordingly, Shire intends to
  defend vigorously any and all claims made against the Company in respect of
  phentermine and believes that a liability is neither probable nor quantifiable
  at this stage of litigation.
  
  On August 31, 2000 Shire entered into an agreement (the "Termination Agreement")
  with the former shareholders of SRI, pursuant to which the ordinary shares
  placed in escrow at the time of the purchase of SRI by Shire were released, and
  the escrow agreement and the escrow fund were terminated. The escrow agreement
  with the SRI shareholders was initially established by Shire in 1997 in
  anticipation of possible phentermine related claims against the Company. Under
  the terms of the Termination Agreement, monies in the approximate amount of $7
  million were received by Shire, and the escrow fund was terminated. The
  remaining shares were distributed to the former SRI shareholders.
  
  Legal expenses have been paid by Eon Labs Manufacturing Inc. ("Eon"), the
  suppliers to SRI or Eon's insurance carriers but such insurance is now
  exhausted. Eon has agreed to defend and indemnify SRI in this litigation
  pursuant to an agreement dated November 30, 2000 between Eon and SRI.
  
  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) Emory
  
  Emory University filed oppositions to two of 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 University has filed an
  appeal against the dioxolane-related decision of the Opposition Division. Emory
  University is not pursuing its appeal of the decision relating to oxathiolanes.
  Emory University has not to date filed revocation actions with respect to any
  BioChem patents in issue in individual European countries.
  
  In Japan, Emory University filed an opposition to BioChem's granted patent which
  covers lamivudine, related analogues and use of the analogues for treating viral
  infections. The Trial Board of the Japanese Patent Office dismissed Emory
  University's opposition to BioChem's patent covering lamivudine. Emory
  University has not to date filed a revocation action against this patent. Emory
  University has filed revocation actions in Australia and South Korea against
  BioChem's granted patents covering lamivudine. The Company is aggressively
  defending these patents.
  
  On July 23, 1996, Emory University filed a complaint in the U.S. alleging
  infringement from the commercialisation of Epivir by BioChem and
  GlaxoSmithKline, BioChem's exclusive licensee in the U.S., of an Emory
  University U.S. patent granted that same day. The Company considers this patent
  infringement suit to be without merit and has successfully challenged the
  validity of Emory University's patent.
  
  On May 19, 1998, the United States Patent and Trademark Office (the "USPTO")
  declared an interference between the Emory University patent that is the subject
  of a lawsuit and a pending patent application of BioChem. The USPTO accorded
  BioChem the earlier priority date and then accorded BioChem senior party status
  in the interference. BioChem has vigorously challenged the Emory University
  patent in the interference, through to a final hearing on November 10, 1999. The
  Board of Patent Appeals and Interferences issued a
  
  
  <PAGE>
  
  decision on December 21, 2000 invalidating Emory's patent. Emory University has
  appealed the decision. There can be no assurance that Emory's patent will not be
  reinstated.
  
  Emory University has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. BioChem and GlaxoSmithKline filed
  an opposition to this grant and are vigorously opposing the grant. An examined
  patent application, filed by Emory University claiming lamivudine, was
  successfully opposed by BioChem in Australia and Norway. Emory University has
  filed an appeal from that decision in the Federal Court of Australia. BioChem
  also filed an appeal from certain portions of the decision. An examined patent
  application filed by Emory University claiming lamivudine was also opposed by
  BioChem in Japan. The opposition was dismissed in April 1999 because it was
  improperly filed by a representative who had previously represented Emory.
  Notwithstanding the dismissal, the Japanese Patent Office issued an ex-officio
  action rejecting all of Emory University's claims. There can be no reassurance
  that Emory will not be able to overcome this rejection. An examined patent
  application filed by Emory claiming lamivudine was opposed by BioChem and
  GlaxoSmithKline in South Korea and such Emory claims to lamivudine were
  cancelled by the South Korean Patent Office. The Company is aware that Emory
  University has filed patent applications in other countries, which it believes
  may claim similar subject matter. The Company intends to challenge vigorously
  such patent applications.
  
  
  (iii) Yale
  
  On November 23, 1999, the USPTO declared an interference between BioChem'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
  company. The Company believes that its patent is valid and intends to vigorously
  defend the patent. The Company is not aware of corresponding patent applications
  by Yale University or Vion in countries other than the U.S. On April 14, 2000,
  the USPTO declared a further interference between BioChem's hepatitis B patent
  for lamivudine and a patent application by GlaxoSmithKline claiming methods of
  treating hepatitis B using lamivudine.
  
  (iv) 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. Shire filed its answer to the complaint on November 24, 2000
  and discovery related to the litigation is ongoing.
  
  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 auto
  following an ingestion of Adderall. As a result of the accident, the driver's
  young son was killed. Shire is evaluating this suit and has not yet filed an
  answer with the Court.
  
  (v) Interests in companies and partnerships
  
  BioChem has undertaken to subscribe to an interest in companies and partnerships
  for amounts totaling $50,269,000. As at September 30, 2001 an amount of
  $33,501,000 (December 31, 2000: $25,709,000) has been subscribed. In addition,
  BioChem has undertaken to subscribe to additional amounts and pay royalties on
  certain future sales upon realization of certain conditions.
  
  <PAGE>
  
  
  ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
          of Operations
  
  The results for the three months and nine months ended September 30, 2000 have
  been restated from prior periods to reflect the merger of Shire and BioChem,
  which became effective on May 11, 2001, as if the merger had occurred at the
  beginning of the periods described.
  
  Results of operations for the three months ended September 30, 2001, as compared
  with those for the three months ended September 30, 2000
  
  Overview of financial results
  Total revenues for the three months ended September 30, 2001 increased by 22 per
  cent to $219.1 million as compared to the three months ended September 30, 2000.
  The Company recorded a third quarter net income of $58.1 million (2000: net
  income $43.2 million), an increase of 35 per cent.
  
  Sales and marketing
  Product sales of $180.3 million, which represented 82 per cent of total
  revenues, increased by 27 per cent over third quarter 2000 product sales of
  $142.1 million. Product sales in the U.S. continue to represent a significant
  percentage of our worldwide sales, 83 per cent in the three months ended
  September 30, 2001 (2000: 78 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:
  
                                   3 months to       3 months to
  Product sales by segment       September 30,     September 30,
                                          2001              2000
                                         $'000             $'000         % change
  
  United States                        149,853           111,069            +34.9
  International                         30,401            31,044             -2.1
                                  ------------      ------------     ------------
  Total product sales                  180,254           142,113            +26.8
                                  ------------      ------------     ------------
  
  
  Third quarter sales of ADDERALL, marketed in the U.S. for the treatment of
  Attention Deficit Hyperactivity Disorder (ADHD), were $86.7 million,
  representing growth of 45 per cent over the third quarter of 2000. ADDERALL had
  a 32.4 per cent share of the prescription market for ADHD in the U.S. in
  September 2001 compared to 33.0 per cent in September 2000. ADDERALL continues
  to be the brand leader in the U.S. market for ADHD.
  
  Sales of AGRYLIN, the only U.S. product licensed for the treatment of essential
  thrombocythemia were $19.8 million, a 44 per cent increase over third quarter
  2000 sales of $13.7 million. Shire achieved a prescription share of 23.8 per
  cent of the total U.S. AGRYLIN market, including Hydrea and generic hydroxyurea,
  in September 2001 compared to 17.4 per cent in September 2000.
  
  Sales of PENTASA, licensed for the treatment of ulcerative colitis, at $20.0
  million, were 39 per cent higher than the comparable period last year. PENTASA
  had a 18.2 per cent share of the oral mesalamine/obsalazine market in September
  2001 compared to 17.9 per cent in September 2000.
  
  CARBATROL containing carbamazapine for the treatment of epilepsy, recorded sales
  growth of 14 per cent from sales of $6.9 million in the three months ended
  September 30, 2000 to $7.9 million in the three months
  
  
  <PAGE>
  
  ended September 30, 2001. This translates to 35.2 per cent of the U.S. extended
  release carbamazepine prescription market in September 2001, compared to 29.7
  per cent in September 2000.
  
  Licensing
  As expected, following the launch by Janssen (J&J) of REMINYL, Shire's
  Alzheimer's drug, reimbursement of associated R&D costs by J&J has now come to
  an end. Consequently, licensing and development fees decreased by 82% to $0.9
  million in the three months ended September 30,2001 compared to the same period
  last year .
  
  Royalties
  Royalties increased by $5.2 million in the three months ended September 30,
  2001, up 16 per cent from the three months ended September 30, 2000, to $37.1
  million. Royalty income has slightly decreased compared to the second quarter of
  the year due to wholesalers de-stocking following the REMINYL U.S. launch in May
  2001. The Company also 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.
  
  Cost of sales and operating expenses
  Gross margin on product sales increased from 77 per cent for the three months
  ended September 30, 2000 to 84 per cent for the three months ended September 30,
  2001. This is a reflection of the product mix as the higher margin products,
  ADDERALL and AGRYLIN, represented approximately 59 per cent of total product
  sales in the three months ended September 30, 2001 compared to 52 per cent in
  the three months ended September 30, 2000. Improved pricing in respect of
  ADDERALL has also benefited the gross margin in three months ended September 30,
  2001.
  
  R&D expenditure decreased 7 per cent to $41.3 million for the three months ended
  September 30, 2001 (2000: $44.5 million). R&D expenditure in third quarter 2001
  represented 19 per cent of revenues compared to 25 per cent in third quarter
  2000 and 23 per cent for full year 2000.
  
  Selling, general and administrative expenses, excluding the effects of a stock
  option compensation charge of $0.05 million (2000: $0.2 million) and
  depreciation and amortization of $11.7 million (2000: $9.4 million), increased
  by 38 per cent to $60.8 million for the three months ended September 30, 2001
  (2000: $44.0 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 34 per cent for the third quarter 2001 (2000:
  31%).
  
  The 25 per cent increase in depreciation and amortization for the three months
  ended September 30, 2001 is attributable to the purchase of several new products
  in Europe since September last year.
  
  Income taxes
  For the three months ended September 30, 2001 income taxes increased $7.8
  million to $19.8 million from $12.0 million for the three months ended September
  30, 2000. The Company's effective tax rate before the stock compensation charge
  and exceptional items was 25 per cent for the three months ended September 30,
  2001 (Q3 2000: 24 per cent). The Company has recorded net deferred tax assets of
  $23.4 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 nine months ended September 30, 2001, as compared
  with those for the nine months ended September 30, 2000
  
  Overview of financial results
  Total revenues for the nine months ended September 30, 2001 were $619.7 million,
  an increase of $129.7 million or 26 per cent over the nine months ended
  September 30, 2000. After one time merger related expenses and restructuring
  charges of $177.0 million, the Company recorded a net loss of $24.6 million
  (2000: $184.4 million net income). Net loss for the nine months to September 30,
  2001 includes an APB 25 charge of $2.4 million compared to $23.7 million for the
  nine months ended September 30, 2000.
  
  Sales and marketing
  Product sales were $506.1 million in the nine months ended September 30, 2001
  (2000: $379.4 million), representing an increase of 33 per cent. Of particular
  note, ADDERALL sales at $226.2 million were 42 per cent higher than in the nine
  months ended September 30, 2000.
  
  
  <PAGE>
  
  Other products contributing to the overall 33 per cent increase were AGRYLIN
  (increase of $19.5 million or 45 per cent), CARBATROL (increase of $9.6 million
  or 54 per cent) and PROAMATINE (increase of $10.6 million or 65 per cent).
  
  U.S. product sales for the nine months ended September 30, 2001 represented 83
  per cent of the Company's total sales revenues (2000: 79 per cent).
  
  
  Product sales by segment         9 months to      9 months to
                                 September 30,    September 30,          % change
                                          2001             2000
                                         $'000            $'000
  
  United States                        418,305          300,619             +39.1
  International                         87,820           78,734             +11.5
                                  ------------     ------------      ------------
  Total product sales                  506,125          379,353             +33.4
                                  ------------     ------------      ------------
  
  Licensing
  Licensing and development fees for the nine months ended September 30, 2001
  decreased by 71 per cent to $4.2 million compared to $14.3 million for the nine
  months ended September 30, 2000.
  
  Royalties increased by $12.2 million to $107.8 million for the nine months ended
  September 30, 2001.
  
  Cost of sales and operating expenses
  Gross margin on product sales increased to 83 per cent for the nine months ended
  September 30, 2001 compared to 80 per cent for the nine months ended September
  30, 2000.
  
  R&D expenditure decreased by 1 per cent to $120.8 million for the nine months
  ended September 30, 2001 (2000: $122.0 million). R&D expenditure for the nine
  months ended September 30, 2001 represents 20 per cent of revenues compared to
  25 per cent for the nine months ended September 30, 2000.
  
  Excluding the effects of a stock option compensation charge, depreciation and
  amortization charges, the underlying selling, general and administrative
  expenses increased by 39 per cent to $182.2 million for the nine months ended
  September 30, 2001 (2000: $131.2 million) in line with the expansion of the
  business.
  
  Depreciation and amortization increased by 21 per cent to $33.8 million (2000:
  $28.0 million). As noted above, this increase reflects the amortization charge
  on those intangible assets acquired since the third quarter of 2000.
  
  Income taxes
  For the nine months ended September 30, 2001 income taxes were $51.4 million,
  representing an effective rate of tax on income pre APB 25 charge of 25 per cent
  (2000: 24 per cent).
  
  
  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 September 30, 2001, the Company had net cash funds available as follows:
  
  
  <PAGE>
  
                                                 September 30,      December 31,
                                                          2001              2000
                                                         $'000             $'000
                                                --------------    --------------
  Cash and cash equivalents                            514,998            93,266
  Marketable securities and other current
    asset investments                                  260,964           370,425
  Debt                                               (397,884)         (213,874)
                                                --------------    --------------
  Net cash                                             378,078           249,817
                                                --------------    --------------
  
  Net cash provided by operating activities for the nine months ended September
  30, 2001 was $117.3 million compared to $52.4 million for the nine months ended
  September 30, 2000.
  
  Investing activities provided $68.0 million for the nine months ended September
  30, 2001 (2000: $33.3 million). This was due to an inflow of cash by reducing
  cash placed on short-term deposit and by the redemption of marketable securities
  of $109.5 million, and outflows in respect of net capital expenditure on
  long-term investments, intangible assets and fixed assets of $41.4 million.
  
  Investing activities for the nine months ended September 30, 2000 included $75.2
  million from the redemption of marketable securities, $136.2 million of proceeds
  from the sale of long-term investments and fixed assets, purchases of intangible
  assets and fixed assets of $43.1 million, a net $134.6 million outflow for
  investment in temporary and long-term investments and a $0.4 million outflow for
  other investing activities.
  
  Financing activities provided $236.1 million for the nine months ended September
  30, 2001 (2000: $41.7 million). The $236.1 million inflow included $50.5 million
  received from exercises of employee stock options and $391.0 million received
  from the issue of convertible notes, and repayments of long-term debt totalling
  $207.0 million. The repayments of debt were in respect of a $125.0 million term
  loan owing to Credit Suisse First Boston and $76.9 million repaid to Glaxo
  SmithKline. In part, cash funds released from short term investments, as noted
  above, were used to settle the long-term debts outstanding.
  
  Financing activities for the nine months ended September 30, 2000 included $43.0
  million received from exercises of employee stock options, $7.2 million of
  proceeds from the issue of common stock and repayments of long-term debt of $8.5
  million.
  
  Capital expenditure
  Capital expenditure on tangible fixed assets for the nine months ended September
  30, 2001 was $6.3 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 approximately $7 million in proceeds received on the sale of the
  Toronto facility. Other capital expenditure related to the purchase of long term
  investments ($13.2 million) and $33.5 million for new products, including
  Monocid and Indurgan marketed by the Company's Spanish and Italian operations.
  
  Capital expenditure on tangible fixed assets for the nine months ended September
  30, 2000 was $21.2 million. This included the purchase of research and
  development equipment, and investment in computer equipment across all
  operational areas. Capital expenditure on new products of $21.9 million included
  the acquisition of certain European and Nordic rights to Balsalazide; a
  treatment for ulcerative colitis, for $15.9 million.
  
  
  <PAGE>
  
  ITEM 3.  Qualitative and Quantitative Disclosures about Market Risk
  
  Shire's principal treasury operations are managed by the Company's treasury
  function based in the U.K. in accordance with the Company's treasury policies
  and procedures which are approved by Shire's Board of Directors. As a matter of
  policy, Shire does not undertake speculative transactions that would increase
  its currency or interest rate exposure.
  
  The Company is subject to market risk exposure in the following areas:
  
  Interest rate market risk
  
  The Company has cash and cash equivalents on which interest is earned at
  variable rates.
  
  Since December 31, 2000 the Company has repaid in full a long-term loan
  outstanding to Credit Suisse First Boston and amounts due to Glaxo SmithKline
  under a promissory note. Thus, as at September 30, 2001 the Company's exposure
  to variable interest rate market risk on debts outstanding compared to the
  position at December 31, 2000 is much reduced.
  
  On August 15, 2001 Shire Finance Limited, a wholly owned subsidiary of the
  Company, placed an offering of $350 million principal amount of Guaranteed
  Convertible Notes due 2011 with international institutional investors at an
  issue price of 100%. In connection with the issue, the initial purchasers
  exercised in full the option to subscribe or precure subscribers for an
  additional $50 million principal amount of notes. The total principal amount of
  the issue was therefore $400 million.
  
  These Notes are guaranteed by the Company and are convertible into redeemable
  preference shares of the issuer which upon issuance will be immediately
  exchanged for either (i) ordinary shares or (ii) American Depository Shares
  (ADS's) of Shire or, at the Issuer's option, cash. The Notes will bear interest
  of 2% per annum, paid semi-annually. The effective initial exchange price is
  $20.154 per ordinary share and $60.4625 per ADS. This exchange price represents
  a premium of 25% over the closing price of Shire ADS's on August 14, 2001.
  
  Investors have the right to require the Issuer to redeem the notes at par on
  August 21, 2004, 2006 or 2008. Subject to certain conditions, the Notes will be
  callable after August 21, 2004.
  
  The Company has short term and long term debt liabilities denominated in foreign
  currencies. As at September 30, 2001, a total of $5.6 million was outstanding
  (December 31, 2000: $6.0 million). The underlying currency was Canadian dollars.
  
  Foreign exchange market risk
  
  The Company and a number of subsidiary operations are located outside the U.S.
  As such, the consolidated financial results are subject to fluctuations in
  exchange rates, particularly between the British pound, Canadian dollar and the
  U.S. dollar. The financial statements of foreign entities are translated using
  the accounting policies described in Note 1 of the Notes to the consolidated
  financial statements filed on Form 10K. The exposure to foreign exchange market
  risk is managed by the Company's treasury function, using forecasts provided by
  the operating units.
  
  
  <PAGE>
  
  General economic market risk
  
  The terrorist attacks of September 11, 2001 resulted in interruption to business
  activities of many entities, business losses and overall disruption of the U.S.
  economy at many levels. The magnitude and far reaching global impact of the
  events of September 11 are unprecedented in terms of the wide array of losses
  incurred and the number of businesses impacted.
  
  Shire has experienced no quantifiable losses, damage to property or loss of life
  as a direct result of September 11. However, consequential increases to
  operational costs such as insurance premiums, international air travel and
  incremental supplier costs would impact future profitability levels. The
  directors do not believe at this time that any additional market risk specific
  to the Company has resulted from the recent acts of terrorism.
  
  
  
  PART II.   OTHER INFORMATION
  
  ITEM 1. LEGAL PROCEEDINGS
  
  (i) Phentermine
  
  Until April 1998, Shire Richwood Inc. ("SRI") distributed products containing
  phentermine, a prescription drug approved in the U.S. as a single agent for
  short term use in obesity. Contrary to the approved labeling of these products,
  physicians in the U.S. co-prescribed phentermine with fenfluramine or
  dexfenfluramine for management of obesity. This combination was popularly known
  as the "fen/phen" diet. In mid 1997, following concerns raised about cardiac
  valvular side effects alleged to be associated with this diet regime, the
  fenfluramine and dexfenfluramine elements of the "fen/phen" diet were withdrawn
  from the U.S. market. Although SRI has ceased to distribute phentermine, the
  drug remains both approved and available in the U.S. SRI and a number of other
  pharmaceutical companies are being sued for damages for personal injury and
  medical monitoring arising from phentermine used either alone or in combination.
  As of October 31, 2001, SRI was named as a defendant in approximately 3,784
  lawsuits and had been dismissed from approximately 3,538 of these cases. There
  were approximately 150 additional cases pending dismissal as of October 31,
  2001. In only 25 cases in which SRI remains as a defendant, has it been alleged
  in the complaint or subsequent discovery that the plaintiff had used SRI's
  particular product. Although there have been reports of substantial jury awards
  and settlements in respect of fenfluramine and/or dexfenfluramine, to date Shire
  is not aware of any jury awards made against, or any settlements made by, any
  phentermine defendant. Shire denies liability on a number of grounds including
  lack of scientific evidence that phentermine, properly prescribed, causes the
  alleged side effects and that SRI did not promote phentermine for long term
  combined use as the "fen/phen" diet. Accordingly, Shire intends to defend
  vigorously any and all claims made against the Company in respect of phentermine
  and believes that a liability is neither probable nor quantifiable at this stage
  of litigation.
  
  On August 31, 2000 Shire entered into an agreement (the "Termination Agreement")
  with the former shareholders of SRI, pursuant to which the ordinary shares
  placed in escrow at the time of the purchase of SRI by Shire were released, and
  the escrow agreement and the escrow fund were terminated. The escrow agreement
  with the SRI shareholders was initially established by Shire in 1997 in
  anticipation of possible phentermine related claims against the Company. Under
  the terms of the Termination Agreement, monies in the approximate amount of $7
  million were received by Shire, and the escrow fund was terminated. The
  remaining shares were distributed to the former SRI shareholders.
  
  Legal expenses have been paid by Eon Labs Manufacturing Inc. ("Eon"), the
  suppliers to SRI or Eon's insurance carriers but such insurance is now
  exhausted. Eon has agreed to defend and indemnify SRI in this litigation
  pursuant to an agreement dated November 30, 2000 between Eon and SRI.
  
  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) Emory
  
  Emory University filed oppositions to two of 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
  
  
  <PAGE>
  
  of these oppositions were dismissed by the Opposition Division of the European
  Patent Office. Emory University has filed an appeal against the
  dioxolane-related decision of the Opposition Division. Emory University is not
  pursuing its appeal of the decision relating to oxathiolanes. Emory University
  has not to date filed revocation actions with respect to any BioChem patents in
  issue in individual European countries.
  
  In Japan, Emory University filed an opposition to BioChem's granted patent which
  covers lamivudine, related analogues and use of the analogues for treating viral
  infections. The Trial Board of the Japanese Patent Office dismissed Emory
  University's opposition to BioChem's patent covering lamivudine. Emory
  University has not to date filed a revocation action against this patent. Emory
  University has filed revocation actions in Australia and South Korea against
  BioChem's granted patents covering lamivudine. The Company is aggressively
  defending these patents.
  
  On July 23, 1996, Emory University filed a complaint in the U.S. alleging
  infringement from the commercialisation of Epivir by BioChem and
  GlaxoSmithKline, BioChem's exclusive licensee in the U.S., of an Emory
  University U.S. patent granted that same day. The Company considers this patent
  infringement suit to be without merit and has successfully challenged the
  validity of Emory University's patent.
  
  On May 19, 1998, the United States Patent and Trademark Office (the "USPTO")
  declared an interference between the Emory University patent that is the subject
  of a lawsuit and a pending patent application of BioChem. The USPTO accorded
  BioChem the earlier priority date and then accorded BioChem senior party status
  in the interference. BioChem has vigorously challenged the Emory University
  patent in the interference, through to a final hearing on November 10, 1999. The
  Board of Patent Appeals and Interferences issued a decision on December 21, 2000
  invalidating Emory's patent. Emory University has appealed the decision. There
  can be no assurance that Emory's patent will not be reinstated.
  
  Emory University has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. BioChem and GlaxoSmithKline filed
  an opposition to this grant and are vigorously opposing the grant. An examined
  patent application, filed by Emory University claiming lamivudine, was
  successfully opposed by BioChem in Australia and Norway. Emory University has
  filed an appeal from that decision in the Federal Court of Australia. BioChem
  also filed an appeal from certain portions of the decision. An examined patent
  application filed by Emory University claiming lamivudine was also opposed by
  BioChem in Japan. The opposition was dismissed in April 1999 because it was
  improperly filed by a representative who had previously represented Emory.
  Notwithstanding the dismissal, the Japanese Patent Office issued an ex-officio
  action rejecting all of Emory University's claims. There can be no reassurance
  that Emory will not be able to overcome this rejection. An examined patent
  application filed by Emory claiming lamivudine was opposed by BioChem and
  GlaxoSmithKline in South Korea and such Emory claims to lamivudine were
  cancelled by the South Korean Patent Office. The Company is aware that Emory
  University has filed patent applications in other countries, which it believes
  may claim similar subject matter. The Company intends to challenge vigorously
  such patent applications.
  
  (iii) Yale
  
  On November 23, 1999, the USPTO declared an interference between BioChem'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
  company. The Company believes that its patent is valid and intends to vigorously
  defend the patent. The Company is not aware of corresponding patent applications
  by Yale University or Vion in countries other than the U.S. On April 14, 2000,
  the USPTO declared a further interference between BioChem's hepatitis B patent
  for lamivudine and a patent application by GlaxoSmithKline claiming methods of
  treating hepatitis B using lamivudine.
  
  (iv) 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. Shire filed its answer to the complaint on November 24, 2000
  and discovery related to the litigation is ongoing.
  
  
  <PAGE>
  
  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 auto
  following an ingestion of Adderall. As a result of the accident, the driver's
  young son was killed. Shire is evaluating this suit and has not yet filed an
  answer with the Court.
  
  
  ITEM 2. CHANGES IN SECURITIES
  
  On August 21, 2001, Shire Finance Limited ("Finance"), a wholly-owned subsidiary
  of the Company, issued $400 million principal amount of 2% Senior Guaranteed
  Convertible Notes due 2011(the "Notes"), which Notes were fully and
  unconditionally guaranteed by the Company (the "Guarantee" and, together with
  the Notes, the "Securities"). The Securities were offered and sold in the United
  States to qualified institutional buyers in reliance on Rule 144A under the
  Securities Act of 1933, as amended (the "Act") and outside the United States to
  institutional investors in reliance on Regulation S under the Act. The initial
  purchasers of the Securities agreed to issue and sell the Securities only to
  qualified institutional buyers under Rule 144A or to institutional investors
  pursuant to Regulation S. The Notes are convertible, at any time prior to August
  14, 2001 or their redemption or repurchase, into preference shares of Finance.
  Each $1,000 principal amount of Notes may be converted into one preference
  share. Upon issuance, the preference shares will be immediately exchanged for
  (i) the Company's ordinary shares, (ii) American Depository Shares ("ADSs")
  representing ordinary shares of the Company or (iii) at Finance's option, cash.
  The initial exchange ratio is equal to 49.6175 ordinary shares per preference
  share or 16.5392 ADSs per preference share, is based on an effective exchange
  price of approximately $20.154 per ordinary share and $60.4625 per ADS,
  representing a premium of 25% over the closing price of the Company's ADSs on
  August 14, 2001, and is subject to adjustment upon the occurrence of certain
  events. The net proceeds to Finance from the offering of the Notes was
  approximately $391 million. On November 6, 2001, the Company filed a
  registration statement with the Securities and Exchange Commission for the
  resale by holders of their Notes and the ordinary shares issuable upon exercise
  of the preference shares. The registration statement has not yet been declared
  effective.
  
  
  ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
  None
  
  
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
  None
  
  
  ITEM 5. OTHER INFORMATION
  
  None
  
  
  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
  
  
  (a)      Exhibits
  
  3.1* Amended and Restated Memorandum and Articles of Association of Shire
       Finance Limited.
  
  4.1* Indenture dated August 21, 2001 by and among Shire Finance Limited, Shire
       Pharmaceuticals Group plc and The Bank of New York, as Trustee
  
  
  <PAGE>
  
  4.2* Form of 2% Senior Guaranteed Note due 2011 (included in Exhibit 4.1)
  
  4.3* Registration Rights Agreement dated August 21, 2001, between Shire Finance
       Limited, Shire Pharmaceuticals Group plc and Bear, Stearns International
       Limited and Goldman Sachs International, as representatives of the Initial
       Purchasers
  
  4.4* Preference Share Guarantee Agreement dated August 21, 2001 among Shire
       Finance Limited, Shire Pharmaceuticals Group plc and The Bank of New York,
       as Guarantee Trustee
  
  4.5* Form of Shire Pharmaceuticals Group plc Guarantee
  
       *    Incorporated by reference to the exhibits to Shire's Registration
            Statement on Form S-3 (No. 333-75862), filed November 6, 2001.
  
  
  
  (b)      Reports on Form 8-K
  
           During the third quarter ended September 30, 2001, 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 July
           17, 2001, with respect to press release of historical financial data in
           US GAAP format.
  
           Form 8-K as amended (Item 5 - Other Events, and Item 7 - Financial
           Statements and Exhibits), date of earliest event reported July 23,
           2001, with respect to press release announcement of second quarter
           results.
  
           Form 8-K (Item 7 - Financial Statements and Exhibits), date of earliest
           event reported July 23, 2001, with respect to presentation relating to
           second quarter results.
  
           Form 8-K (Item 5 - Other Events), and Item 7 - Financial Statements and
           Exhibits), date of earliest event reported August 15, 2001, with
           respect to restated financial statements and management's discussion
           and analysis of financial conditions and results of operations.
  
  
           During the period between September 30, 2001 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 5 - Other Events, and Item 7 - Financial Statements and
           Exhibits), date of earliest event reported October 12, 2001, with
           respect to press release announcement of US Food and Drug
           Administration (FDA) approval of Adderall XR(TM).
  
  
  
  
  <PAGE>
  
  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:    November 14, 2001          By:      /s/ Angus C. Russell
                                               ----------------------------
                                               Angus C. Russell
                                               Group Finance Director
  
  
  
  Date:    November 14, 2001          By:      /s/ Rolf Stahel
                                               ----------------------------
                                               Rolf Stahel
                                               Chief Executive
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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 September 30, 2001
  
                           Commission File Number: 0-29630
  
                           SHIRE PHARMACEUTICALS GROUP PLC
               (Exact name of registrant as specified in its charter)
  
                      England and Wales                          Applied for
                (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 November 13, 2001
  
   Common Stock: Ordinary Shares                        479,403,984
  THE "SAFE HARBOR" STATEMENT UNDER SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
  1934 (AMENDED) AND SECTION 27A OF THE SECURITIES ACT OF 1933 (AMENDED). The
  statements in this Form 10-Q that are not historical facts are forward-looking
  statements that involve risks and uncertainties, including but not limited to,
  risks associated with the inherent uncertainty of pharmaceutical research,
  product development and commercialization, the impact of competitive products,
  patents, and other risks and uncertainties, including those detailed from time
  to time in periodic reports, 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)
  
                                                                September 30,          December 31,
                                                                         2001                  2000
                                                                  (Unaudited)
  ASSETS                                                          -----------           -----------
  Current assets:
  Cash and cash equivalents                                           514,998                93,266
  Marketable securities and other current asset
    investments                                                       260,964               370,425
  Accounts receivable, net                                            142,650               144,175
  Inventories, net                                                     50,032                49,612
  Deferred tax asset                                                    8,288                26,990
  Prepaid expenses and other current assets                            24,389                11,385
                                                                 ------------          ------------
  Total current assets                                              1,001,321               695,853
  
  Investments                                                          61,276                74,314
  Property, plant and equipment, net                                  112,577               131,224
  Intangible assets, net                                              560,010               578,436
  Net assets of business transferred under
    contractual arrangements                                            3,831                35,850
  Deferred tax asset                                                   15,108                 6,543
  Other assets                                                         18,983                26,275
                                                                 ------------          ------------
  Total assets                                                      1,773,106             1,548,495
                                                                 ------------          ------------
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
  Current instalments of long-term debt                                 4,393                81,811
  Accounts and notes payable                                          158,145               113,446
  Other current liabilities                                            15,016                32,593
                                                                 ------------          ------------
  Total current liabilities                                           177,554               227,850
  Long-term debt, excluding current instalments                       393,491               132,063
  Other long-term liabilities                                          11,188                14,196
                                                                 ------------          ------------
  Total liabilities                                                   582,233               374,109
                                                                 ------------          ------------
  Shareholders' equity:
  Common stock, 5p par value: 800,000,000 shares
  authorized; and 477,927,959 shares issued and
  outstanding (2000: 488,015,304)                                      36,702                40,292
  Exchangeable shares: 6,117,944 shares issued and
  outstanding (2000: nil)                                             277,328                     -
  Additional paid-in capital                                          993,460             1,209,448
  Accumulated other comprehensive losses                             (77,197)              (60,550)
  Accumulated deficit                                                (39,420)              (14,804)
                                                                 ------------          ------------
  Total shareholders' equity                                        1,190,873             1,174,386
                                                                 ------------          ------------
  Total liabilities and shareholders' equity                        1,773,106             1,548,495
                                                                 ------------          ------------
  The balance sheet as at December 31, 2000 has been restated to include the
  results of BioChem Pharma Inc., the merger with whom was accounted for as a
  pooling of interests in accordance with APB 16, Accounting for Business
  Combinations. 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          9 months         9 months
                                                  September 30,    September 30,                to               to
                                                           2001             2000     September 30,    September 30,
                                                                                              2001             2000
                                                   ------------     ------------      ------------     ------------
  Product sales                                         180,254          142,113           506,125          379,353
  Licensing and development                                 943            5,063             4,229           14,344
  Royalties                                              37,103           31,890           107,793           95,553
  Other revenues                                            784              257             1,530              731
                                                   ------------     ------------      ------------     ------------
  Total revenues                                        219,084          179,323           619,677          489,981
  
  Costs and expenses:
  Cost of revenues                                     (28,036)         (32,134)          (85,021)         (77,231)
  Research and development                             (41,327)         (44,487)         (120,838)        (121,969)
  Selling, general and administrative
  (inclusive of stock option compensation
  charge of  $51,000, $206,000, $2,403,000
  and $23,688,000 respectively)                        (72,585)         (53,616)         (218,376)        (182,912)
  Asset impairments and restructuring charges                 -                -          (85,447)                -
  Merger transaction expenses                                 -                -          (83,470)                -
  (Losses)/gains on dispositions of assets              (2,028)              214          (10,126)              479
                                                   ------------     ------------      ------------     ------------
  Total operating expenses                              143,976          130,023           603,278          381,633
                                                   ------------     ------------      ------------     ------------
  Operating income                                       75,108           49,300            16,399          108,348
  
  Interest income                                         4,651            5,064            14,286           13,259
  Interest expense                                        (989)          (3,275)           (5,671)         (11,663)
  Other (expense)/income, net                             (844)            4,050             1,809          106,503
                                                   ------------     ------------      ------------     ------------
  Total other income, net                                 2,818            5,839            10,424          108,099
                                                    -----------      -----------      ------------     ------------
  Income before income taxes                             77,926           55,139            26,823          216,447
  
  Income taxes                                         (19,815)         (11,963)          (51,439)         (32,045)
                                                   ------------     ------------      ------------     ------------
  Net income/(loss)                                      58,111           43,176          (24,616)          184,402
                                                   ------------     ------------      ------------     ------------
  
  Net income/(loss) per share:
  Basic                                                   11.8c             8.9c            (5.0c)            38.3c
  Diluted                                                 11.5c             8.7c            (5.0c)            37.3c
  
  Weighted average number of shares:
  Basic                                             493,790,267      485,406,226       490,750,414      481,488,865
  Diluted                                           503,914,740      497,036,041       490,750,414      493,737,179
  The results for the three and nine months ended September 30, 2000 have been
  restated to include the results of BioChem Pharma Inc., the merger with whom was
  accounted for as a pooling of interests in accordance with APB 16, Accounting
  for Business Combinations.
  SHIRE PHARMACEUTICALS GROUP PLC
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
                                                                              9 months to      9 months to
                                                                            September 30,    September 30,
                                                                                     2001             2000
                                                                          ---------------  ---------------
  Cash flows from operating activities:
  Net (loss)/income                                                              (24,616)          184,402
  Adjustments to reconcile net (loss)/income to net cash provided by
  operating activities:
  Depreciation and amortization                                                    33,753           28,045
  Stock option compensation                                                         2,403           23,688
  Tax benefit of stock option compensation charged directly to equity               3,307           10,972
  Non cash exchange gains and losses                                             (15,167)          (2,996)
  Write-down of long term investments                                              24,937                -
  Write-down of intangible assets                                                  20,890            7,061
  Write-down of net assets of business transferred under contractual
  arrangements                                                                     30,811                -
  Gain on sale of long term investments                                                 -        (104,984)
  Loss/(gain) on sale of fixed assets                                               8,112            (479)
  Loss on sale of intangible assets                                                 2,014                -
  Share of loss in company subject to significant influence                             -            1,464
  Changes in assets and liabilities:
  Decrease/(increase) in accounts receivable                                        1,551         (42,064)
  Decrease/(increase) in inventory                                                  (420)              278
  Decrease in deferred tax asset                                                   10,137            7,604
  (Increase)/decrease in prepayments and other current asset investments         (13,004)            1,429
  Decrease/(increase) in other assets                                               8,500             (18)
  Increase/(decrease) in accounts and notes payable                                44,699         (60,542)
  Decrease in other current liabilities                                          (17,577)                -
  Decrease in other long term liabilities                                         (3,008)              (4)
                                                                          ---------------  ---------------
  Net cash provided by operating activities                                       117,322           53,856
                                                                          ---------------  ---------------
  Cash flows from investing activities:
  (Investment in)/redemption of marketable securities                            (18,450)           75,205
  Decrease in cash placed on short-term deposit                                   127,911                -
  Purchase of temporary investments                                                     -        (232,743)
  Purchase of long term investments                                              (13,216)         (15,606)
  Maturity of long term investments                                                     -          113,793
  Expenses of acquisition of subsidiaries                                               -            (657)
  Purchase of intangible assets                                                  (33,519)         (21,894)
  Purchase of fixed assets                                                        (6,305)         (21,173)
  Purchase of other assets                                                              -            (606)
  Proceeds from sale of long term investments                                           -          124,145
  Proceeds from sale of fixed assets                                                7,043           12,093
  Proceeds from sale of intangible assets                                           4,556                -
  Collection on notes receivable                                                        -              766
                                                                          ---------------  ---------------
  Net cash provided by investing activities                                        68,020           33,323
                                                                          ---------------  ---------------
  Cash flows from financing activities:
  Proceeds from issue of long-term debt                                           391,000                -
  Repayment of long-term debt and capital leases                                (206,990)          (8,505)
  Proceeds from issue of common stock, net of expenses                              1,526            7,190
  Proceeds from exercise of options                                                50,514           43,047
                                                                          ---------------   --------------
  Net cash provided by financing activities                                       236,050           41,732
                                                                          ---------------   --------------
  
  Effect of foreign exchange rate changes on cash and cash equivalents                340          (5,303)
  Cash flows used in discontinued operations                                            -          (1,722)
                                                                          ---------------   --------------
  Net increase in cash and cash equivalents                                       421,732          121,886
  Cash and cash equivalents at beginning of period                                 93,266          102,503
                                                                          ---------------   --------------
  Cash and cash equivalents at end of period                                      514,998          224,389
                                                                          ---------------   --------------
  The cash flows for the nine months ended September 30, 2000 have been restated
  to include the cash flows of BioChem Pharma Inc., the merger with whom was
  accounted for as a pooling of interests in accordance with APB 16, Accounting
  for Business Combinations.
  CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
                                                    3 months to       3 months to      9 months to      9 months to
                                                  September 30,     September 30,    September 30,    September 30,
                                                           2001              2000             2001             2000
                                                   ------------      ------------     ------------     ------------
  Net income/(loss)                                      58,111            43,176         (24,616)          184,402
  Foreign currency translation adjustments               13,424          (16,098)         (16,139)         (41,886)
  Unrealized holding (losses)/gains on
  marketable securities and non-current
  investments                                             (312)           (2,691)            (508)            1,356
                                                   ------------      ------------     ------------     ------------
  Comprehensive income/(loss)                            71,223            24,387         (41,263)          143,872
                                                   ------------      ------------     ------------     ------------
  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 is an international specialty pharmaceutical company with a strategic
  focus on three therapeutic areas: central nervous system disorders, oncology and
  anti-infectives. Shire's strategy is further supported by two technology
  platforms, drug delivery and biologics.
  
  The Company has a global sales and marketing infrastructure with a broad
  portfolio of products and its own direct marketing capability in the U.S.,
  Canada, U.K., Republic of Ireland, France, Germany, Italy and Spain. Shire also
  covers other significant pharmaceutical markets indirectly through distributors.
  The business is managed within three individual operating segments: U.S.,
  International and global research and development. Within these segments,
  revenues are derived 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 it's principal products tend
  to be prescribed by specialists as opposed to primary care physicians. The
  Company's comparatively small sales force can promote specialty products
  effectively while it could not be expected to achieve the necessary coverage of
  primary care physicians. Shire's main approach is to in-license projects, to
  develop them and launch them using it's own sales force in the eight key world
  markets. 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 for the treatment of Attention Deficit
            Hyperactivity Disorder; Agrylin for the treatment of elevated blood
            platelets; Pentasa for the treatment of ulcerative colitis; Carbatrol
            for the treatment of epilepsy; and ProAmatine for the treatment of
            orthostatic 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., the Calcichew 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
            (marketed in partnership with GlaxoSmithKline); Amatine; Second Look,
            a breast cancer diagnostics product for which the Company hopes to
            receive FDA approval in 2001; and Fluviral S/F, a vaccine for the
            prevention of influenza; and
  
       o    in the rest of the world, the Company receives royalties on the sales
            of Zeffix for the treatment of hepatitis B, marketed by
            GlaxoSmithKline, and will receive royalties on sales of Reminyl from
            Janssen Pharmaceutica.
  
  In addition, the Company has a number of products in late stage development
  including Dirame for the treatment of moderate to severe pain, Foznol for the
  treatment of high blood phosphate levels associated with kidney failure and
  Troxatyl for the treatment of leukemia and solid tumors. The Company submitted
  the first regulatory submission for Foznol under the European Mutual Recognition
  procedure on March 13, 2001.
  
  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.
  
  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, 2000
  and notes thereto. The results for the period ended September 30, 2001 are not
  necessarily indicative of the results that may be expected for the year ending
  December 31, 2001.
  
  c) New Accounting Pronouncements
  
  In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
  of Financial Accounting Standards ("SFAS") No. 141 "Business Combinations" and
  SFAS No. 142 "Goodwill and Other Intangible Assets". SFAS No. 141 requires the
  use of the purchase method of accounting for all business combinations initiated
  after June 30, 2001. Had the BioChem transaction been initiated after this date,
  it would have been required to be accounted for under the purchase method rather
  than the pooling of interests method. SFAS No. 141 requires intangible assets to
  be recognized if they arise from contractual or legal rights or are "separable",
  i.e., it is feasible that they may be sold, transferred, licensed, rented,
  exchanged or pledged. As a result, it is likely that more intangibles will be
  recognized under SFAS No. 141 than its predecessor, APB Opinion No. 16, although
  in some instances previously recognized intangibles will be subsumed into
  goodwill.
  
  SFAS No. 142 is effective for fiscal years beginning after December 15, 2001
  although goodwill on business combinations consummated after July 1, 2001 will
  not be amortized. On adoption the Company may need to record a cumulative effect
  adjustment to reflect the impairment of previously recognized intangible assets.
  In addition, goodwill recognized on prior business combinations will cease to be
  amortized. Had the Company adopted SFAS No. 142 at January 1, 2001 the Company
  would not have recorded a goodwill amortization charge of $8,089,000 for the
  nine months ended September 30, 2001. The Company has not determined the impact
  that these statements will have on intangible assets or whether a cumulative
  effect adjustment will be required upon adoption.
  
  In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
  Obligations. SFAS No. 143 requires 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 not yet assessed the
  potential impact of the adoption of SFAS No. 143.
  
  In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
  Disposal of Long-Lived Assets". SFAS No. 44 establishes a single accounting
  model for long-lived assets to be disposed of by sale consistent with the
  fundamental provisions of SFAS No. 121 "Accounting for the Impairment of
  Long-Lived Assets and for Long-Lived Assets to be Disposed Of". While it
  supersedes APB Opinion No. 30 "Reporting the Results of Operations - Reporting
  the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
  and Infrequently Occurring Events and Transactions" it retains the presentation
  of discontinued operations but broadens that presentation to include a component
  of an entity (rather than a segment of a business). However, discontinued
  operations are no longer recorded at net realizable value and future operating
  losses are no longer recognized before they occur. Under SFAS No. 144 there is
  no longer a requirement to allocate goodwill to long-lived assets to be tested
  for impairment. It also establishes a probability weighted cash flow estimation
  approach to deal with situations in which there are a range of cash flows that
  may be generated by the asset being tested for impairment. SFAS No. 144 also
  establishes criteria for determining when an asset should be treated as held for
  sale.
  
  SFAS No. 144 is effective for fiscal years beginning after December 15, 2001 and
  interim periods within those fiscal years, with early application encouraged.
  The provisions of the Statement are generally to be applied prospectively. The
  Company is currently assessing whether the adoption of SFAS No. 144 will have
  any impact on its results of operations or financial position.
  2.   Inventory
  
                                           September 30,          December 31,
                                                    2001                  2000
                                                   $'000                 $'000
                                          --------------        --------------
  Finished goods                                  27,487                24,118
  Work-in-process                                 17,311                12,544
  Raw materials                                    5,234                12,950
                                          --------------        --------------
                                                  50,032                49,612
                                          --------------        --------------
  
  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 September 30, 2001                     U.S.   International              R&D           Total
                                                           $'000           $'000            $'000           $'000
                                                      ----------      ----------       ----------      ----------
  Product sales                                          149,853          30,401                -         180,254
  Licensing and development                                  943               -                -             943
  Royalties                                                   44          37,059                -          37,103
  Other revenues                                               -             784                -             784
                                                      ----------      ----------       ----------      ----------
  Total revenues                                         150,840          68,244                -         219,084
                                                      ----------      ----------       ----------      ----------
  
  Cost of revenues                                        13,264          14,772                -          28,036
  Research and development                                     -               -           41,327          41,327
  Selling, general and administrative                     37,968          34,617                -          72,585
  Losses on dispositions of assets                         2,014              14                -           2,028
                                                      ----------      ----------       ----------      ----------
  Total operating expenses                              (53,246)        (49,403)         (41,327)       (143,976)
                                                      ----------      ----------       ----------      ----------
  Operating income/(loss)                                 97,594          18,841         (41,327)          75,108
                                                      ----------      ----------       ----------      ----------
  
  Three months ended September 30, 2000                     U.S.   International              R&D           Total
                                                           $'000           $'000            $'000           $'000
                                                      ----------      ----------       ----------      ----------
  Product sales                                          111,069          31,044                -         142,113
  Licensing and development                                  884           4,179                -           5,063
  Royalties                                                   92          31,798                -          31,890
  Other revenues                                               3             254                -             257
                                                      ----------      ----------       ----------      ----------
  Total revenues                                         112,048          67,275                -         179,323
                                                      ----------      ----------       ----------      ----------
  
  Cost of revenues                                        17,357          14,777                -          32,134
  Research and development                                     -               -           44,487          44,487
  Selling, general and administrative                     28,943          24,673                -          53,616
  Losses on dispositions of assets                           219           (433)                -           (214)
                                                      ----------      ----------       ----------      ----------
  Total operating expenses                              (46,519)        (39,017)         (44,487)       (130,023)
                                                      ----------      ----------       ----------      ----------
  Operating income/(loss)                                 65,529          28,258         (44,487)          49,300
                                                      ----------      ----------       ----------      ----------
  
  Nine months ended September 30, 2001                      U.S.    International             R&D             Total
                                                           $'000            $'000           $'000             $'000
                                                      ----------       ----------      ----------        ----------
  Product sales                                          418,305           87,820               -           506,125
  Licensing and development                                3,272              957               -             4,229
  Royalties                                                  224          107,569               -           107,793
  Other revenues                                               -            1,530               -             1,530
                                                      ----------       ----------      ----------        ----------
  Total revenues                                         421,801          197,876               -           619,677
                                                      ----------       ----------      ----------        ----------
  
  Cost of revenues                                        48,756           36,265               -            85,021
  Research and development                                     -                -         120,838           120,838
  Selling, general and administrative                    129,821           88,555               -           218,376
  Asset impairments and restructuring charges
                                                               -           85,447               -            85,447
  Merger transaction expenses                                  -           83,470               -            83,470
  Losses on dispositions of assets                         2,014            8,112               -            10,126
                                                      ----------       ----------      ----------        ----------
  Total operating expenses                             (180,591)        (301,849)       (120,838)         (603,278)
                                                      ----------       ----------      ----------        ----------
  Operating income/(loss)                                241,210        (103,973)       (120,838)            16,399
                                                      ----------       ----------      ----------        ----------
  
  Nine months ended September 30, 2000                      U.S.    International             R&D             Total
                                                           $'000            $'000           $'000             $'000
                                                      ----------       ----------      ----------        ----------
  Product sales                                          300,619           78,734               -           379,353
  Licensing and development                                2,874           11,470               -            14,344
  Royalties                                                  221           95,332               -            95,553
  Other revenues                                              16              715               -               731
                                                      ----------       ----------      ----------        ----------
  Total revenues                                         303,730          186,251               -           489,981
                                                      ----------       ----------      ----------        ----------
  
  Cost of revenues                                        42,794           34,437               -            77,231
  Research and development                                     -                -         121,969           121,969
  Selling, general and administrative                     88,083           94,829               -           182,912
  Gains on dispositions of assets                           (63)            (416)               -             (479)
                                                      ----------       ----------      ----------        ----------
  Total operating expenses                             (130,814)        (128,850)       (121,969)         (381,633)
                                                      ----------       ----------      ----------        ----------
  Operating income/(loss)                                172,916           57,401       (121,969)           108,348
                                                      ----------       ----------      ----------        ----------
  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      9 months to       9 months to
                                                          September 30,     September 30,    September 30,     September 30,
                                                                   2001              2000             2001              2000
                                                                  $'000             $'000            $'000             $'000
                                                         --------------------------------  ---------------- ----------------
  Numerator for basic net income/(loss) per share                58,111            43,176         (24,616)           184,402
  Interest charged on convertible debt                               29                96                -                 -
  Tax on interest charged                                           (7)              (23)                -                 -
                                                         --------------------------------  ---------------- ----------------
  Numerator for diluted net income/(loss) per share              58,133            43,249         (24,616)           184,402
                                                         --------------------------------  ---------------- ----------------
  
  Weighted average number of shares:                      No. of shares     No. of shares    No. of shares     No. of shares
                                                         --------------------------------  ---------------- ----------------
  Basic  - weighted average number of shares                493,790,267       485,406,226      490,750,414       481,488,865
  Effect of dilutive stock options                            9,842,029        10,529,424                -        12,248,314
  Convertible debt                                              282,444         1,100,391                -                 -
                                                         --------------------------------  ---------------- ----------------
  Diluted - weighted average number of shares               503,914,740       497,036,041      490,750,414       493,737,179
                                                         --------------------------------  ---------------- ----------------
  Basic net income/(loss) per share                               11.8c              8.9c           (5.0c)             38.3c
                                                         --------------------------------  ---------------- ----------------
  Diluted net income/(loss) per share                             11.5c              8.7c           (5.0c)             37.3c
                                                         --------------------------------  ---------------- ----------------
  The calculation of the diluted weighted average number of shares for the nine
  months ended September 30, 2001 excludes the effects of dilutive stock options
  and convertible debt securities issued by the Company because these have an
  antidilutive effect on the calculation in a loss making period.
  
  The calculation of the diluted weighted average number of shares for the nine
  months ended September 30, 2000 excludes the effects of convertible debt because
  it has an antidilutive effect.
  
  5.   Restructuring
  
  In May 2001, the Company completed a merger with BioChem Pharma Inc.
  ("BioChem"), an international specialty pharmaceutical company based in
  Montreal, Canada. As a result of the merger, the Company recorded pre tax
  charges in the second quarter of 2001 totalling $177.0 million, comprising asset
  impairment and restructuring costs ($85.4 million), merger related transaction
  expenses ($83.5 million) and a loss from the sale of a manufacturing facility in
  Toronto, Canada ($8.1 million).
  
  The restructuring costs included an impairment charge of $20.9 million to adjust
  intangible asset values, primarily trademark and patent costs but also an
  element of product rights, to their estimated fair value. These charges are
  consistent with the Company's accounting policy to review periodically the
  carrying value of intangible assets and evaluate whether there has been any
  impairment in the carrying value of those intangibles as compared with estimated
  undiscounted future cash flows relating to those intangibles. Other asset
  impairment charges included the write down of long term unquoted investments
  ($24.9 million) and a write down of $30.8 million to a debenture held by
  BioChem, which was received on divestiture of its diagnostics subsidiary. These
  charges are consistent with the Company's policy to provide for other than
  temporary impairments in investment by reference to the fair value of the
  investment using established financial methodologies. There was also a total of
  $8.8 million recorded in respect of employee related costs.
  
  The employee terminations related to the closure of the Toronto facility and the
  elimination of duplicate positions across the combined organization. Shire's
  existing Canadian based sales and marketing operations in Toronto have been
  combined with those of BioChem in Laval. A total of 57 employees were identified
  to be terminated. As of September 30, 2001 all of the planned terminations were
  completed.
  6. Long-term debt
  
       (a)  During the first nine months of 2001, the Company made repayments of
            debt totalling $207 million.
  
       (b)  During the first nine months of 2001, Shire Finance Limited, a wholly
            owned subsidiary of the Company, issued $400 million in senior
            guaranteed convertible notes due 2011, guaranteed by the Company, with
            an interest rate of 2%. The Company incurred issuance costs of
            approximately $9 million in respect of these convertible notes.
  
  7. Consolidated statement of changes in shareholders' equity
  Accumu-
                                                             Exchange-                             lated
                                      Common      Exchange-    able                                other       Total
                          Common      Stock         able      shares    Additional    Accumu-     compre-    sharehold-
                          Stock        No.         shares      No.        paid-in      late       hensive       ers'
                          Amount      000's        Amount     shares      capital    deficit      losses      equity
                          $'000       Shares       $'000      000's        $'000       $'000       $'000       $'000
                        ----------- ----------- ----------- ---------- -----------  ----------  ----------  ------------
  As at January 1,
  2001                      40,292     488,015          -           -     1,209,448   (14,804)    (60,550)   1,174,386
  
  Net loss                       -           -          -           -             -   (24,616)           -    (24,616)
  Foreign currency
  translation                    -           -          -           -             -          -    (16,139)    (16,139)
  
  Unrealized holding
  loss on non-current
  investments                    -           -          -           -             -          -       (508)       (508)
  
  Issue of shares for
  acquisitions             (6,522)    (51,478)    792,220      17,292     (785,698)          -           -           -
  
  Issue of shares for
  conversion of loan
  note                          22         295          -           -         1,522          -           -       1,544
  
  Exchange of
  exchangeable shares        2,368      33,522  (514,892)    (11,174)       512,524          -           -           -
  Options exercised            542       7,574          -           -        49,972          -           -      50,514
  Issuance costs                 -           -          -           -          (18)          -           -        (18)
  Stock option
  compensation                   -           -          -           -         2,403          -           -       2,403
  Tax benefit
  associated with
  exercise of stock
  options                        -           -          -           -         3,307          -           -       3,307
                        ----------- ----------- ----------- ---------- -----------  ----------  ----------  ------------
  As at September 30,
  2001                      36,702     477,928    277,328       6,118       993,460   (39,420)    (77,197)   1,190,873
                        ----------- ----------- ----------- ---------- -----------  ----------  ----------  ------------
  Each exchangeable share is exchangeable into 3 ordinary shares.
  
  8. Contingent liabilities
  
  (i) Phentermine
  
  Until April 1998, Shire Richwood Inc. ("SRI") distributed products containing
  phentermine, a prescription drug approved in the U.S. as a single agent for
  short term use in obesity. Contrary to the approved labeling of these products,
  physicians in the U.S. co-prescribed phentermine with fenfluramine or
  dexfenfluramine for management of obesity. This combination was popularly known
  as the "fen/phen" diet. In mid 1997, following
  concerns raised about cardiac valvular side effects alleged to be associated
  with this diet regime, the fenfluramine and dexfenfluramine elements of the
  "fen/phen" diet were withdrawn from the U.S. market. Although SRI has ceased to
  distribute phentermine, the drug remains both approved and available in the U.S.
  SRI and a number of other pharmaceutical companies are being sued for damages
  for personal injury and medical monitoring arising from phentermine used either
  alone or in combination. As of October 31, 2001, SRI was named as a defendant in
  approximately 3,784 lawsuits and had been dismissed from 3,538 of these cases.
  There were approximately 150 additional cases pending dismissal as of October
  31, 2001. In only 25 cases in which SRI remains as a defendant, has it been
  alleged in the complaint or subsequent discovery that the plaintiff had used
  SRI's particular product. Although there have been reports of substantial jury
  awards and settlements in respect of fenfluramine and/or dexfenfluramine, to
  date Shire is not aware of any jury awards made against, or any settlements made
  by, any phentermine defendant. Shire denies liability on a number of grounds
  including lack of scientific evidence that phentermine, properly prescribed,
  causes the alleged side effects and that SRI did not promote phentermine for
  long term combined use as the "fen/phen" diet. Accordingly, Shire intends to
  defend vigorously any and all claims made against the Company in respect of
  phentermine and believes that a liability is neither probable nor quantifiable
  at this stage of litigation.
  
  On August 31, 2000 Shire entered into an agreement (the "Termination Agreement")
  with the former shareholders of SRI, pursuant to which the ordinary shares
  placed in escrow at the time of the purchase of SRI by Shire were released, and
  the escrow agreement and the escrow fund were terminated. The escrow agreement
  with the SRI shareholders was initially established by Shire in 1997 in
  anticipation of possible phentermine related claims against the Company. Under
  the terms of the Termination Agreement, monies in the approximate amount of $7
  million were received by Shire, and the escrow fund was terminated. The
  remaining shares were distributed to the former SRI shareholders.
  
  Legal expenses have been paid by Eon Labs Manufacturing Inc. ("Eon"), the
  suppliers to SRI or Eon's insurance carriers but such insurance is now
  exhausted. Eon has agreed to defend and indemnify SRI in this litigation
  pursuant to an agreement dated November 30, 2000 between Eon and SRI.
  
  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) Emory
  
  Emory University filed oppositions to two of 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 University has filed an
  appeal against the dioxolane-related decision of the Opposition Division. Emory
  University is not pursuing its appeal of the decision relating to oxathiolanes.
  Emory University has not to date filed revocation actions with respect to any
  BioChem patents in issue in individual European countries.
  
  In Japan, Emory University filed an opposition to BioChem's granted patent which
  covers lamivudine, related analogues and use of the analogues for treating viral
  infections. The Trial Board of the Japanese Patent Office dismissed Emory
  University's opposition to BioChem's patent covering lamivudine. Emory
  University has not to date filed a revocation action against this patent. Emory
  University has filed revocation actions in Australia and South Korea against
  BioChem's granted patents covering lamivudine. The Company is aggressively
  defending these patents.
  
  On July 23, 1996, Emory University filed a complaint in the U.S. alleging
  infringement from the commercialisation of Epivir by BioChem and
  GlaxoSmithKline, BioChem's exclusive licensee in the U.S., of an Emory
  University U.S. patent granted that same day. The Company considers this patent
  infringement suit to be without merit and has successfully challenged the
  validity of Emory University's patent.
  
  On May 19, 1998, the United States Patent and Trademark Office (the "USPTO")
  declared an interference between the Emory University patent that is the subject
  of a lawsuit and a pending patent application of BioChem. The USPTO accorded
  BioChem the earlier priority date and then accorded BioChem senior party status
  in the interference. BioChem has vigorously challenged the Emory University
  patent in the interference, through to a final hearing on November 10, 1999. The
  Board of Patent Appeals and Interferences issued a
  decision on December 21, 2000 invalidating Emory's patent. Emory University has
  appealed the decision. There can be no assurance that Emory's patent will not be
  reinstated.
  
  Emory University has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. BioChem and GlaxoSmithKline filed
  an opposition to this grant and are vigorously opposing the grant. An examined
  patent application, filed by Emory University claiming lamivudine, was
  successfully opposed by BioChem in Australia and Norway. Emory University has
  filed an appeal from that decision in the Federal Court of Australia. BioChem
  also filed an appeal from certain portions of the decision. An examined patent
  application filed by Emory University claiming lamivudine was also opposed by
  BioChem in Japan. The opposition was dismissed in April 1999 because it was
  improperly filed by a representative who had previously represented Emory.
  Notwithstanding the dismissal, the Japanese Patent Office issued an ex-officio
  action rejecting all of Emory University's claims. There can be no reassurance
  that Emory will not be able to overcome this rejection. An examined patent
  application filed by Emory claiming lamivudine was opposed by BioChem and
  GlaxoSmithKline in South Korea and such Emory claims to lamivudine were
  cancelled by the South Korean Patent Office. The Company is aware that Emory
  University has filed patent applications in other countries, which it believes
  may claim similar subject matter. The Company intends to challenge vigorously
  such patent applications.
  
  (iii) Yale
  
  On November 23, 1999, the USPTO declared an interference between BioChem'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
  company. The Company believes that its patent is valid and intends to vigorously
  defend the patent. The Company is not aware of corresponding patent applications
  by Yale University or Vion in countries other than the U.S. On April 14, 2000,
  the USPTO declared a further interference between BioChem's hepatitis B patent
  for lamivudine and a patent application by GlaxoSmithKline claiming methods of
  treating hepatitis B using lamivudine.
  
  (iv) 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. Shire filed its answer to the complaint on November 24, 2000
  and discovery related to the litigation is ongoing.
  
  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 auto
  following an ingestion of Adderall. As a result of the accident, the driver's
  young son was killed. Shire is evaluating this suit and has not yet filed an
  answer with the Court.
  
  (v) Interests in companies and partnerships
  
  BioChem has undertaken to subscribe to an interest in companies and partnerships
  for amounts totaling $50,269,000. As at September 30, 2001 an amount of
  $33,501,000 (December 31, 2000: $25,709,000) has been subscribed. In addition,
  BioChem has undertaken to subscribe to additional amounts and pay royalties on
  certain future sales upon realization of certain conditions.
  ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
          of Operations
  
  The results for the three months and nine months ended September 30, 2000 have
  been restated from prior periods to reflect the merger of Shire and BioChem,
  which became effective on May 11, 2001, as if the merger had occurred at the
  beginning of the periods described.
  
  Results of operations for the three months ended September 30, 2001, as compared
  with those for the three months ended September 30, 2000
  
  Overview of financial results
  Total revenues for the three months ended September 30, 2001 increased by 22 per
  cent to $219.1 million as compared to the three months ended September 30, 2000.
  The Company recorded a third quarter net income of $58.1 million (2000: net
  income $43.2 million), an increase of 35 per cent.
  
  Sales and marketing
  Product sales of $180.3 million, which represented 82 per cent of total
  revenues, increased by 27 per cent over third quarter 2000 product sales of
  $142.1 million. Product sales in the U.S. continue to represent a significant
  percentage of our worldwide sales, 83 per cent in the three months ended
  September 30, 2001 (2000: 78 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:
  
                                   3 months to       3 months to
  Product sales by segment       September 30,     September 30,
                                          2001              2000
                                         $'000             $'000         % change
  
  United States                        149,853           111,069            +34.9
  International                         30,401            31,044             -2.1
                                  ------------      ------------     ------------
  Total product sales                  180,254           142,113            +26.8
                                  ------------      ------------     ------------
  
  Third quarter sales of ADDERALL, marketed in the U.S. for the treatment of
  Attention Deficit Hyperactivity Disorder (ADHD), were $86.7 million,
  representing growth of 45 per cent over the third quarter of 2000. ADDERALL had
  a 32.4 per cent share of the prescription market for ADHD in the U.S. in
  September 2001 compared to 33.0 per cent in September 2000. ADDERALL continues
  to be the brand leader in the U.S. market for ADHD.
  
  Sales of AGRYLIN, the only U.S. product licensed for the treatment of essential
  thrombocythemia were $19.8 million, a 44 per cent increase over third quarter
  2000 sales of $13.7 million. Shire achieved a prescription share of 23.8 per
  cent of the total U.S. AGRYLIN market, including Hydrea and generic hydroxyurea,
  in September 2001 compared to 17.4 per cent in September 2000.
  
  Sales of PENTASA, licensed for the treatment of ulcerative colitis, at $20.0
  million, were 39 per cent higher than the comparable period last year. PENTASA
  had a 18.2 per cent share of the oral mesalamine/obsalazine market in September
  2001 compared to 17.9 per cent in September 2000.
  
  CARBATROL containing carbamazapine for the treatment of epilepsy, recorded sales
  growth of 14 per cent from sales of $6.9 million in the three months ended
  September 30, 2000 to $7.9 million in the three months
  ended September 30, 2001. This translates to 35.2 per cent of the U.S. extended
  release carbamazepine prescription market in September 2001, compared to 29.7
  per cent in September 2000.
  
  Licensing
  As expected, following the launch by Janssen (J&J) of REMINYL, Shire's
  Alzheimer's drug, reimbursement of associated R&D costs by J&J has now come to
  an end. Consequently, licensing and development fees decreased by 82% to $0.9
  million in the three months ended September 30,2001 compared to the same period
  last year .
  
  Royalties
  Royalties increased by $5.2 million in the three months ended September 30,
  2001, up 16 per cent from the three months ended September 30, 2000, to $37.1
  million. Royalty income has slightly decreased compared to the second quarter of
  the year due to wholesalers de-stocking following the REMINYL U.S. launch in May
  2001. The Company also 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.
  
  Cost of sales and operating expenses
  Gross margin on product sales increased from 77 per cent for the three months
  ended September 30, 2000 to 84 per cent for the three months ended September 30,
  2001. This is a reflection of the product mix as the higher margin products,
  ADDERALL and AGRYLIN, represented approximately 59 per cent of total product
  sales in the three months ended September 30, 2001 compared to 52 per cent in
  the three months ended September 30, 2000. Improved pricing in respect of
  ADDERALL has also benefited the gross margin in three months ended September 30,
  2001.
  
  R&D expenditure decreased 7 per cent to $41.3 million for the three months ended
  September 30, 2001 (2000: $44.5 million). R&D expenditure in third quarter 2001
  represented 19 per cent of revenues compared to 25 per cent in third quarter
  2000 and 23 per cent for full year 2000.
  
  Selling, general and administrative expenses, excluding the effects of a stock
  option compensation charge of $0.05 million (2000: $0.2 million) and
  depreciation and amortization of $11.7 million (2000: $9.4 million), increased
  by 38 per cent to $60.8 million for the three months ended September 30, 2001
  (2000: $44.0 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 34 per cent for the third quarter 2001 (2000:
  31%).
  
  The 25 per cent increase in depreciation and amortization for the three months
  ended September 30, 2001 is attributable to the purchase of several new products
  in Europe since September last year.
  
  Income taxes
  For the three months ended September 30, 2001 income taxes increased $7.8
  million to $19.8 million from $12.0 million for the three months ended September
  30, 2000. The Company's effective tax rate before the stock compensation charge
  and exceptional items was 25 per cent for the three months ended September 30,
  2001 (Q3 2000: 24 per cent). The Company has recorded net deferred tax assets of
  $23.4 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 nine months ended September 30, 2001, as compared
  with those for the nine months ended September 30, 2000
  
  Overview of financial results
  Total revenues for the nine months ended September 30, 2001 were $619.7 million,
  an increase of $129.7 million or 26 per cent over the nine months ended
  September 30, 2000. After one time merger related expenses and restructuring
  charges of $177.0 million, the Company recorded a net loss of $24.6 million
  (2000: $184.4 million net income). Net loss for the nine months to September 30,
  2001 includes an APB 25 charge of $2.4 million compared to $23.7 million for the
  nine months ended September 30, 2000.
  
  Sales and marketing
  Product sales were $506.1 million in the nine months ended September 30, 2001
  (2000: $379.4 million), representing an increase of 33 per cent. Of particular
  note, ADDERALL sales at $226.2 million were 42 per cent higher than in the nine
  months ended September 30, 2000.
  Other products contributing to the overall 33 per cent increase were AGRYLIN
  (increase of $19.5 million or 45 per cent), CARBATROL (increase of $9.6 million
  or 54 per cent) and PROAMATINE (increase of $10.6 million or 65 per cent).
  
  U.S. product sales for the nine months ended September 30, 2001 represented 83
  per cent of the Company's total sales revenues (2000: 79 per cent).
  
  Product sales by segment         9 months to      9 months to
                                 September 30,    September 30,          % change
                                          2001             2000
                                         $'000            $'000
  
  United States                        418,305          300,619             +39.1
  International                         87,820           78,734             +11.5
                                  ------------     ------------      ------------
  Total product sales                  506,125          379,353             +33.4
                                  ------------     ------------      ------------
  
  Licensing
  Licensing and development fees for the nine months ended September 30, 2001
  decreased by 71 per cent to $4.2 million compared to $14.3 million for the nine
  months ended September 30, 2000.
  
  Royalties increased by $12.2 million to $107.8 million for the nine months ended
  September 30, 2001.
  
  Cost of sales and operating expenses
  Gross margin on product sales increased to 83 per cent for the nine months ended
  September 30, 2001 compared to 80 per cent for the nine months ended September
  30, 2000.
  
  R&D expenditure decreased by 1 per cent to $120.8 million for the nine months
  ended September 30, 2001 (2000: $122.0 million). R&D expenditure for the nine
  months ended September 30, 2001 represents 20 per cent of revenues compared to
  25 per cent for the nine months ended September 30, 2000.
  
  Excluding the effects of a stock option compensation charge, depreciation and
  amortization charges, the underlying selling, general and administrative
  expenses increased by 39 per cent to $182.2 million for the nine months ended
  September 30, 2001 (2000: $131.2 million) in line with the expansion of the
  business.
  
  Depreciation and amortization increased by 21 per cent to $33.8 million (2000:
  $28.0 million). As noted above, this increase reflects the amortization charge
  on those intangible assets acquired since the third quarter of 2000.
  
  Income taxes
  For the nine months ended September 30, 2001 income taxes were $51.4 million,
  representing an effective rate of tax on income pre APB 25 charge of 25 per cent
  (2000: 24 per cent).
  
  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 September 30, 2001, the Company had net cash funds available as follows:
  September 30,      December 31,
                                                          2001              2000
                                                         $'000             $'000
                                                --------------    --------------
  Cash and cash equivalents                            514,998            93,266
  Marketable securities and other current
    asset investments                                  260,964           370,425
  Debt                                               (397,884)         (213,874)
                                                --------------    --------------
  Net cash                                             378,078           249,817
                                                --------------    --------------
  
  Net cash provided by operating activities for the nine months ended September
  30, 2001 was $117.3 million compared to $52.4 million for the nine months ended
  September 30, 2000.
  
  Investing activities provided $68.0 million for the nine months ended September
  30, 2001 (2000: $33.3 million). This was due to an inflow of cash by reducing
  cash placed on short-term deposit and by the redemption of marketable securities
  of $109.5 million, and outflows in respect of net capital expenditure on
  long-term investments, intangible assets and fixed assets of $41.4 million.
  
  Investing activities for the nine months ended September 30, 2000 included $75.2
  million from the redemption of marketable securities, $136.2 million of proceeds
  from the sale of long-term investments and fixed assets, purchases of intangible
  assets and fixed assets of $43.1 million, a net $134.6 million outflow for
  investment in temporary and long-term investments and a $0.4 million outflow for
  other investing activities.
  
  Financing activities provided $236.1 million for the nine months ended September
  30, 2001 (2000: $41.7 million). The $236.1 million inflow included $50.5 million
  received from exercises of employee stock options and $391.0 million received
  from the issue of convertible notes, and repayments of long-term debt totalling
  $207.0 million. The repayments of debt were in respect of a $125.0 million term
  loan owing to Credit Suisse First Boston and $76.9 million repaid to Glaxo
  SmithKline. In part, cash funds released from short term investments, as noted
  above, were used to settle the long-term debts outstanding.
  
  Financing activities for the nine months ended September 30, 2000 included $43.0
  million received from exercises of employee stock options, $7.2 million of
  proceeds from the issue of common stock and repayments of long-term debt of $8.5
  million.
  
  Capital expenditure
  Capital expenditure on tangible fixed assets for the nine months ended September
  30, 2001 was $6.3 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 approximately $7 million in proceeds received on the sale of the
  Toronto facility. Other capital expenditure related to the purchase of long term
  investments ($13.2 million) and $33.5 million for new products, including
  Monocid and Indurgan marketed by the Company's Spanish and Italian operations.
  
  Capital expenditure on tangible fixed assets for the nine months ended September
  30, 2000 was $21.2 million. This included the purchase of research and
  development equipment, and investment in computer equipment across all
  operational areas. Capital expenditure on new products of $21.9 million included
  the acquisition of certain European and Nordic rights to Balsalazide; a
  treatment for ulcerative colitis, for $15.9 million.
  ITEM 3.  Qualitative and Quantitative Disclosures about Market Risk
  
  Shire's principal treasury operations are managed by the Company's treasury
  function based in the U.K. in accordance with the Company's treasury policies
  and procedures which are approved by Shire's Board of Directors. As a matter of
  policy, Shire does not undertake speculative transactions that would increase
  its currency or interest rate exposure.
  
  The Company is subject to market risk exposure in the following areas:
  
  Interest rate market risk
  
  The Company has cash and cash equivalents on which interest is earned at
  variable rates.
  
  Since December 31, 2000 the Company has repaid in full a long-term loan
  outstanding to Credit Suisse First Boston and amounts due to Glaxo SmithKline
  under a promissory note. Thus, as at September 30, 2001 the Company's exposure
  to variable interest rate market risk on debts outstanding compared to the
  position at December 31, 2000 is much reduced.
  
  On August 15, 2001 Shire Finance Limited, a wholly owned subsidiary of the
  Company, placed an offering of $350 million principal amount of Guaranteed
  Convertible Notes due 2011 with international institutional investors at an
  issue price of 100%. In connection with the issue, the initial purchasers
  exercised in full the option to subscribe or precure subscribers for an
  additional $50 million principal amount of notes. The total principal amount of
  the issue was therefore $400 million.
  
  These Notes are guaranteed by the Company and are convertible into redeemable
  preference shares of the issuer which upon issuance will be immediately
  exchanged for either (i) ordinary shares or (ii) American Depository Shares
  (ADS's) of Shire or, at the Issuer's option, cash. The Notes will bear interest
  of 2% per annum, paid semi-annually. The effective initial exchange price is
  $20.154 per ordinary share and $60.4625 per ADS. This exchange price represents
  a premium of 25% over the closing price of Shire ADS's on August 14, 2001.
  
  Investors have the right to require the Issuer to redeem the notes at par on
  August 21, 2004, 2006 or 2008. Subject to certain conditions, the Notes will be
  callable after August 21, 2004.
  
  The Company has short term and long term debt liabilities denominated in foreign
  currencies. As at September 30, 2001, a total of $5.6 million was outstanding
  (December 31, 2000: $6.0 million). The underlying currency was Canadian dollars.
  
  Foreign exchange market risk
  
  The Company and a number of subsidiary operations are located outside the U.S.
  As such, the consolidated financial results are subject to fluctuations in
  exchange rates, particularly between the British pound, Canadian dollar and the
  U.S. dollar. The financial statements of foreign entities are translated using
  the accounting policies described in Note 1 of the Notes to the consolidated
  financial statements filed on Form 10K. The exposure to foreign exchange market
  risk is managed by the Company's treasury function, using forecasts provided by
  the operating units.
  General economic market risk
  
  The terrorist attacks of September 11, 2001 resulted in interruption to business
  activities of many entities, business losses and overall disruption of the U.S.
  economy at many levels. The magnitude and far reaching global impact of the
  events of September 11 are unprecedented in terms of the wide array of losses
  incurred and the number of businesses impacted.
  
  Shire has experienced no quantifiable losses, damage to property or loss of life
  as a direct result of September 11. However, consequential increases to
  operational costs such as insurance premiums, international air travel and
  incremental supplier costs would impact future profitability levels. The
  directors do not believe at this time that any additional market risk specific
  to the Company has resulted from the recent acts of terrorism.
  
  PART II.   OTHER INFORMATION
  
  ITEM 1. LEGAL PROCEEDINGS
  
  (i) Phentermine
  
  Until April 1998, Shire Richwood Inc. ("SRI") distributed products containing
  phentermine, a prescription drug approved in the U.S. as a single agent for
  short term use in obesity. Contrary to the approved labeling of these products,
  physicians in the U.S. co-prescribed phentermine with fenfluramine or
  dexfenfluramine for management of obesity. This combination was popularly known
  as the "fen/phen" diet. In mid 1997, following concerns raised about cardiac
  valvular side effects alleged to be associated with this diet regime, the
  fenfluramine and dexfenfluramine elements of the "fen/phen" diet were withdrawn
  from the U.S. market. Although SRI has ceased to distribute phentermine, the
  drug remains both approved and available in the U.S. SRI and a number of other
  pharmaceutical companies are being sued for damages for personal injury and
  medical monitoring arising from phentermine used either alone or in combination.
  As of October 31, 2001, SRI was named as a defendant in approximately 3,784
  lawsuits and had been dismissed from approximately 3,538 of these cases. There
  were approximately 150 additional cases pending dismissal as of October 31,
  2001. In only 25 cases in which SRI remains as a defendant, has it been alleged
  in the complaint or subsequent discovery that the plaintiff had used SRI's
  particular product. Although there have been reports of substantial jury awards
  and settlements in respect of fenfluramine and/or dexfenfluramine, to date Shire
  is not aware of any jury awards made against, or any settlements made by, any
  phentermine defendant. Shire denies liability on a number of grounds including
  lack of scientific evidence that phentermine, properly prescribed, causes the
  alleged side effects and that SRI did not promote phentermine for long term
  combined use as the "fen/phen" diet. Accordingly, Shire intends to defend
  vigorously any and all claims made against the Company in respect of phentermine
  and believes that a liability is neither probable nor quantifiable at this stage
  of litigation.
  
  On August 31, 2000 Shire entered into an agreement (the "Termination Agreement")
  with the former shareholders of SRI, pursuant to which the ordinary shares
  placed in escrow at the time of the purchase of SRI by Shire were released, and
  the escrow agreement and the escrow fund were terminated. The escrow agreement
  with the SRI shareholders was initially established by Shire in 1997 in
  anticipation of possible phentermine related claims against the Company. Under
  the terms of the Termination Agreement, monies in the approximate amount of $7
  million were received by Shire, and the escrow fund was terminated. The
  remaining shares were distributed to the former SRI shareholders.
  
  Legal expenses have been paid by Eon Labs Manufacturing Inc. ("Eon"), the
  suppliers to SRI or Eon's insurance carriers but such insurance is now
  exhausted. Eon has agreed to defend and indemnify SRI in this litigation
  pursuant to an agreement dated November 30, 2000 between Eon and SRI.
  
  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) Emory
  
  Emory University filed oppositions to two of 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 University has filed an appeal against the
  dioxolane-related decision of the Opposition Division. Emory University is not
  pursuing its appeal of the decision relating to oxathiolanes. Emory University
  has not to date filed revocation actions with respect to any BioChem patents in
  issue in individual European countries.
  
  In Japan, Emory University filed an opposition to BioChem's granted patent which
  covers lamivudine, related analogues and use of the analogues for treating viral
  infections. The Trial Board of the Japanese Patent Office dismissed Emory
  University's opposition to BioChem's patent covering lamivudine. Emory
  University has not to date filed a revocation action against this patent. Emory
  University has filed revocation actions in Australia and South Korea against
  BioChem's granted patents covering lamivudine. The Company is aggressively
  defending these patents.
  
  On July 23, 1996, Emory University filed a complaint in the U.S. alleging
  infringement from the commercialisation of Epivir by BioChem and
  GlaxoSmithKline, BioChem's exclusive licensee in the U.S., of an Emory
  University U.S. patent granted that same day. The Company considers this patent
  infringement suit to be without merit and has successfully challenged the
  validity of Emory University's patent.
  
  On May 19, 1998, the United States Patent and Trademark Office (the "USPTO")
  declared an interference between the Emory University patent that is the subject
  of a lawsuit and a pending patent application of BioChem. The USPTO accorded
  BioChem the earlier priority date and then accorded BioChem senior party status
  in the interference. BioChem has vigorously challenged the Emory University
  patent in the interference, through to a final hearing on November 10, 1999. The
  Board of Patent Appeals and Interferences issued a decision on December 21, 2000
  invalidating Emory's patent. Emory University has appealed the decision. There
  can be no assurance that Emory's patent will not be reinstated.
  
  Emory University has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. BioChem and GlaxoSmithKline filed
  an opposition to this grant and are vigorously opposing the grant. An examined
  patent application, filed by Emory University claiming lamivudine, was
  successfully opposed by BioChem in Australia and Norway. Emory University has
  filed an appeal from that decision in the Federal Court of Australia. BioChem
  also filed an appeal from certain portions of the decision. An examined patent
  application filed by Emory University claiming lamivudine was also opposed by
  BioChem in Japan. The opposition was dismissed in April 1999 because it was
  improperly filed by a representative who had previously represented Emory.
  Notwithstanding the dismissal, the Japanese Patent Office issued an ex-officio
  action rejecting all of Emory University's claims. There can be no reassurance
  that Emory will not be able to overcome this rejection. An examined patent
  application filed by Emory claiming lamivudine was opposed by BioChem and
  GlaxoSmithKline in South Korea and such Emory claims to lamivudine were
  cancelled by the South Korean Patent Office. The Company is aware that Emory
  University has filed patent applications in other countries, which it believes
  may claim similar subject matter. The Company intends to challenge vigorously
  such patent applications.
  
  (iii) Yale
  
  On November 23, 1999, the USPTO declared an interference between BioChem'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
  company. The Company believes that its patent is valid and intends to vigorously
  defend the patent. The Company is not aware of corresponding patent applications
  by Yale University or Vion in countries other than the U.S. On April 14, 2000,
  the USPTO declared a further interference between BioChem's hepatitis B patent
  for lamivudine and a patent application by GlaxoSmithKline claiming methods of
  treating hepatitis B using lamivudine.
  
  (iv) 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. Shire filed its answer to the complaint on November 24, 2000
  and discovery related to the litigation is ongoing.
  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 auto
  following an ingestion of Adderall. As a result of the accident, the driver's
  young son was killed. Shire is evaluating this suit and has not yet filed an
  answer with the Court.
  
  ITEM 2. CHANGES IN SECURITIES
  
  On August 21, 2001, Shire Finance Limited ("Finance"), a wholly-owned subsidiary
  of the Company, issued $400 million principal amount of 2% Senior Guaranteed
  Convertible Notes due 2011(the "Notes"), which Notes were fully and
  unconditionally guaranteed by the Company (the "Guarantee" and, together with
  the Notes, the "Securities"). The Securities were offered and sold in the United
  States to qualified institutional buyers in reliance on Rule 144A under the
  Securities Act of 1933, as amended (the "Act") and outside the United States to
  institutional investors in reliance on Regulation S under the Act. The initial
  purchasers of the Securities agreed to issue and sell the Securities only to
  qualified institutional buyers under Rule 144A or to institutional investors
  pursuant to Regulation S. The Notes are convertible, at any time prior to August
  14, 2001 or their redemption or repurchase, into preference shares of Finance.
  Each $1,000 principal amount of Notes may be converted into one preference
  share. Upon issuance, the preference shares will be immediately exchanged for
  (i) the Company's ordinary shares, (ii) American Depository Shares ("ADSs")
  representing ordinary shares of the Company or (iii) at Finance's option, cash.
  The initial exchange ratio is equal to 49.6175 ordinary shares per preference
  share or 16.5392 ADSs per preference share, is based on an effective exchange
  price of approximately $20.154 per ordinary share and $60.4625 per ADS,
  representing a premium of 25% over the closing price of the Company's ADSs on
  August 14, 2001, and is subject to adjustment upon the occurrence of certain
  events. The net proceeds to Finance from the offering of the Notes was
  approximately $391 million. On November 6, 2001, the Company filed a
  registration statement with the Securities and Exchange Commission for the
  resale by holders of their Notes and the ordinary shares issuable upon exercise
  of the preference shares. The registration statement has not yet been declared
  effective.
  
  ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
  None
  
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
  None
  
  ITEM 5. OTHER INFORMATION
  
  None
  
  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
  
  (a)      Exhibits
  
  3.1* Amended and Restated Memorandum and Articles of Association of Shire
       Finance Limited.
  
  4.1* Indenture dated August 21, 2001 by and among Shire Finance Limited, Shire
       Pharmaceuticals Group plc and The Bank of New York, as Trustee
  4.2* Form of 2% Senior Guaranteed Note due 2011 (included in Exhibit 4.1)
  
  4.3* Registration Rights Agreement dated August 21, 2001, between Shire Finance
       Limited, Shire Pharmaceuticals Group plc and Bear, Stearns International
       Limited and Goldman Sachs International, as representatives of the Initial
       Purchasers
  
  4.4* Preference Share Guarantee Agreement dated August 21, 2001 among Shire
       Finance Limited, Shire Pharmaceuticals Group plc and The Bank of New York,
       as Guarantee Trustee
  
  4.5* Form of Shire Pharmaceuticals Group plc Guarantee
  
       *    Incorporated by reference to the exhibits to Shire's Registration
            Statement on Form S-3 (No. 333-75862), filed November 6, 2001.
  
  (b)      Reports on Form 8-K
  
           During the third quarter ended September 30, 2001, 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 July
           17, 2001, with respect to press release of historical financial data in
           US GAAP format.
  
           Form 8-K as amended (Item 5 - Other Events, and Item 7 - Financial
           Statements and Exhibits), date of earliest event reported July 23,
           2001, with respect to press release announcement of second quarter
           results.
  
           Form 8-K (Item 7 - Financial Statements and Exhibits), date of earliest
           event reported July 23, 2001, with respect to presentation relating to
           second quarter results.
  
           Form 8-K (Item 5 - Other Events), and Item 7 - Financial Statements and
           Exhibits), date of earliest event reported August 15, 2001, with
           respect to restated financial statements and management's discussion
           and analysis of financial conditions and results of operations.
  
           During the period between September 30, 2001 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 5 - Other Events, and Item 7 - Financial Statements and
           Exhibits), date of earliest event reported October 12, 2001, with
           respect to press release announcement of US Food and Drug
           Administration (FDA) approval of Adderall XR(TM).
  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:    November 14, 2001          By:      /s/ Angus C. Russell
                                               ----------------------------
                                               Angus C. Russell
                                               Group Finance Director
  
  Date:    November 14, 2001          By:      /s/ Rolf Stahel
                                               ----------------------------
                                               Rolf Stahel
                                               Chief Executive