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 March 31, 2002
  
                           Commission File Number: 0-29630
  
                           SHIRE PHARMACEUTICALS GROUP PLC
               (Exact name of registrant as specified in its charter)
  
          England and Wales                               98-0359573
    (State or other jurisdiction                       (I.R.S. Employer
  of incorporation or organization)                  Identification No.)
  
  Hampshire International Business Park, Chineham,
           Basingstoke, Hampshire, England                           RG24 8EP
      (Address of principal executive offices)                      (Zip Code)
  
                                   44 1256 894 000
                (Registrant's telephone number, including area code)
  
  Indicate by check mark whether the registrant (1) has filed all reports required
  to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
  the preceding 12 months, and (2) has been subject to such filing requirements
  for the past 90 days.
  
                                                       Yes  X    No  __
  
  Indicate the number of shares outstanding of each of the issuer's classes of
  Common Stock, as of the latest practical date.
  
               Class                       Outstanding at May 14, 2002
  
   Common Stock: Ordinary Shares                   482,732,570
  
  
  <PAGE>
                                        -2-
  
  
  THE "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
  OF 1995
  
  Statements included herein that are not historical facts, are forward looking
  statements. The forward looking statements involve a number of risks and
  uncertainties and are subject to change at any time. In the event such risks or
  uncertainties materialize, Shire's results could be materially affected. The
  risks and uncertainties include, but are not limited to, risks associated with
  the inherent uncertainty of pharmaceutical research, product development and
  commercialization, the impact of competitive products, patents, government
  regulation and approval, and other risks and uncertainties detailed from time to
  time in our filings, including the Annual Report filed on Form 10-K by Shire
  with the Securities and Exchange Commission.
  
  
  
  
  
  <PAGE>
                                        -3-
  
  
  
  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)
  
  <TABLE>
  <CAPTION>
                                                                                       (Unaudited)
                                                                                         March 31,          December 31,
                                                                                              2002                  2001
  ASSETS                                                                               -----------           -----------
  Current assets:
  <S>                                                                                      <C>                   <C>
  Cash and cash equivalents                                                                706,457               118,040
  Marketable securities and other current asset investments                                237,113               723,911
  Accounts receivable, net                                                                 140,400               193,913
  Inventories, net                                                                          55,852                46,690
  Deferred tax asset                                                                        25,515                19,430
  Prepaid expenses and other current assets                                                 26,194                38,571
                                                                                      ------------          ------------
  Total current assets                                                                   1,191,531             1,140,555
  
  Investments                                                                               68,031                68,743
  Property, plant and equipment, net                                                       111,223               113,347
  Intangible assets, net                                                                   539,187               549,044
  Deferred tax asset                                                                         9,693                12,874
  Other assets                                                                              27,434                26,168
                                                                                      ------------          ------------
  Total assets                                                                           1,947,099             1,910,731
                                                                                      ------------          ------------
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
  Current instalments of long-term debt                                                      4,480                 4,325
  Accounts payable and accrued expenses                                                    167,062               167,152
  Unearned income                                                                                -                17,409
  Other current liabilities                                                                 44,632                42,730
                                                                                      ------------          ------------
  Total current liabilities                                                                216,174               231,616
  Long-term debt, excluding current instalments                                            402,487               402,481
  Other long-term liabilities                                                               13,544                13,645
                                                                                      ------------          ------------
  Total liabilities                                                                        632,205               647,742
                                                                                      ------------          ------------
  Shareholders' equity:
  Common stock, 5p par value: 800,000,000 shares authorized; and
  482,614,881 shares issued and outstanding (2001: 481,817,487)                             39,898                39,861
  Exchangeable shares: 5,882,978 shares issued and outstanding (2001:
  5,978,902)                                                                               272,946               277,386
  Additional paid-in capital                                                             1,020,266             1,014,796
  Accumulated other comprehensive losses                                                  (98,973)              (93,009)
  Accumulated surplus                                                                       80,757                23,955
                                                                                      ------------          ------------
  Total shareholders' equity                                                             1,314,894             1,262,989
                                                                                      ------------          ------------
  Total liabilities and shareholders' equity                                             1,947,099             1,910,731
                                                                                      ------------          ------------
  </TABLE>
  
  The accompanying notes are an integral part of these financial statements.
  
  <PAGE>
                                        -4-
  
  
  
  
  
                           SHIRE PHARMACEUTICALS GROUP PLC
                          CONSOLIDATED STATEMENTS OF INCOME
           (In thousands of U.S. dollars, except share and per share data)
                                     (Unaudited)
  
  
  <TABLE>
  <CAPTION>
  3 months ended March 31,                                                            2002                     2001
                                                                              ------------             ------------
  <S>                                                                              <C>                      <C>
  Product sales                                                                    202,718                  151,514
  Licensing and development                                                            682                    3,042
  Royalties                                                                         39,576                   32,891
  Other revenues                                                                       217                      275
                                                                              ------------             ------------
  Total revenues                                                                   243,193                  187,722
  
  Costs and expenses:
  Cost of revenues                                                                  26,511                   28,385
  Research and development                                                          49,729                   37,684
  Selling, general and administrative (inclusive of stock option
  compensation credit of  $302,000 and charge of $2,120,000 for
  2002 and 2001 respectively)                                                       94,077                   69,161
                                                                              ------------             ------------
  Total operating expenses                                                         170,317                  135,230
                                                                              ------------             ------------
  Operating income                                                                  72,876                   52,492
  
  Interest income                                                                    4,731                    5,140
  Interest expense                                                                 (1,977)                  (2,998)
  Other income, net                                                                  1,885                      770
                                                                              ------------             ------------
  Total other income, net                                                            4,639                    2,912
                                                                               -----------              -----------
  Income before income taxes                                                        77,515                   55,404
  
  Income taxes                                                                    (20,713)                 (13,939)
                                                                              ------------             ------------
  Net income                                                                        56,802                   41,465
                                                                              ------------             ------------
  
  Net income per share:
  Basic                                                                              11.4c                     8.5c
  Diluted                                                                            11.1c                     8.3c
  
  Weighted average number of shares:
  Basic                                                                        499,926,390              488,448,379
  Diluted                                                                      524,865,259              500,699,108
  
  </TABLE>
  
  The results for the three months ended March 31, 2001 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>
                                        -5-
  
  
  
                           SHIRE PHARMACEUTICALS GROUP PLC
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
  <TABLE>
  <CAPTION>
  3 months ended March 31,                                                           2002             2001
                                                                          ---------------  ---------------
  Cash flows from operating activities:
  <S>                                                                              <C>              <C>
  Net income                                                                       56,802           41,465
  Adjustments to reconcile net income to net cash provided by operating
  activities:
  Depreciation and amortization                                                    10,173           10,823
  Stock option compensation                                                         (302)            2,120
  Tax benefit of stock option compensation charged directly to equity                 590            3,090
  Non cash exchange gains and losses                                                (793)         (10,424)
  Loss on sale of fixed assets                                                          -              607
  Other movements in long-term assets                                               2,500          (2,859)
  Changes in assets and liabilities:
  Decrease in accounts receivable                                                  53,513           34,348
  (Increase)/decrease in inventory                                                (9,162)            2,197
  (Increase)/decrease in deferred tax asset                                       (2,904)            6,500
  Decrease/(increase) in prepayments and other current assets                      12,377         (10,932)
  (Increase)/decrease in other assets                                             (1,266)              758
  Decrease in accounts payable and accrued expenses                                  (90)         (15,703)
  Decrease in unearned income                                                    (17,409)                -
  Increase in other current liabilities                                             1,902            2,601
  Decrease in other long-term liabilities                                           (101)          (1,164)
                                                                          ---------------  ---------------
  Net cash provided by operating activities                                       105,830           63,427
                                                                          ---------------  ---------------
  Cash flows from investing activities:
  Redemption of marketable securities, net                                              -           46,000
  Decrease in short-term deposits                                                 486,798          129,966
  Purchase of long-term investments                                               (1,761)          (8,502)
  Purchase of intangible assets                                                         -         (25,725)
  Purchase of fixed assets                                                        (3,130)          (2,629)
  Purchase of other assets                                                              -              685
                                                                          ---------------  ---------------
  Net cash provided by investing activities                                       481,907          139,795
                                                                          ---------------  ---------------
  Cash flows from financing activities:
  Movements on long-term debt and notes                                                 -         (76,520)
  Proceeds from issue of common stock, net                                              -             (17)
  Proceeds from exercise of options                                                   778            4,279
                                                                          ---------------   --------------
  Net cash provided by/ (used in) financing activities                                778         (72,258)
                                                                          ---------------   --------------
  
  
  Effect of foreign exchange rate changes on cash and cash equivalents
                                                                                     (98)          (5,098)
                                                                          ---------------   --------------
  Net increase in cash and cash equivalents                                       588,417          125,866
  Cash and cash equivalents at beginning of period                                118,040           93,266
                                                                          ---------------   --------------
  Cash and cash equivalents at end of period                                      706,457          219,132
                                                                          ---------------   --------------
  
  </TABLE>
  
  The cash flows for the three months ended March 31, 2001 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>
                                        -6-
  
  
  
  
  
               CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSSES)
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
  
  <TABLE>
  <CAPTION>
  3 months to March 31,                                                               2002                     2001
                                                                              ------------             ------------
  <S>                                                                               <C>                      <C>
  Net income                                                                        56,802                   41,465
  Foreign currency translation adjustments                                         (5,964)                 (63,191)
  Unrealised holding loss on on-current investments                                      -                    (210)
                                                                              ------------             ------------
  Comprehensive income                                                              50,838                 (21,936)
                                                                              ------------             ------------
  
  </TABLE>
  
  There are no material tax effects related to the items included above.
  
  The results for the three months ended March 31, 2001 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>
                                        -7-
  
  
  
  
                           SHIRE PHARMACEUTICALS GROUP PLC
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  
  1. Summary of Significant Accounting Policies
  
  a) Description of Operations and Principles of Consolidation
  
  Shire Pharmaceuticals Group plc (the Company) is an international specialty
  pharmaceutical company with a strategic focus on three therapeutic areas:
  central nervous system disorders, oncology and anti-infectives. The Company's
  strategy is further supported by two technology platforms, drug delivery and
  biologics.
  
  The Company has sales and marketing subsidiaries with a portfolio of products
  targeting the U.S., Canada, the U.K., the Republic of Ireland, France, Germany,
  Italy and Spain. Shire also covers other significant pharmaceutical markets
  indirectly through distributors. The business is operated and managed within
  three individual operating segments: U.S., International (which includes the
  Group's global headquarters) and global research and development. Within these
  segments, revenues are derived primarily from three sources: sales of products
  by the Company's own sales and marketing operations, royalties and licensing and
  development fees.
  
  The Company is referred to as "specialty" because its principal products tend to
  be prescribed by specialists as opposed to primary care physicians. The
  Company's main approach is to start projects in-house through research and
  advanced drug delivery or to in-license projects, and then to develop them and
  launch them using its sales and marketing capability in eight of the key world
  markets. The Company seeks to protect the intellectual property upon which it
  relies through a range of patents and patent applications (both its own and
  those of its licensors).
  
  The Company's principal products include:
  
       o    in the U.S., ADDERALL XR(TM) and ADDERALL(TM) for the treatment of
            Attention Deficit Hyperactivity Disorder; AGRYLIN(TM) for the
            treatment of elevated blood platelets; PENTASA(TM) for the treatment
            of ulcerative colitis; CARBATROL(TM) for the treatment of epilepsy;
            and PROAMATINE(TM) for the treatment of postural hypotension. In
            addition, the Company receives royalties on sales of REMINYL** for the
            treatment of Alzheimer's disease, marketed by Johnson & Johnson, and
            on EPIVIR**, COMBIVIR** and TRIZIVIR** for the treatment of HIV/AIDS
            and EPIVIR-HBV for the treatment of hepatitis B, each marketed by
            GlaxoSmithKline;
  
       o    in the U.K., the CALCICHEW(TM)range, used primarily as adjuncts in the
            treatment of osteoporosis, and REMINYL**, which was launched in
            September 2000 and is co-promoted by Janssen-Cilag;
  
       o    in Canada, 3TC for the treatment of HIV/AIDS, COMBIVIR** and
            HEPTOVIR** (marketed in partnership with GlaxoSmithKline);
            AMATINE(TM); SECOND LOOK(TM), a breast cancer diagnostics product for
            which the Company received FDA approval in January 2002; and FLUVIRAL
            S/F(TM), a vaccine for the prevention of influenza; and
  
       o    in the rest of the world, 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(TM) for the treatment of analgesia, FOZNOL(TM) (renamed
  FOSRENOL(TM)) for the treatment of high blood phosphate levels associated with
  kidney failure and TROXATYL(TM) for the treatment of leukemia and pancreatic
  cancer. The Company submitted the first regulatory submission for FOSRENOL under
  the European Mutual Recognition procedure on March 13, 2001 and a New Drug
  Application with the US FDA on April 30, 2002.
  
  The accompanying consolidated financial statements include the accounts of Shire
  Pharmaceuticals Group plc and all its subsidiary undertakings after elimination
  of intercompany accounts and transactions.
  
  *        Registered trademark of Johnson and Johnson
  **       Registered trademark of GlaxoSmithKline
  
  
  <PAGE>
                                        -8-
  
  
  
  (TM) Unless otherwise indicated, all product names set out in this document are
  trademarks of Shire or companies within the Shire Group, many of which are the
  subject of trademark registrations in certain territories.
  
  b) Basis of Presentation
  
  The accompanying consolidated financial statements, which include the operations
  of the Company and its wholly owned subsidiaries and the financial information
  included herein, are unaudited. They have been prepared in accordance with
  generally accepted accounting principles in the United States and Securities and
  Exchange Commission regulations for interim reporting. Certain information and
  footnote disclosures normally included in financial statements prepared in
  accordance with generally accepted accounting principles in the United States
  have been condensed or omitted pursuant to such rules and regulations. However,
  such information includes all adjustments (consisting solely of normal recurring
  adjustments), which are, in the opinion of management, necessary to fairly state
  the results of the interim periods. Interim results are not necessarily
  indicative of results to be expected for the full year. These consolidated
  financial statements should be read in conjunction with the Company's audited
  consolidated financial statements for the three years ended December 31, 2001
  and notes thereto. The results for the period ended March 31, 2002 are not
  necessarily indicative of the results that may be expected for the year ending
  December 31, 2002.
  
  c) New Accounting Pronouncements
  
  In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
  Obligations. SFAS No. 143 requires the fair value of a liability for asset
  retirement obligations be recognized in the period in which it is incurred if a
  reasonable estimate of the fair value can be made. The associated asset
  retirement costs are capitalized as part of the carrying amount of the related
  long-lived asset. SFAS No. 143 is effective for financial statements issued for
  fiscal years beginning after June 15, 2002. The Company has assessed the
  potential impact of the adoption of SFAS No. 143 and concluded that there is no
  impact.
  
  
  
  
  <PAGE>
                                        -9-
  
  
  
  2. Inventory
  
                                        March 31,          December 31,
                                             2002                  2001
                                            $'000                 $'000
                                   --------------        --------------
  Finished goods                           25,695                19,880
  Work-in-process                          19,891                18,262
  Raw materials                            10,266                 8,548
                                   --------------        --------------
                                           55,852                46,690
                                   --------------        --------------
  
  3. Analysis of revenue, operating income and reportable segments
  
  The Company has disclosed segment information for the individual operating areas
  of the business based on the way in which the business is managed and
  controlled. Shire's principal reporting segments are U.S., International (which
  includes the Group's global headquarters) and global research and development,
  each being managed and monitored separately. The Company evaluates performance
  based on operating income.
  
  <TABLE>
  <CAPTION>
  Three months ended March 31, 2002                         U.S.   International              R&D           Total
                                                           $'000           $'000            $'000           $'000
                                                      ----------      ----------       ----------      ----------
  <S>                                                    <C>              <C>                  <C>        <C>
  Product sales                                          173,524          29,194                -         202,718
  Licensing and development                                  541             141                -             682
  Royalties                                                  214          39,362                -          39,576
  Other revenues                                               -             217                -             217
                                                      ----------      ----------       ----------      ----------
  Total revenues                                         174,279          68,914                -         243,193
                                                      ----------      ----------       ----------      ----------
  
  Cost of revenues                                        14,420          12,091                -          26,511
  Research and development                                     -               -           49,729          49,729
  Selling, general and administrative                     56,451          27,453                -          83,904
  Depreciation and amortisation                            5,945           4,228                -          10,173
                                                      ----------      ----------       ----------      ----------
  Total operating expenses                                76,816          43,772           49,729         170,317
                                                      ----------      ----------       ----------      ----------
  Operating income/(loss)                                 97,463          25,142         (49,729)          72,876
                                                      ----------      ----------       ----------      ----------
  
  Three months ended March 31, 2001                         U.S.   International              R&D           Total
                                                           $'000           $'000            $'000           $'000
                                                      ----------      ----------       ----------      ----------
  Product sales                                          126,804          24,710                -         151,514
  Licensing and development                                2,085             957                -           3,042
  Royalties                                                   60          32,831                -          32,891
  Other revenues                                               -             275                -             275
                                                      ----------      ----------       ----------      ----------
  Total revenues                                         128,949          58,773                -         187,722
                                                      ----------      ----------       ----------      ----------
  Cost of revenues                                        17,877          10,508                -          28,385
  Research and development                                     -               -           37,684          37,684
  Selling, general and administrative                     36,406          21,932                -          58,338
  Depreciation and amortisation                            4,460           6,363                -          10,823
                                                      ----------      ----------       ----------      ----------
  Total operating expenses                                58,743          38,803           37,684         135,230
                                                      ----------      ----------       ----------      ----------
  Operating income/(loss)                                 70,206          19,970         (37,684)          52,492
                                                      ----------      ----------       ----------      ----------
  
  </TABLE>
  
  
  <PAGE>
                                        -10-
  
  
  4.  Net income per share
  
  Basic net income per share is based upon the net income available to common
  stockholders divided by the weighted-average number of common shares outstanding
  during the period. Diluted net income per share is based upon net income
  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
  per share:
  
  <TABLE>
  <CAPTION>
  3 months ended March 31,                                                              2002                   2001
                                                                                       $'000                  $'000
                                                                            ----------------       ----------------
  <S>                                                                                 <C>                    <C>
  Numerator for basic net income per share                                            56,802                 41,465
  Interest charged on convertible debt, net of tax                                     1,397                      -
                                                                            ----------------       ----------------
  Numerator for diluted net income per share                                          58,199                 41,465
                                                                            ----------------       ----------------
  
  Weighted average number of shares:                                           No. of shares          No. of shares
                                                                            ----------------       ----------------
  Basic                                                                          499,926,390            488,448,379
  Effect of dilutive shares:
  Stock options                                                                    3,582,567             12,250,729
  Warrants                                                                         1,213,297                      -
  Convertible debt                                                                20,143,005                      -
                                                                            ----------------       ----------------
  Diluted:                                                                       524,865,259            500,699,108
                                                                            ----------------       ----------------
  Basic net income per share                                                           11.4c                   8.5c
                                                                            ----------------       ----------------
  Diluted net income per share                                                         11.1c                   8.3c
                                                                            ----------------       ----------------
  
  </TABLE>
  
  The calculation of weighted average number of shares for the three months ended
  March 31, 2001 does not include convertible debt because, after eliminating
  interest charged in the income statement from the numerator, the inclusion would
  be anti-dilutive.
  
  5.   Goodwill and Other Intangible Assets - Adoption of Statement 142
  
  SFAS No. 142 is effective for fiscal years beginning after December 15, 2001.
  The statement directs that goodwill and intangible assets that have indefinite
  useful lives will not be amortized but rather will be tested at least annually
  for impairment. Intangible assets that have finite useful lives will continue to
  be amortized over their useful lives, but without the constraint of an arbitrary
  ceiling.
  
  a) Goodwill
  
  A reconciliation table for the results for the three months ended March 31, 2001
  is provided to exclude the effect of goodwill amortization in accordance with
  transitional disclosures relating to SFAS 142. Results for the three months
  ended March 31, 2002 have been prepared in accordance with SFAS 142.
  
  A transitional assessment of goodwill impairment as of January 1, 2002 has not
  yet been completed. Any cumulative effect will be recognised in a later quarter
  and the first quarter restated.
  
  
  <PAGE>
                                        -11-
  
  
  <TABLE>
  <CAPTION>
  
                                                                                 3 months to            3 months to
                                                                              March 31, 2002         March 31, 2001
                                                                                       $'000                  $'000
                                                                            ----------------       ----------------
  <S>                                                                                 <C>                    <C>
  Reported net income                                                                 56,802                 41,465
  Add back: Goodwill amortization                                                          -                  2,711
                                                                            ----------------       ----------------
  Adjusted net income                                                                 56,802                 44,176
  Interest charged on convertible debt, net of tax                                     1,397                      -
                                                                            ----------------       ----------------
  Numerator for diluted net income/(loss) per share                                   58,199                 44,176
                                                                            ----------------       ----------------
  Weighted average number of shares:                                           No. of shares          No. of shares
                                                                            ----------------       ----------------
  Basic                                                                          499,926,390            488,448,379
  Diluted                                                                        524,865,259            500,699,108
  
  Basic earnings per share:
  Reported net income                                                                  11.4c                   8.5c
  Goodwill amortization (net of tax effect)                                                -                   0.5c
                                                                            ----------------       ----------------
  Adjusted net income                                                                  11.4c                   9.0c
                                                                            ----------------       ----------------
  Diluted earnings per share:
  Reported net income                                                                  11.1c                   8.3c
  Goodwill amortization (net of tax effect)                                                -                   0.5c
                                                                            ----------------       ----------------
  Adjusted net income                                                                  11.1c                   8.8c
                                                                            ----------------       ----------------
  
  </TABLE>
  
  The calculation of the diluted weighted average number of shares for the three
  months ended March 31, 2001 excludes the effects of convertible debt because it
  has an antidilutive effect.
  
  There is no tax effect related to the inclusion of goodwill amortisation in the
  earnings calculation disclosed above.
  
  b) Intangible fixed assets
  
                                             March 31, 2002      March 31, 2001
                                                      $'000               $'000
                                               ------------        ------------
  Intellectual property rights acquired             459,506             479,284
  Less: Accumulated amortization                   (91,768)            (87,885)
                                               ------------        ------------
                                                    367,738             391,399
                                               ------------        ------------
  
  The useful economic lives of all intangible assets have been reassessed in
  accordance with the Standard, and Group management is satisfied that no changes
  are necessary to amortization periods, and that intangible assets will continue
  to be amortized at their current rate.
  
  Management estimates that the annual amortization charge in respect of
  intangible fixed assets held at March 31, 2002 will be approximately $30 million
  for each of the five years to March 31, 2007. Estimated amortization expense can
  be affected by various factors including future acquisitions and disposals of
  product rights.
  
  6. Long-term debt
  
  During the first three months of 2002, the Company did not issue debt or make
  any debt repayments. During the first quarter in 2001, the Company repaid in
  full amounts due to GSK under a promissory note totalling $76.5 million.
  
  
  <PAGE>
                                        -12-
  
  
  
  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       lated    hensive       ers'
                          Amount      Shares     Amount      shares        capital      surplus    losses      equity
                          $'000       000's       $'000       000's         $'000        $'000      $'000       $'000
                        ----------- ----------- ------------------------------------------------------------------------
  <S>                       <C>        <C>        <C>           <C>       <C>           <C>       <C>        <C>
  As at January 1,
  2002                      39,861     481,817    277,386       5,979     1,014,796     23,955    (93,009)   1,262,989
  Net income                     -           -          -           -             -     56,802           -      56,802
  Foreign currency
  translation                    -           -          -           -             -          -     (5,964)     (5,964)
  Exchange of
  exchangeable shares            -         288    (4,440)        (96)         4,440          -           -           -
  Options exercised             37         510          -           -           742          -           -         779
  Stock option
  compensation                   -           -          -           -         (302)          -           -       (302)
  Tax benefit
  associated with
  exercise of stock
  options                        -           -          -           -           590          -           -         590
                        ----------- ----------- ----------- ----------- ------------ ----------- ----------- -----------
  As at March 31, 2002
                            39,898     482,615    272,946       5,883     1,020,266     80,757    (98,973)   1,314,894
                        ----------- ----------- ----------- ----------- ------------ ----------- ----------- -----------
  </TABLE>
  
  Each exchangeable share is exchangeable into 3 ordinary shares.
  
  8. Contingent liabilities
  
  (i) Phentermine
  
  Shire US Inc. (SUS) is a defendant in 14 lawsuits still pending in both U.S.
  federal and state courts which seek damages for, among other things, personal
  injury arising from phentermine products supplied for the treatment of obesity
  by SUS and several other pharmaceutical companies. SUS, formerly known as Shire
  Richwood Inc., has been sued as a manufacturer and distributor of phentermine,
  an anorectic used in the short-term treatment of obesity and one of the products
  addressed by the lawsuits. The suits relate to phentermine either alone or
  together with fenfluramine or dexenfluramine. The lawsuits generally allege the
  following claims: the defendants marketed phentermine and other products for the
  treatment of obesity and misled users about the products and territory dangers
  associated with them; the defendants failed adequately to test phentermine
  individually and when taken in combination with the other drugs; and the
  defendants knew or should have known about the negative effects of the drugs and
  should have informed the public about such risks and/or failed to provide
  appropriate warning labels. SUS has been named as a defendant in a total of
  approximately 3,800 such phentermine lawsuits, but in all but the fourteen cases
  described above, SUS has been dismissed as a defendant.
  
  SUS became involved with phentermine through its acquisition of certain assets
  of Rexar in January 1994. In addition to SUS potentially incurring liability as
  a result of its own production of Oby-Cap, a phentermine product, the plaintiffs
  may additionally seek to impose liability on SUS as successor to Rexar. SUS
  intends vigorously to defend all the lawsuits and pursue all available
  reasonable defenses. SUS denies liability on a number of grounds including lack
  of scientific evidence that phentermine, properly prescribed, causes the alleged
  side effects and that SUS did not promote phentermine for long-term combined use
  as part of the "fen/phen" diet. Accordingly, SUS intends to defend vigorously
  any and all claims made against the Group in respect of phentermine and believes
  that liability is neither probable nor quantifiable at this stage of litigation.
  Legal expenses have been paid by Eon Labs Manufacturing Inc. (Eon), the supplier
  to SUS, or Eon's insurance carriers but such insurance is now exhausted. Eon has
  agreed to defend and indemnify SUS in this litigation pursuant to an agreement
  dated November 30, 2000 between Eon and SUS.
  
  
  <PAGE>
                                        -13-
  
  
  
  
  At the present stage of litigation, Shire is unable to estimate the level of
  future legal costs after taking into account any available product liability
  insurance and enforceable indemnities. To the extent that any legal costs are
  not covered by insurance or available indemnities, these will be expensed as
  incurred.
  
  (ii) ADDERALL
  On September 22, 2000, a lawsuit was filed against Shire in the United States
  District Court for the District of North Dakota. The suit involves an incident
  in 1999 in which a young North Dakota man, Ryan Ehlis, shot and killed his
  infant daughter and wounded himself, allegedly as a result of a psychotic
  reaction to ADDERALL. Mr Ehlis' physician had prescribed ADDERALL for the
  treatment of ADHD. Shire filed its answer to the complaint on November 24, 2000
  and discovery related to the litigation is ongoing. Shire intends to
  vigorouslydefend such action.
  
  On October 3, 2001, a lawsuit was filed against Shire in Boone County Kentucky
  Circuit Court. The suit involves an automobile accident that is alleged to have
  been the result of a psychotic episode experienced by the driver of the car
  following an ingestion of ADDERALL. As a result of the accident, the driver's
  young son was killed. Shire has filed an answer to this lawsuit and intends to
  vigorously defend such action.
  
  On July 27, 2001, Shire received service of a complaint filed in state court in
  Texas that alleged that ADDERALL caused or contributed to a stroke. The
  plaintiff, an adult female aged 39, was prescribed ADDERALL as treatment for her
  ADHD. The complaint alleges that the plaintiff used ADDERALL during the period
  from January 1999 to September 1999. Also named as defendants are two doctors
  who were involved in diagnosing the plaintiff's ADHD and for prescribing
  ADDERALL for its treatment. Discovery in this litigation is ongoing. Shire
  intends to vigorously defend such action.
  
  (iii) AGRYLIN
  SUS. has been named as a defendant in a recently filed lawsuit in a Texas state
  court involving AGRYLIN. The complaint was filed in late December and served on
  Shire on December 26, 2001. Shire's contract manufacturer for AGRYLIN,
  Mallinckrodt, Inc., is also a named defendant.
  
  The complaint alleges that the Plaintiff suffered a debilitating stroke due to
  the fact that the Plaintiff was allegedly unable to procure this product in some
  fashion. Shire has filed an answer to the complaint in which it denies the
  allegations in the Plaintiffs original petition. Shire intends to vigorously
  defend such action.
  
  (iv) Emory
  Shire BioChem is involved in worldwide patent disputes with Emory University
  ("Emory") relating to lamivudine wherein Shire BioChem is opposing certain
  patents and patent applications of Emory and wherein Emory is opposing certain
  patents and patent applications of Shire BioChem. Further detail regarding these
  disputes is provided below. In November 2001, Shire and GlaxoSmithKline ("GSK")
  signed an agreement as to the key terms of a global settlement agreement with
  Emory. The parties are in the process of finalizing the settlement agreement.
  Pursuant to the settlement agreement, Emory will grant Shire and GSK an
  exclusive license under Emory's patent rights for lamivudine. The agreement
  provides for the resolution of the below noted worldwide patent disputes between
  the parties relating to lamivudine. The settlement involves an upfront payment
  to Emory by Shire of $2.5 million and a royalty payment from Shire of 0.5% on
  worldwide sales of lamivudine over an 11 year period commencing on January 1,
  2001 and a licence under Shire's FTC patent rights, in consideration for the
  settlement of all claims against Shire and GSK relating to lamivudine. The total
  cost to Shire in 2001 of the settlement (including upfront payment) was $7.7
  million.
  
  Emory filed oppositions to two of Shire BioChem's granted patent applications in
  Europe which cover oxathiolane nucleosides including lamivudine and dioxolane
  nucleosides, including troxacitabine, related nucleoside analogues and use of
  these analogues for treating viral infections. In oral hearings held in 1999,
  both of these oppositions were dismissed by the Opposition Division of the
  European Patent Office. Emory is not pursuing its appeal of the decision
  relating to oxathiolanes. Emory has not to date filed revocation actions with
  respect to any Shire BioChem lamivudine patents in issue in individual European
  countries.
  
  Emory has filed an appeal against the dioxolane-related decision and this appeal
  is pending in the European Patent Office. This appeal does not relate to
  lamivudine and is not included in the settlement agreement with Emory.
  
  In Japan, Emory filed an opposition to Shire 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
  
  
  <PAGE>
                                        -14-
  
  
  dismissed Emory's opposition to Shire BioChem's patent covering lamivudine.
  Emory has filed revocation actions in Australia and South Korea against Shire
  BioChem's granted patents covering lamivudine. Shire BioChem is aggressively
  defending these patents.
  
  On July 23, 1996, Emory filed a complaint in the U.S. alleging infringement from
  the commercialization of EPIVIR by Shire BioChem and GSK, Shire BioChem's
  exclusive licensee in the U.S., of an Emory U.S. patent granted that same day.
  Shire BioChem considers this patent infringement suit to be without merit and
  has successfully challenged the validity of Emory's patent.
  
  On May 19, 1998, the USPTO declared an interference between the Emory patent
  that is the subject of a lawsuit and a pending patent application of Shire
  BioChem. The Board of Patent Appeals and Interferences issued a decision on
  December 21, 2000 invalidating Emory's patent. Emory has appealed the decision.
  Pusuant to the lamivudine settlement agreement, Emory will accept the Board's
  decision as final and the infringement suit will be dismissed with prejudice.
  
  Emory has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. Shire BioChem and GSK filed an
  opposition to this grant and are vigorously opposing the grant. An examined
  patent application, filed by Emory claiming lamivudine, was successfully opposed
  by Shire BioChem in Australia and Norway. Emory has filed an appeal from the
  Australian decision in the Federal Court of Australia. Shire BioChem also filed
  an appeal from certain portions of the decision. An examined patent application
  filed by Emory claiming lamivudine was also opposed by Shire 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's claims. There can be no assurance that Emory will not be able to
  overcome this rejection.
  
  An examined patent application filed by Emory claiming lamivudine was opposed by
  Shire BioChem and GSK in South Korea and such Emory claims to lamivudine were
  cancelled by the South Korean Patent Office. Shire BioChem is aware that Emory
  has filed patent applications in other countries, which Shire BioChem believes
  may claim similar subject matter.
  
  (v) Yale
  On November 23, 1999, the USPTO declared an interference between Shire's
  hepatitis B patent for lamivudine and a patent application filed by Yale
  University (Yale) claiming methods of treating hepatitis B using lamivudine. The
  Company believes that this application is licensed to Vion Pharmaceuticals, Inc.
  (Vion), formerly known as OncoRx, Inc., a New Haven, Connecticut-based company.
  On March 28, 2002, the Board of Patent Appeals and Interferences issued an order
  awarding priority to the Company's patent. There can also be no reassurance that
  Yale will not appeal from the Board's judgement on priority against Yale and, if
  successful, obtain claims in the US directed to methods of treatment for
  hepatitis B using lamivudine. The Company is not aware of corresponding patent
  applications by Yale or Vion in countries other than the US.
  
  On April 14, 2000, the USPTO declared a further interference between BioChem's
  hepatitis B patent for lamivudine and a patent application by GSK claiming
  methods of treating hepatitis B using lamivudine. There is no guarantee that
  Shire will be successful in this interference and that Shire's patent will be
  maintained.
  
  (vi) Commitments
  The Company has undertaken to subscribe to interests in companies and
  partnerships for amounts totalling $37,790 million. As at March 31, 2002 an
  amount of $22,372 million (March 31, 2001: $17,217 million) has been subscribed.
  In addition, the Company has undertaken to subscribe to additional amounts and
  to pay royalties on certain future sales upon realization of certain conditions.
  
  (vii) FLUVIRAL
  The Company has signed a ten-year contract with the Government of Canada to
  assure a state of readiness in the case of an influenza pandemic (worldwide
  epidemic) and to provide influenza vaccine for all Canadian citizens in such an
  event. Under the contract, Shire Biologics will also supply the Government of
  Canada with a substantial proportion of its annual influenza vaccine
  requirements over the ten-year period. The value of the agreement may exceed
  Cdn$300 million (approximately $190 million) over the ten-year term, with an
  option for the Government of Canada to extend the contract.
  
  The concept of a state of readiness against an influenza pandemic requires the
  development of sufficient infrastructure and capacity in Canada to provide 100%
  of domestic vaccine needs in the event of an influenza
  
  
  <PAGE>
                                        -15-
  
  
  pandemic. Canada would require 32 million doses of single-strain (monovalent)
  flu vaccine within a production period of 16 weeks. Shire Biologics will
  therefore begin expanding its current production capacity in order to meet this
  objective within a five-year period.
  
  Shire Biologics is committed to Cdn$4.5 million (approximately $2.8 million) of
  capital expenditure on immoveables for the purpose of achieving the level of
  pandemic readiness required. In addition, a performance bond equal to 10% of the
  minimum estimated contract value in any year, which for 2001/2002 is Cdn$17.5
  million (approximately $11 million), would become payable to the Government of
  Canada if contracted penalty clauses were triggered.
  
  (vii) Other matters
  In addition, the Company is involved in other claims and lawsuits in the normal
  course of business. It is not possible at this time to determine the ultimate
  outcome of any of these claims.
  
  
  ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
          of Operations
  
  The results for the three months ended March 31, 2001 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 March 31, 2002, as compared
  with those for the three months ended March 31, 2001
  
  Overview of financial results
  Total revenues for the three months ended March 31, 2002 increased by 30 per
  cent to $243.2 million as compared to the three months ended March 31, 2001. The
  Company recorded a first quarter net income of $56.8 million (2001: $41.5
  million), an increase of 37 per cent.
  
  Sales and marketing
  Product sales of $202.7 million, which represented 83 per cent of total
  revenues, increased by 34 per cent over first quarter 2001 product sales of
  $151.5 million. Product sales in the U.S. continue to represent a significant
  percentage of our worldwide sales, 86 per cent in the three months ended March
  31, 2002 (2001: 84 per cent).
  
  The Company manages and controls the sales and marketing operations on
  geographic lines. The following table presents the Company's net product sales
  by individual operating segment:
  
  Product sales by segment         3 months to       3 months to
                                March 31, 2002    March 31, 2001
                                         $'000             $'000         % change
  
  U.S.                                 173,524           126,804              +37
  International                         29,194            24,710              +18
                                  ------------      ------------     ------------
  Total product sales                  202,718           151,514              +34
                                  ------------      ------------     ------------
  
  
  First quarter combined sales of ADDERALL XR and ADDERALL, marketed in the U.S.
  for the treatment of Attention Deficit Hyperactivity Disorder (ADHD), were
  $108.0 million, representing growth of 54 per cent over the first quarter of
  2001. ADDERALL XR and ADDERALL had a 31 per cent share of the prescription
  market for ADHD in the U.S. in March 2002 compared to 33 per cent in March 2001.
  
  Since the launch of ADDERALL XR and a generic version of ADDERALL, the combined
  amphetamine market represents 40 per cent of the total US ADHD market compared
  with 33 per cent prior to these launches.
  
  To support a successful launch of ADDERALL XR, we extended certain sales terms
  to our customers (limited to $28 million of ADDERALL XR launch stock) to
  encourage the immediate fulfilment of distribution inventory levels. $11 million
  of this launch stock was booked as sales in Q4 2001. We have recognized the
  balance of $17 million of ADDERALL XR shipments as realisable and earned in Q1
  2002.
  
  
  <PAGE>
                                        -16-
  
  
  Sales of AGRYLIN, the only U.S. product licensed for the treatment of essential
  thrombocythemia were $23.4 million, a 37 per cent increase over first quarter
  2001 sales of $17.1 million. Shire achieved a prescription share of 26 per cent
  of the total U.S. AGRYLIN market, including Hydrea and generic hydroxyurea, in
  March 2002 compared to 20 per cent in March 2001.
  
  Sales of PENTASA, licensed for the treatment of ulcerative colitis, at $17.5
  million, were 22 per cent higher than the comparable period last year. PENTASA
  had a 18 per cent share of the oral mesalamine/obsalazine market in March 2002
  and March 2001.
  
  Sales of PROAMATINE, for the treatment of postural hypotension, were $9.6
  million, 26 per cent higher than first quarter 2001 sales of $7.6 million. The
  U.S. prescription market for PROAMATINE and Florinef prescriptions indiciates
  that PROAMATINE had a 24 per cent share in March 2002, an increase from 22 per
  cent in March 2001.
  
  CARBATROL containing carbamazapine for the treatment of epilepsy, recorded sales
  growth of 20 per cent from sales of $9.6 million in the three months ended March
  31, 2001 to $11.6 million in the three months ended March 31, 2002. This
  translates to 36 per cent of the U.S. extended release carbamazepine
  prescription market in March 2002, compared to 33 per cent in March 2001.
  
  Royalties
  Royalties increased by $6.7 million in the three months ended March 31, 2002, up
  20 per cent from the three months ended March 31, 2001, to $39.6 million. The
  Company receives royalties from GlaxoSmithKline on the worldwide sales of 3TC,
  for the treatment of HIV infection / AIDS, and ZEFFIX, an oral treatment for
  chronic hepatitis B, with the exception of Canada where a commercialisation
  partnership with GSK exists. ZEFFIX royalties, which represented 13 per cent of
  Shire's royalty income in the first quarter 2002, increased by 40 per cent. The
  Company also receives royalties from J&J on sales of REMINYL, for the treatment
  of Alzheimer's disease.
  
  Cost of revenues
  Gross margin on product sales increased from 81 per cent for the three months
  ended March 31, 2001 to 87 per cent for the three months ended March 31, 2002.
  This is a reflection of the product mix as the higher margin products, ADDERALL
  XR, ADDERALL and AGRYLIN, represented approximately 65 per cent of total product
  sales in the three months ended March 31, 2002 compared to 58 per cent in the
  three months ended March 31, 2001. Improved pricing in respect of the ADHD
  franchise has also contributed to the higher gross margin for the three months
  ended March 31, 2002.
  
  Research and development
  Research and development expenditure increased 32 per cent to $49.7 million for
  the three months ended March 31, 2002 (2001: $37.7 million). R&D expenditure in
  first quarter 2002 represented 20 per cent of revenues, consistent with the
  first quarter 2001.
  
  Selling, general and administrative
  Selling, general and administrative expenses, excluding the effects of a stock
  option compensation credit of $0.3 million (2001: charge $2.1 million) and
  depreciation and amortization of $10.2 million (2001: $10.8 million), increased
  by 50 per cent to $84.2 million for the three months ended March 31, 2002 (2001:
  $56.2 million). This reflects the sustained high level of promotional spend
  associated with the ADDERALL XR launch. As a percentage of product sales,
  selling, general and administrative costs represented 42 per cent for the first
  quarter 2002 (2001: 37 per cent).
  
  The 6 per cent decrease in depreciation and amortization for the three months
  ended March 31, 2002 is attributable to the introduction of a new US reporting
  standard (SFAS No. 142 "Goodwill and Other Intangible Assets"), under which
  goodwill is no longer amortised.
  
  Interest income and expense
  For the three months ended March 31, 2002, the Company received interest income
  of $4.7 million (Q1 2001: $5.1 million). Interest expense decreased from $3.0
  million to $2.0 million. This decrease reflects an improved debt profile
  resulting from the repayment of a $125 million term loan in May 2001 and the
  subsequent issue of the $400 million convertible notes in August 2001, which
  bear interest at the comparatively lower fixed rate of 2% per annum.
  
  
  <PAGE>
                                        -17-
  
  
  Income taxes
  For the three months ended March 31, 2002 income taxes increased $6.8 million to
  $20.7 million from $13.9 million for the three months ended March 31, 2001. The
  Company's effective tax rate before the stock compensation credit was 27 per
  cent for the three months ended March 31, 2002 (Q1 2001: 25 per cent). The
  Company has recorded net deferred tax assets of $35.2 million at March 31, 2002.
  Realization is dependent upon generating sufficient taxable income to utilize
  such assets. Although realization on these assets is not assured, management
  believes it is more likely than not that the deferred tax assets will be
  realized.
  
  Liquidity and Financial Condition
  The Company's funding requirements depend on a number of factors, including the
  Company's product development programs, business and product acquisitions, the
  level of resources required for the expansion of marketing capabilities as the
  product base expands, increased investment in accounts receivable and inventory
  which may arise as sales levels increase, competitive and technological
  developments, the timing and cost of obtaining required regulatory approvals for
  new products and the continuing revenues generated from sales of its key
  products.
  
  At March 31, 2002, the Company had net cash funds available as follows:
  
                                                  March 31,         December 31,
                                                       2002                 2001
                                                      $'000                $'000
                                             --------------       --------------
  Cash and cash equivalents                         706,457              118,040
  Marketable securities and other current
    asset investments                               237,113              723,911
  Debt                                            (406,967)            (406,806)
                                             --------------       --------------
  Net cash                                          536,603              435,145
                                             --------------       --------------
  
  Net cash provided by operating activities for the three months ended March 31,
  2002 was $105.8 million compared to $63.4 million for the three months ended
  March 31, 2001.
  
  Investing activities provided $481.9 million for the three months ended March
  31, 2002 (2001: $139.8 million). This was due to an inflow of $486.8 million
  cash by reducing cash placed on short-term deposit, and outflows in respect of
  net capital expenditure on long-term investments and fixed assets of $4.9
  million.
  
  Investing activities for the three months ended March 31, 2001 included $46.0
  million from the redemption of marketable securities, an inflow of $130.0
  million cash by reducing cash placed on short-term deposit, and outflows in
  respect of net capital expenditure on long-term investments, intangible assets
  and fixed assets of $36.2 million.
  
  Financing activities provided $0.8 million from exercises of employee stock
  options for the three months ended March 31, 2002.
  
  Financing activities for the three months ended March 31, 2001, which totalled a
  $72.3 million outflow, included $4.3 million received from exercises of employee
  stock options and repayments of long-term debt of $76.5 million.
  
  Capital expenditure
  Capital expenditure on tangible fixed assets for the three months ended March
  31, 2002 was $3.1 million, which primarily related to laboratory and computer
  equipment purchased across the Group. Other capital expenditure related to the
  purchase of long-term investments ($1.8 million).
  
  Capital expenditure on tangible fixed assets for the three months ended March
  31, 2001 was $2.6 million. This included $1.5 million for tangible fixed assets
  related to the Group's head office facility purchased in quarter four 2000, the
  purchase of research and development equipment, and investment in computer
  equipment across all operational areas. Capital expenditure on new products of
  $25.7 million included $18.4 million for new products to be marketed by the
  Group's Spanish and Italian operations. Other capital expenditure related to the
  purchase of long-term investments ($8.5 million).
  
  
  <PAGE>
                                        -18-
  
  
  
  
  ITEM 3.  Qualitative and Quantitative Disclosures about Market Risk
  
  There have been no material changes in the Group's market risk exposure since
  December 31, 2001. Item 7A of the Group's Annual Report on Form 10-K for the
  year ended December 31, 2001 contains a detailed discussion of the Group's
  market risk exposure in relation to interest rate market risk and foreign
  exchange market risk.
  
  
  PART II.   OTHER INFORMATION
  
  ITEM 1. LEGAL PROCEEDINGS
  (i) Phentermine
  Until April 1998, Shire US Inc. ("SUS', and formerly known as Shire Richwood
  Inc.) 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 SUS has ceased to
  distribute phentermine, the drug remains both approved and available in the U.S.
  SUS 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. ) SUS is a defendant in 14 lawsuits still pending in
  both U.S. federal and state courts related to phentermine. 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 SUS did not promote phentermine for long term combined use as part of
  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.
  
  Legal expenses have been paid by Eon Labs Manufacturing Inc. ("Eon"), the
  supplier to SUS or Eon's insurance carriers but such insurance is now exhausted.
  Eon has agreed to defend and indemnify SUS in this litigation pursuant to an
  agreement dated November 30, 2000 between Eon and SUS.
  
  At the present stage of litigation, Shire is unable to estimate the level of
  future legal costs after taking into account any available product liability
  insurance and enforceable indemnities. To the extent that any legal costs are
  not covered by insurance or available indemnities, these will be expensed as
  incurred.
  
  
  (ii) ADDERALL
  On September 22, 2000, a lawsuit was filed against Shire in the United States
  District Court for the District of North Dakota. The suit involves an incident
  in 1999 in which a young North Dakota man, Ryan Ehlis, shot and killed his
  infant daughter and wounded himself, allegedly as a result of a psychotic
  reaction to ADDERALL. Mr Ehlis' physician had prescribed ADDERALL for the
  treatment of ADHD. Shire filed its answer to the complaint on November 24, 2000
  and discovery related to the litigation is ongoing. Shire intends to vigorously
  defend such action.
  
  On July 27, 2001, Shire received service of a complaint filed in state court in
  Texas that alleged that ADDERALL caused or contributed to a stroke. The
  plaintiff, an adult female aged 39, was prescribed ADDERALL as treatment for her
  ADHD. The complaint alleges that the plaintiff used ADDERALL during the period
  from January 1999 to September 1999. Also named as defendants are two doctors
  who were involved in diagnosing the plaintiff's ADHD and for prescribing
  ADDERALL for its treatment. Discovery in this litigation is ongoing. Shire
  intends to vigorously defend such action.
  
  On October 3, 2001, a lawsuit was filed against Shire in Boone County Kentucky
  Circuit Court. The suit involves an automobile accident that is alleged to have
  been the result of a psychotic episode experienced by the driver of the car
  following an ingestion of ADDERALL. As a result of the accident, the driver's
  young son was killed. Shire has filed an answer to this lawsuit and intends to
  vigorously defend such action.
  
  
  
  <PAGE>
                                        -19-
  
  
  (iii) AGRYLIN
  Shire US Inc. has been named as a defendant in a recently filed lawsuit in a
  Texas state court involving AGRYLIN. The complaint was filed in late December
  and served on Shire on December 26, 2001. Shire's contract manufacturer for
  AGRYLIN, Mallinckrodt, Inc., is also a named defendant.
  
  The complaint alleges that the Plaintiff suffered a debilitating stroke due to
  the fact that the Plaintiff was allegedly unable to procure this product in some
  fashion. Shire has filed an answer to the complaint in which it denies the
  allegations in the Plaintiffs original petition. Shire intends to vigorously
  defend such action.
  
  
  (iv) Emory
  Shire BioChem is involved in worldwide patent disputes with Emory University
  ("Emory") relating to lamivudine wherein Shire BioChem is opposing certain
  patents and patent applications of Emory and wherein Emory is opposing certain
  patents and patent applications of Shire BioChem. Further detail regarding these
  disputes is provided below. In November 2001, Shire and GlaxoSmithKline ("GSK")
  signed an agreement as to the key terms of a global settlement agreement with
  Emory. The parties are in the process of finalizing the settlement agreement.
  Pursuant to the settlement agreement, Emory will grant Shire and GSK an
  exclusive license under Emory's patent rights for lamivudine. The agreement
  provides for the resolution of the below noted worldwide patent disputes between
  the parties relating to lamivudine. The settlement involves an upfront payment
  to Emory by Shire of $2.5 million and a royalty payment from Shire of 0.5% on
  worldwide sales of lamivudine over an 11 year period commencing on January 1,
  2001 and a licence under Shire's FTC patent rights, in consideration for the
  settlement of all claims against Shire and GSK relating to lamivudine. The total
  cost to Shire in 2001 of the settlement (including upfront payment) was $7.7
  million.
  
  Emory filed oppositions to two of Shire BioChem's granted patent applications in
  Europe which cover oxathiolane nucleosides including lamivudine and dioxolane
  nucleosides, including troxacitabine, related nucleoside analogues and use of
  these analogues for treating viral infections. In oral hearings held in 1999,
  both of these oppositions were dismissed by the Opposition Division of the
  European Patent Office. Emory is not pursuing its appeal of the decision
  relating to oxathiolanes. Emory has not to date filed revocation actions with
  respect to any Shire BioChem lamivudine patents in issue in individual European
  countries.
  
  Emory has filed an appeal against the dioxolane-related decision and this appeal
  is pending in the European Patent Office. This appeal does not relate to
  lamivudine and is not included in the settlement agreement with Emory.
  
  In Japan, Emory filed an opposition to Shire 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's
  opposition to Shire BioChem's patent covering lamivudine. Emory has filed
  revocation actions in Australia and South Korea against Shire BioChem's granted
  patents covering lamivudine. Shire BioChem is aggressively defending these
  patents.
  
  On July 23, 1996, Emory filed a complaint in the U.S. alleging infringement from
  the commercialization of EPIVIR by Shire BioChem and GSK, Shire BioChem's
  exclusive licensee in the U.S., of an Emory U.S. patent granted that same day.
  Shire BioChem considers this patent infringement suit to be without merit and
  has successfully challenged the validity of Emory's patent.
  
  On May 19, 1998, the USPTO declared an interference between the Emory patent
  that is the subject of a lawsuit and a pending patent application of Shire
  BioChem. The Board of Patent Appeals and Interferences issued a decision on
  December 21, 2000 invalidating Emory's patent. Emory has appealed the decision.
  Pusuant to the lamivudine settlement agreement, Emory will accept the Board's
  decision as final and the infringement suit will be dismissed with prejudice.
  
  Emory has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. Shire BioChem and GSK filed an
  opposition to this grant and are vigorously opposing the grant. An examined
  patent application, filed by Emory claiming lamivudine, was successfully opposed
  by Shire BioChem in Australia and Norway. Emory has filed an appeal from the
  Australian decision in the Federal Court of Australia. Shire BioChem also filed
  an appeal from certain portions of the decision. An examined patent application
  filed by Emory claiming lamivudine was also opposed by Shire BioChem in Japan.
  The opposition was dismissed in April 1999 because it was improperly filed by a
  representative who had previously represented
  
  
  <PAGE>
                                        -20-
  
  
  Emory. Notwithstanding the dismissal, the Japanese Patent Office issued an
  ex-officio action rejecting all of Emory's claims. There can be no assurance
  that Emory will not be able to overcome this rejection.
  
  An examined patent application filed by Emory claiming lamivudine was opposed
  by Shire BioChem and GSK in South Korea and such Emory claims to lamivudine were
  cancelled by the South Korean Patent Office. Shire BioChem is aware that Emory
  has filed patent applications in other countries, which Shire BioChem believes
  may claim similar subject matter.
  
  (v) Yale
  On November 23, 1999, the USPTO declared an interference between Shire's
  hepatitis B patent for lamivudine and a patent application filed by Yale
  University (Yale) claiming methods of treating hepatitis B using lamivudine. The
  Company believes that this application is licensed to Vion Pharmaceuticals, Inc.
  (Vion), formerly known as OncoRx, Inc., a New Haven, Connecticut-based company.
  On March 28, 2002, the Board of Patent Appeals and Interferences issued an order
  awarding priority to the Company's patent. There can also be no reassurance that
  Yale will not appeal from the Board's judgement on priority against Yale and, if
  successful, obtain claims in the US directed to methods of treatment for
  hepatitis B using lamivudine. The Company is not aware of corresponding patent
  applications by Yale or Vion in countries other than the US.
  
  On April 14, 2000, the USPTO declared a further interference between BioChem's
  hepatitis B patent for lamivudine and a patent application by GSK claiming
  methods of treating hepatitis B using lamivudine. There is no guarantee that
  Shire will be successful in this interference and that Shire's patent will be
  maintained.
  
  
  
  
  <PAGE>
                                        -21-
  
  
  
  
  ITEM 2. CHANGES IN SECURITIES
  
  None
  
  
  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
  
  None
  
  
  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:    May 14, 2002                       By:  /s/ Angus C Russell
                                                   -------------------------------
                                                   Angus C Russell
                                                   Group Finance Director
  
  
  
  
  Date:    May 14, 2002                       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 March 31, 2002
  
                           Commission File Number: 0-29630
  
                           SHIRE PHARMACEUTICALS GROUP PLC
               (Exact name of registrant as specified in its charter)
  
          England and Wales                               98-0359573
    (State or other jurisdiction                       (I.R.S. Employer
  of incorporation or organization)                  Identification No.)
  
  Hampshire International Business Park, Chineham,
           Basingstoke, Hampshire, England                           RG24 8EP
      (Address of principal executive offices)                      (Zip Code)
  
                                   44 1256 894 000
                (Registrant's telephone number, including area code)
  
  Indicate by check mark whether the registrant (1) has filed all reports required
  to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
  the preceding 12 months, and (2) has been subject to such filing requirements
  for the past 90 days.
  
                                                       Yes  X    No  __
  
  Indicate the number of shares outstanding of each of the issuer's classes of
  Common Stock, as of the latest practical date.
  
               Class                       Outstanding at May 14, 2002
  
   Common Stock: Ordinary Shares                   482,732,570
  -2-
  
  THE "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
  OF 1995
  
  Statements included herein that are not historical facts, are forward looking
  statements. The forward looking statements involve a number of risks and
  uncertainties and are subject to change at any time. In the event such risks or
  uncertainties materialize, Shire's results could be materially affected. The
  risks and uncertainties include, but are not limited to, risks associated with
  the inherent uncertainty of pharmaceutical research, product development and
  commercialization, the impact of competitive products, patents, government
  regulation and approval, and other risks and uncertainties detailed from time to
  time in our filings, including the Annual Report filed on Form 10-K by Shire
  with the Securities and Exchange Commission.
  -3-
  
  PART I.  FINANCIAL INFORMATION
  
  ITEM 1.  Financial Statements
  
                           SHIRE PHARMACEUTICALS GROUP PLC
                             CONSOLIDATED BALANCE SHEETS
           (In thousands of U.S. dollars, except share and per share data)
  (Unaudited)
                                                                                         March 31,          December 31,
                                                                                              2002                  2001
  ASSETS                                                                               -----------           -----------
  Current assets:
  Cash and cash equivalents                                                                706,457               118,040
  Marketable securities and other current asset investments                                237,113               723,911
  Accounts receivable, net                                                                 140,400               193,913
  Inventories, net                                                                          55,852                46,690
  Deferred tax asset                                                                        25,515                19,430
  Prepaid expenses and other current assets                                                 26,194                38,571
                                                                                      ------------          ------------
  Total current assets                                                                   1,191,531             1,140,555
  
  Investments                                                                               68,031                68,743
  Property, plant and equipment, net                                                       111,223               113,347
  Intangible assets, net                                                                   539,187               549,044
  Deferred tax asset                                                                         9,693                12,874
  Other assets                                                                              27,434                26,168
                                                                                      ------------          ------------
  Total assets                                                                           1,947,099             1,910,731
                                                                                      ------------          ------------
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
  Current instalments of long-term debt                                                      4,480                 4,325
  Accounts payable and accrued expenses                                                    167,062               167,152
  Unearned income                                                                                -                17,409
  Other current liabilities                                                                 44,632                42,730
                                                                                      ------------          ------------
  Total current liabilities                                                                216,174               231,616
  Long-term debt, excluding current instalments                                            402,487               402,481
  Other long-term liabilities                                                               13,544                13,645
                                                                                      ------------          ------------
  Total liabilities                                                                        632,205               647,742
                                                                                      ------------          ------------
  Shareholders' equity:
  Common stock, 5p par value: 800,000,000 shares authorized; and
  482,614,881 shares issued and outstanding (2001: 481,817,487)                             39,898                39,861
  Exchangeable shares: 5,882,978 shares issued and outstanding (2001:
  5,978,902)                                                                               272,946               277,386
  Additional paid-in capital                                                             1,020,266             1,014,796
  Accumulated other comprehensive losses                                                  (98,973)              (93,009)
  Accumulated surplus                                                                       80,757                23,955
                                                                                      ------------          ------------
  Total shareholders' equity                                                             1,314,894             1,262,989
                                                                                      ------------          ------------
  Total liabilities and shareholders' equity                                             1,947,099             1,910,731
                                                                                      ------------          ------------
  The accompanying notes are an integral part of these financial statements.
  -4-
  
                           SHIRE PHARMACEUTICALS GROUP PLC
                          CONSOLIDATED STATEMENTS OF INCOME
           (In thousands of U.S. dollars, except share and per share data)
                                     (Unaudited)
  3 months ended March 31,                                                            2002                     2001
                                                                              ------------             ------------
  Product sales                                                                    202,718                  151,514
  Licensing and development                                                            682                    3,042
  Royalties                                                                         39,576                   32,891
  Other revenues                                                                       217                      275
                                                                              ------------             ------------
  Total revenues                                                                   243,193                  187,722
  
  Costs and expenses:
  Cost of revenues                                                                  26,511                   28,385
  Research and development                                                          49,729                   37,684
  Selling, general and administrative (inclusive of stock option
  compensation credit of  $302,000 and charge of $2,120,000 for
  2002 and 2001 respectively)                                                       94,077                   69,161
                                                                              ------------             ------------
  Total operating expenses                                                         170,317                  135,230
                                                                              ------------             ------------
  Operating income                                                                  72,876                   52,492
  
  Interest income                                                                    4,731                    5,140
  Interest expense                                                                 (1,977)                  (2,998)
  Other income, net                                                                  1,885                      770
                                                                              ------------             ------------
  Total other income, net                                                            4,639                    2,912
                                                                               -----------              -----------
  Income before income taxes                                                        77,515                   55,404
  
  Income taxes                                                                    (20,713)                 (13,939)
                                                                              ------------             ------------
  Net income                                                                        56,802                   41,465
                                                                              ------------             ------------
  
  Net income per share:
  Basic                                                                              11.4c                     8.5c
  Diluted                                                                            11.1c                     8.3c
  
  Weighted average number of shares:
  Basic                                                                        499,926,390              488,448,379
  Diluted                                                                      524,865,259              500,699,108
  The results for the three months ended March 31, 2001 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.
  -5-
  
                           SHIRE PHARMACEUTICALS GROUP PLC
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  3 months ended March 31,                                                           2002             2001
                                                                          ---------------  ---------------
  Cash flows from operating activities:
  Net income                                                                       56,802           41,465
  Adjustments to reconcile net income to net cash provided by operating
  activities:
  Depreciation and amortization                                                    10,173           10,823
  Stock option compensation                                                         (302)            2,120
  Tax benefit of stock option compensation charged directly to equity                 590            3,090
  Non cash exchange gains and losses                                                (793)         (10,424)
  Loss on sale of fixed assets                                                          -              607
  Other movements in long-term assets                                               2,500          (2,859)
  Changes in assets and liabilities:
  Decrease in accounts receivable                                                  53,513           34,348
  (Increase)/decrease in inventory                                                (9,162)            2,197
  (Increase)/decrease in deferred tax asset                                       (2,904)            6,500
  Decrease/(increase) in prepayments and other current assets                      12,377         (10,932)
  (Increase)/decrease in other assets                                             (1,266)              758
  Decrease in accounts payable and accrued expenses                                  (90)         (15,703)
  Decrease in unearned income                                                    (17,409)                -
  Increase in other current liabilities                                             1,902            2,601
  Decrease in other long-term liabilities                                           (101)          (1,164)
                                                                          ---------------  ---------------
  Net cash provided by operating activities                                       105,830           63,427
                                                                          ---------------  ---------------
  Cash flows from investing activities:
  Redemption of marketable securities, net                                              -           46,000
  Decrease in short-term deposits                                                 486,798          129,966
  Purchase of long-term investments                                               (1,761)          (8,502)
  Purchase of intangible assets                                                         -         (25,725)
  Purchase of fixed assets                                                        (3,130)          (2,629)
  Purchase of other assets                                                              -              685
                                                                          ---------------  ---------------
  Net cash provided by investing activities                                       481,907          139,795
                                                                          ---------------  ---------------
  Cash flows from financing activities:
  Movements on long-term debt and notes                                                 -         (76,520)
  Proceeds from issue of common stock, net                                              -             (17)
  Proceeds from exercise of options                                                   778            4,279
                                                                          ---------------   --------------
  Net cash provided by/ (used in) financing activities                                778         (72,258)
                                                                          ---------------   --------------
  
  Effect of foreign exchange rate changes on cash and cash equivalents
                                                                                     (98)          (5,098)
                                                                          ---------------   --------------
  Net increase in cash and cash equivalents                                       588,417          125,866
  Cash and cash equivalents at beginning of period                                118,040           93,266
                                                                          ---------------   --------------
  Cash and cash equivalents at end of period                                      706,457          219,132
                                                                          ---------------   --------------
  The cash flows for the three months ended March 31, 2001 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.
  -6-
  
               CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSSES)
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  3 months to March 31,                                                               2002                     2001
                                                                              ------------             ------------
  Net income                                                                        56,802                   41,465
  Foreign currency translation adjustments                                         (5,964)                 (63,191)
  Unrealised holding loss on on-current investments                                      -                    (210)
                                                                              ------------             ------------
  Comprehensive income                                                              50,838                 (21,936)
                                                                              ------------             ------------
  There are no material tax effects related to the items included above.
  
  The results for the three months ended March 31, 2001 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.
  -7-
  
                           SHIRE PHARMACEUTICALS GROUP PLC
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  
  1. Summary of Significant Accounting Policies
  
  a) Description of Operations and Principles of Consolidation
  
  Shire Pharmaceuticals Group plc (the Company) is an international specialty
  pharmaceutical company with a strategic focus on three therapeutic areas:
  central nervous system disorders, oncology and anti-infectives. The Company's
  strategy is further supported by two technology platforms, drug delivery and
  biologics.
  
  The Company has sales and marketing subsidiaries with a portfolio of products
  targeting the U.S., Canada, the U.K., the Republic of Ireland, France, Germany,
  Italy and Spain. Shire also covers other significant pharmaceutical markets
  indirectly through distributors. The business is operated and managed within
  three individual operating segments: U.S., International (which includes the
  Group's global headquarters) and global research and development. Within these
  segments, revenues are derived primarily from three sources: sales of products
  by the Company's own sales and marketing operations, royalties and licensing and
  development fees.
  
  The Company is referred to as "specialty" because its principal products tend to
  be prescribed by specialists as opposed to primary care physicians. The
  Company's main approach is to start projects in-house through research and
  advanced drug delivery or to in-license projects, and then to develop them and
  launch them using its sales and marketing capability in eight of the key world
  markets. The Company seeks to protect the intellectual property upon which it
  relies through a range of patents and patent applications (both its own and
  those of its licensors).
  
  The Company's principal products include:
  
       o    in the U.S., ADDERALL XR(TM) and ADDERALL(TM) for the treatment of
            Attention Deficit Hyperactivity Disorder; AGRYLIN(TM) for the
            treatment of elevated blood platelets; PENTASA(TM) for the treatment
            of ulcerative colitis; CARBATROL(TM) for the treatment of epilepsy;
            and PROAMATINE(TM) for the treatment of postural hypotension. In
            addition, the Company receives royalties on sales of REMINYL** for the
            treatment of Alzheimer's disease, marketed by Johnson & Johnson, and
            on EPIVIR**, COMBIVIR** and TRIZIVIR** for the treatment of HIV/AIDS
            and EPIVIR-HBV for the treatment of hepatitis B, each marketed by
            GlaxoSmithKline;
  
       o    in the U.K., the CALCICHEW(TM)range, used primarily as adjuncts in the
            treatment of osteoporosis, and REMINYL**, which was launched in
            September 2000 and is co-promoted by Janssen-Cilag;
  
       o    in Canada, 3TC for the treatment of HIV/AIDS, COMBIVIR** and
            HEPTOVIR** (marketed in partnership with GlaxoSmithKline);
            AMATINE(TM); SECOND LOOK(TM), a breast cancer diagnostics product for
            which the Company received FDA approval in January 2002; and FLUVIRAL
            S/F(TM), a vaccine for the prevention of influenza; and
  
       o    in the rest of the world, 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(TM) for the treatment of analgesia, FOZNOL(TM) (renamed
  FOSRENOL(TM)) for the treatment of high blood phosphate levels associated with
  kidney failure and TROXATYL(TM) for the treatment of leukemia and pancreatic
  cancer. The Company submitted the first regulatory submission for FOSRENOL under
  the European Mutual Recognition procedure on March 13, 2001 and a New Drug
  Application with the US FDA on April 30, 2002.
  
  The accompanying consolidated financial statements include the accounts of Shire
  Pharmaceuticals Group plc and all its subsidiary undertakings after elimination
  of intercompany accounts and transactions.
  
  *        Registered trademark of Johnson and Johnson
  **       Registered trademark of GlaxoSmithKline
  -8-
  
  (TM) Unless otherwise indicated, all product names set out in this document are
  trademarks of Shire or companies within the Shire Group, many of which are the
  subject of trademark registrations in certain territories.
  
  b) Basis of Presentation
  
  The accompanying consolidated financial statements, which include the operations
  of the Company and its wholly owned subsidiaries and the financial information
  included herein, are unaudited. They have been prepared in accordance with
  generally accepted accounting principles in the United States and Securities and
  Exchange Commission regulations for interim reporting. Certain information and
  footnote disclosures normally included in financial statements prepared in
  accordance with generally accepted accounting principles in the United States
  have been condensed or omitted pursuant to such rules and regulations. However,
  such information includes all adjustments (consisting solely of normal recurring
  adjustments), which are, in the opinion of management, necessary to fairly state
  the results of the interim periods. Interim results are not necessarily
  indicative of results to be expected for the full year. These consolidated
  financial statements should be read in conjunction with the Company's audited
  consolidated financial statements for the three years ended December 31, 2001
  and notes thereto. The results for the period ended March 31, 2002 are not
  necessarily indicative of the results that may be expected for the year ending
  December 31, 2002.
  
  c) New Accounting Pronouncements
  
  In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
  Obligations. SFAS No. 143 requires the fair value of a liability for asset
  retirement obligations be recognized in the period in which it is incurred if a
  reasonable estimate of the fair value can be made. The associated asset
  retirement costs are capitalized as part of the carrying amount of the related
  long-lived asset. SFAS No. 143 is effective for financial statements issued for
  fiscal years beginning after June 15, 2002. The Company has assessed the
  potential impact of the adoption of SFAS No. 143 and concluded that there is no
  impact.
  -9-
  
  2. Inventory
  
                                        March 31,          December 31,
                                             2002                  2001
                                            $'000                 $'000
                                   --------------        --------------
  Finished goods                           25,695                19,880
  Work-in-process                          19,891                18,262
  Raw materials                            10,266                 8,548
                                   --------------        --------------
                                           55,852                46,690
                                   --------------        --------------
  
  3. Analysis of revenue, operating income and reportable segments
  
  The Company has disclosed segment information for the individual operating areas
  of the business based on the way in which the business is managed and
  controlled. Shire's principal reporting segments are U.S., International (which
  includes the Group's global headquarters) and global research and development,
  each being managed and monitored separately. The Company evaluates performance
  based on operating income.
  Three months ended March 31, 2002                         U.S.   International              R&D           Total
                                                           $'000           $'000            $'000           $'000
                                                      ----------      ----------       ----------      ----------
  Product sales                                          173,524          29,194                -         202,718
  Licensing and development                                  541             141                -             682
  Royalties                                                  214          39,362                -          39,576
  Other revenues                                               -             217                -             217
                                                      ----------      ----------       ----------      ----------
  Total revenues                                         174,279          68,914                -         243,193
                                                      ----------      ----------       ----------      ----------
  
  Cost of revenues                                        14,420          12,091                -          26,511
  Research and development                                     -               -           49,729          49,729
  Selling, general and administrative                     56,451          27,453                -          83,904
  Depreciation and amortisation                            5,945           4,228                -          10,173
                                                      ----------      ----------       ----------      ----------
  Total operating expenses                                76,816          43,772           49,729         170,317
                                                      ----------      ----------       ----------      ----------
  Operating income/(loss)                                 97,463          25,142         (49,729)          72,876
                                                      ----------      ----------       ----------      ----------
  
  Three months ended March 31, 2001                         U.S.   International              R&D           Total
                                                           $'000           $'000            $'000           $'000
                                                      ----------      ----------       ----------      ----------
  Product sales                                          126,804          24,710                -         151,514
  Licensing and development                                2,085             957                -           3,042
  Royalties                                                   60          32,831                -          32,891
  Other revenues                                               -             275                -             275
                                                      ----------      ----------       ----------      ----------
  Total revenues                                         128,949          58,773                -         187,722
                                                      ----------      ----------       ----------      ----------
  Cost of revenues                                        17,877          10,508                -          28,385
  Research and development                                     -               -           37,684          37,684
  Selling, general and administrative                     36,406          21,932                -          58,338
  Depreciation and amortisation                            4,460           6,363                -          10,823
                                                      ----------      ----------       ----------      ----------
  Total operating expenses                                58,743          38,803           37,684         135,230
                                                      ----------      ----------       ----------      ----------
  Operating income/(loss)                                 70,206          19,970         (37,684)          52,492
                                                      ----------      ----------       ----------      ----------
  -10-
  
  4.  Net income per share
  
  Basic net income per share is based upon the net income available to common
  stockholders divided by the weighted-average number of common shares outstanding
  during the period. Diluted net income per share is based upon net income
  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
  per share:
  3 months ended March 31,                                                              2002                   2001
                                                                                       $'000                  $'000
                                                                            ----------------       ----------------
  Numerator for basic net income per share                                            56,802                 41,465
  Interest charged on convertible debt, net of tax                                     1,397                      -
                                                                            ----------------       ----------------
  Numerator for diluted net income per share                                          58,199                 41,465
                                                                            ----------------       ----------------
  
  Weighted average number of shares:                                           No. of shares          No. of shares
                                                                            ----------------       ----------------
  Basic                                                                          499,926,390            488,448,379
  Effect of dilutive shares:
  Stock options                                                                    3,582,567             12,250,729
  Warrants                                                                         1,213,297                      -
  Convertible debt                                                                20,143,005                      -
                                                                            ----------------       ----------------
  Diluted:                                                                       524,865,259            500,699,108
                                                                            ----------------       ----------------
  Basic net income per share                                                           11.4c                   8.5c
                                                                            ----------------       ----------------
  Diluted net income per share                                                         11.1c                   8.3c
                                                                            ----------------       ----------------
  The calculation of weighted average number of shares for the three months ended
  March 31, 2001 does not include convertible debt because, after eliminating
  interest charged in the income statement from the numerator, the inclusion would
  be anti-dilutive.
  
  5.   Goodwill and Other Intangible Assets - Adoption of Statement 142
  
  SFAS No. 142 is effective for fiscal years beginning after December 15, 2001.
  The statement directs that goodwill and intangible assets that have indefinite
  useful lives will not be amortized but rather will be tested at least annually
  for impairment. Intangible assets that have finite useful lives will continue to
  be amortized over their useful lives, but without the constraint of an arbitrary
  ceiling.
  
  a) Goodwill
  
  A reconciliation table for the results for the three months ended March 31, 2001
  is provided to exclude the effect of goodwill amortization in accordance with
  transitional disclosures relating to SFAS 142. Results for the three months
  ended March 31, 2002 have been prepared in accordance with SFAS 142.
  
  A transitional assessment of goodwill impairment as of January 1, 2002 has not
  yet been completed. Any cumulative effect will be recognised in a later quarter
  and the first quarter restated.
  -11-
  3 months to            3 months to
                                                                              March 31, 2002         March 31, 2001
                                                                                       $'000                  $'000
                                                                            ----------------       ----------------
  Reported net income                                                                 56,802                 41,465
  Add back: Goodwill amortization                                                          -                  2,711
                                                                            ----------------       ----------------
  Adjusted net income                                                                 56,802                 44,176
  Interest charged on convertible debt, net of tax                                     1,397                      -
                                                                            ----------------       ----------------
  Numerator for diluted net income/(loss) per share                                   58,199                 44,176
                                                                            ----------------       ----------------
  Weighted average number of shares:                                           No. of shares          No. of shares
                                                                            ----------------       ----------------
  Basic                                                                          499,926,390            488,448,379
  Diluted                                                                        524,865,259            500,699,108
  
  Basic earnings per share:
  Reported net income                                                                  11.4c                   8.5c
  Goodwill amortization (net of tax effect)                                                -                   0.5c
                                                                            ----------------       ----------------
  Adjusted net income                                                                  11.4c                   9.0c
                                                                            ----------------       ----------------
  Diluted earnings per share:
  Reported net income                                                                  11.1c                   8.3c
  Goodwill amortization (net of tax effect)                                                -                   0.5c
                                                                            ----------------       ----------------
  Adjusted net income                                                                  11.1c                   8.8c
                                                                            ----------------       ----------------
  The calculation of the diluted weighted average number of shares for the three
  months ended March 31, 2001 excludes the effects of convertible debt because it
  has an antidilutive effect.
  
  There is no tax effect related to the inclusion of goodwill amortisation in the
  earnings calculation disclosed above.
  
  b) Intangible fixed assets
  
                                             March 31, 2002      March 31, 2001
                                                      $'000               $'000
                                               ------------        ------------
  Intellectual property rights acquired             459,506             479,284
  Less: Accumulated amortization                   (91,768)            (87,885)
                                               ------------        ------------
                                                    367,738             391,399
                                               ------------        ------------
  
  The useful economic lives of all intangible assets have been reassessed in
  accordance with the Standard, and Group management is satisfied that no changes
  are necessary to amortization periods, and that intangible assets will continue
  to be amortized at their current rate.
  
  Management estimates that the annual amortization charge in respect of
  intangible fixed assets held at March 31, 2002 will be approximately $30 million
  for each of the five years to March 31, 2007. Estimated amortization expense can
  be affected by various factors including future acquisitions and disposals of
  product rights.
  
  6. Long-term debt
  
  During the first three months of 2002, the Company did not issue debt or make
  any debt repayments. During the first quarter in 2001, the Company repaid in
  full amounts due to GSK under a promissory note totalling $76.5 million.
  -12-
  
  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       lated    hensive       ers'
                          Amount      Shares     Amount      shares        capital      surplus    losses      equity
                          $'000       000's       $'000       000's         $'000        $'000      $'000       $'000
                        ----------- ----------- ------------------------------------------------------------------------
  As at January 1,
  2002                      39,861     481,817    277,386       5,979     1,014,796     23,955    (93,009)   1,262,989
  Net income                     -           -          -           -             -     56,802           -      56,802
  Foreign currency
  translation                    -           -          -           -             -          -     (5,964)     (5,964)
  Exchange of
  exchangeable shares            -         288    (4,440)        (96)         4,440          -           -           -
  Options exercised             37         510          -           -           742          -           -         779
  Stock option
  compensation                   -           -          -           -         (302)          -           -       (302)
  Tax benefit
  associated with
  exercise of stock
  options                        -           -          -           -           590          -           -         590
                        ----------- ----------- ----------- ----------- ------------ ----------- ----------- -----------
  As at March 31, 2002
                            39,898     482,615    272,946       5,883     1,020,266     80,757    (98,973)   1,314,894
                        ----------- ----------- ----------- ----------- ------------ ----------- ----------- -----------
  Each exchangeable share is exchangeable into 3 ordinary shares.
  
  8. Contingent liabilities
  
  (i) Phentermine
  
  Shire US Inc. (SUS) is a defendant in 14 lawsuits still pending in both U.S.
  federal and state courts which seek damages for, among other things, personal
  injury arising from phentermine products supplied for the treatment of obesity
  by SUS and several other pharmaceutical companies. SUS, formerly known as Shire
  Richwood Inc., has been sued as a manufacturer and distributor of phentermine,
  an anorectic used in the short-term treatment of obesity and one of the products
  addressed by the lawsuits. The suits relate to phentermine either alone or
  together with fenfluramine or dexenfluramine. The lawsuits generally allege the
  following claims: the defendants marketed phentermine and other products for the
  treatment of obesity and misled users about the products and territory dangers
  associated with them; the defendants failed adequately to test phentermine
  individually and when taken in combination with the other drugs; and the
  defendants knew or should have known about the negative effects of the drugs and
  should have informed the public about such risks and/or failed to provide
  appropriate warning labels. SUS has been named as a defendant in a total of
  approximately 3,800 such phentermine lawsuits, but in all but the fourteen cases
  described above, SUS has been dismissed as a defendant.
  
  SUS became involved with phentermine through its acquisition of certain assets
  of Rexar in January 1994. In addition to SUS potentially incurring liability as
  a result of its own production of Oby-Cap, a phentermine product, the plaintiffs
  may additionally seek to impose liability on SUS as successor to Rexar. SUS
  intends vigorously to defend all the lawsuits and pursue all available
  reasonable defenses. SUS denies liability on a number of grounds including lack
  of scientific evidence that phentermine, properly prescribed, causes the alleged
  side effects and that SUS did not promote phentermine for long-term combined use
  as part of the "fen/phen" diet. Accordingly, SUS intends to defend vigorously
  any and all claims made against the Group in respect of phentermine and believes
  that liability is neither probable nor quantifiable at this stage of litigation.
  Legal expenses have been paid by Eon Labs Manufacturing Inc. (Eon), the supplier
  to SUS, or Eon's insurance carriers but such insurance is now exhausted. Eon has
  agreed to defend and indemnify SUS in this litigation pursuant to an agreement
  dated November 30, 2000 between Eon and SUS.
  -13-
  
  At the present stage of litigation, Shire is unable to estimate the level of
  future legal costs after taking into account any available product liability
  insurance and enforceable indemnities. To the extent that any legal costs are
  not covered by insurance or available indemnities, these will be expensed as
  incurred.
  
  (ii) ADDERALL
  On September 22, 2000, a lawsuit was filed against Shire in the United States
  District Court for the District of North Dakota. The suit involves an incident
  in 1999 in which a young North Dakota man, Ryan Ehlis, shot and killed his
  infant daughter and wounded himself, allegedly as a result of a psychotic
  reaction to ADDERALL. Mr Ehlis' physician had prescribed ADDERALL for the
  treatment of ADHD. Shire filed its answer to the complaint on November 24, 2000
  and discovery related to the litigation is ongoing. Shire intends to
  vigorouslydefend such action.
  
  On October 3, 2001, a lawsuit was filed against Shire in Boone County Kentucky
  Circuit Court. The suit involves an automobile accident that is alleged to have
  been the result of a psychotic episode experienced by the driver of the car
  following an ingestion of ADDERALL. As a result of the accident, the driver's
  young son was killed. Shire has filed an answer to this lawsuit and intends to
  vigorously defend such action.
  
  On July 27, 2001, Shire received service of a complaint filed in state court in
  Texas that alleged that ADDERALL caused or contributed to a stroke. The
  plaintiff, an adult female aged 39, was prescribed ADDERALL as treatment for her
  ADHD. The complaint alleges that the plaintiff used ADDERALL during the period
  from January 1999 to September 1999. Also named as defendants are two doctors
  who were involved in diagnosing the plaintiff's ADHD and for prescribing
  ADDERALL for its treatment. Discovery in this litigation is ongoing. Shire
  intends to vigorously defend such action.
  
  (iii) AGRYLIN
  SUS. has been named as a defendant in a recently filed lawsuit in a Texas state
  court involving AGRYLIN. The complaint was filed in late December and served on
  Shire on December 26, 2001. Shire's contract manufacturer for AGRYLIN,
  Mallinckrodt, Inc., is also a named defendant.
  
  The complaint alleges that the Plaintiff suffered a debilitating stroke due to
  the fact that the Plaintiff was allegedly unable to procure this product in some
  fashion. Shire has filed an answer to the complaint in which it denies the
  allegations in the Plaintiffs original petition. Shire intends to vigorously
  defend such action.
  
  (iv) Emory
  Shire BioChem is involved in worldwide patent disputes with Emory University
  ("Emory") relating to lamivudine wherein Shire BioChem is opposing certain
  patents and patent applications of Emory and wherein Emory is opposing certain
  patents and patent applications of Shire BioChem. Further detail regarding these
  disputes is provided below. In November 2001, Shire and GlaxoSmithKline ("GSK")
  signed an agreement as to the key terms of a global settlement agreement with
  Emory. The parties are in the process of finalizing the settlement agreement.
  Pursuant to the settlement agreement, Emory will grant Shire and GSK an
  exclusive license under Emory's patent rights for lamivudine. The agreement
  provides for the resolution of the below noted worldwide patent disputes between
  the parties relating to lamivudine. The settlement involves an upfront payment
  to Emory by Shire of $2.5 million and a royalty payment from Shire of 0.5% on
  worldwide sales of lamivudine over an 11 year period commencing on January 1,
  2001 and a licence under Shire's FTC patent rights, in consideration for the
  settlement of all claims against Shire and GSK relating to lamivudine. The total
  cost to Shire in 2001 of the settlement (including upfront payment) was $7.7
  million.
  
  Emory filed oppositions to two of Shire BioChem's granted patent applications in
  Europe which cover oxathiolane nucleosides including lamivudine and dioxolane
  nucleosides, including troxacitabine, related nucleoside analogues and use of
  these analogues for treating viral infections. In oral hearings held in 1999,
  both of these oppositions were dismissed by the Opposition Division of the
  European Patent Office. Emory is not pursuing its appeal of the decision
  relating to oxathiolanes. Emory has not to date filed revocation actions with
  respect to any Shire BioChem lamivudine patents in issue in individual European
  countries.
  
  Emory has filed an appeal against the dioxolane-related decision and this appeal
  is pending in the European Patent Office. This appeal does not relate to
  lamivudine and is not included in the settlement agreement with Emory.
  
  In Japan, Emory filed an opposition to Shire 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
  -14-
  
  dismissed Emory's opposition to Shire BioChem's patent covering lamivudine.
  Emory has filed revocation actions in Australia and South Korea against Shire
  BioChem's granted patents covering lamivudine. Shire BioChem is aggressively
  defending these patents.
  
  On July 23, 1996, Emory filed a complaint in the U.S. alleging infringement from
  the commercialization of EPIVIR by Shire BioChem and GSK, Shire BioChem's
  exclusive licensee in the U.S., of an Emory U.S. patent granted that same day.
  Shire BioChem considers this patent infringement suit to be without merit and
  has successfully challenged the validity of Emory's patent.
  
  On May 19, 1998, the USPTO declared an interference between the Emory patent
  that is the subject of a lawsuit and a pending patent application of Shire
  BioChem. The Board of Patent Appeals and Interferences issued a decision on
  December 21, 2000 invalidating Emory's patent. Emory has appealed the decision.
  Pusuant to the lamivudine settlement agreement, Emory will accept the Board's
  decision as final and the infringement suit will be dismissed with prejudice.
  
  Emory has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. Shire BioChem and GSK filed an
  opposition to this grant and are vigorously opposing the grant. An examined
  patent application, filed by Emory claiming lamivudine, was successfully opposed
  by Shire BioChem in Australia and Norway. Emory has filed an appeal from the
  Australian decision in the Federal Court of Australia. Shire BioChem also filed
  an appeal from certain portions of the decision. An examined patent application
  filed by Emory claiming lamivudine was also opposed by Shire 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's claims. There can be no assurance that Emory will not be able to
  overcome this rejection.
  
  An examined patent application filed by Emory claiming lamivudine was opposed by
  Shire BioChem and GSK in South Korea and such Emory claims to lamivudine were
  cancelled by the South Korean Patent Office. Shire BioChem is aware that Emory
  has filed patent applications in other countries, which Shire BioChem believes
  may claim similar subject matter.
  
  (v) Yale
  On November 23, 1999, the USPTO declared an interference between Shire's
  hepatitis B patent for lamivudine and a patent application filed by Yale
  University (Yale) claiming methods of treating hepatitis B using lamivudine. The
  Company believes that this application is licensed to Vion Pharmaceuticals, Inc.
  (Vion), formerly known as OncoRx, Inc., a New Haven, Connecticut-based company.
  On March 28, 2002, the Board of Patent Appeals and Interferences issued an order
  awarding priority to the Company's patent. There can also be no reassurance that
  Yale will not appeal from the Board's judgement on priority against Yale and, if
  successful, obtain claims in the US directed to methods of treatment for
  hepatitis B using lamivudine. The Company is not aware of corresponding patent
  applications by Yale or Vion in countries other than the US.
  
  On April 14, 2000, the USPTO declared a further interference between BioChem's
  hepatitis B patent for lamivudine and a patent application by GSK claiming
  methods of treating hepatitis B using lamivudine. There is no guarantee that
  Shire will be successful in this interference and that Shire's patent will be
  maintained.
  
  (vi) Commitments
  The Company has undertaken to subscribe to interests in companies and
  partnerships for amounts totalling $37,790 million. As at March 31, 2002 an
  amount of $22,372 million (March 31, 2001: $17,217 million) has been subscribed.
  In addition, the Company has undertaken to subscribe to additional amounts and
  to pay royalties on certain future sales upon realization of certain conditions.
  
  (vii) FLUVIRAL
  The Company has signed a ten-year contract with the Government of Canada to
  assure a state of readiness in the case of an influenza pandemic (worldwide
  epidemic) and to provide influenza vaccine for all Canadian citizens in such an
  event. Under the contract, Shire Biologics will also supply the Government of
  Canada with a substantial proportion of its annual influenza vaccine
  requirements over the ten-year period. The value of the agreement may exceed
  Cdn$300 million (approximately $190 million) over the ten-year term, with an
  option for the Government of Canada to extend the contract.
  
  The concept of a state of readiness against an influenza pandemic requires the
  development of sufficient infrastructure and capacity in Canada to provide 100%
  of domestic vaccine needs in the event of an influenza
  -15-
  
  pandemic. Canada would require 32 million doses of single-strain (monovalent)
  flu vaccine within a production period of 16 weeks. Shire Biologics will
  therefore begin expanding its current production capacity in order to meet this
  objective within a five-year period.
  
  Shire Biologics is committed to Cdn$4.5 million (approximately $2.8 million) of
  capital expenditure on immoveables for the purpose of achieving the level of
  pandemic readiness required. In addition, a performance bond equal to 10% of the
  minimum estimated contract value in any year, which for 2001/2002 is Cdn$17.5
  million (approximately $11 million), would become payable to the Government of
  Canada if contracted penalty clauses were triggered.
  
  (vii) Other matters
  In addition, the Company is involved in other claims and lawsuits in the normal
  course of business. It is not possible at this time to determine the ultimate
  outcome of any of these claims.
  
  ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
          of Operations
  
  The results for the three months ended March 31, 2001 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 March 31, 2002, as compared
  with those for the three months ended March 31, 2001
  
  Overview of financial results
  Total revenues for the three months ended March 31, 2002 increased by 30 per
  cent to $243.2 million as compared to the three months ended March 31, 2001. The
  Company recorded a first quarter net income of $56.8 million (2001: $41.5
  million), an increase of 37 per cent.
  
  Sales and marketing
  Product sales of $202.7 million, which represented 83 per cent of total
  revenues, increased by 34 per cent over first quarter 2001 product sales of
  $151.5 million. Product sales in the U.S. continue to represent a significant
  percentage of our worldwide sales, 86 per cent in the three months ended March
  31, 2002 (2001: 84 per cent).
  
  The Company manages and controls the sales and marketing operations on
  geographic lines. The following table presents the Company's net product sales
  by individual operating segment:
  
  Product sales by segment         3 months to       3 months to
                                March 31, 2002    March 31, 2001
                                         $'000             $'000         % change
  
  U.S.                                 173,524           126,804              +37
  International                         29,194            24,710              +18
                                  ------------      ------------     ------------
  Total product sales                  202,718           151,514              +34
                                  ------------      ------------     ------------
  
  First quarter combined sales of ADDERALL XR and ADDERALL, marketed in the U.S.
  for the treatment of Attention Deficit Hyperactivity Disorder (ADHD), were
  $108.0 million, representing growth of 54 per cent over the first quarter of
  2001. ADDERALL XR and ADDERALL had a 31 per cent share of the prescription
  market for ADHD in the U.S. in March 2002 compared to 33 per cent in March 2001.
  
  Since the launch of ADDERALL XR and a generic version of ADDERALL, the combined
  amphetamine market represents 40 per cent of the total US ADHD market compared
  with 33 per cent prior to these launches.
  
  To support a successful launch of ADDERALL XR, we extended certain sales terms
  to our customers (limited to $28 million of ADDERALL XR launch stock) to
  encourage the immediate fulfilment of distribution inventory levels. $11 million
  of this launch stock was booked as sales in Q4 2001. We have recognized the
  balance of $17 million of ADDERALL XR shipments as realisable and earned in Q1
  2002.
  -16-
  
  Sales of AGRYLIN, the only U.S. product licensed for the treatment of essential
  thrombocythemia were $23.4 million, a 37 per cent increase over first quarter
  2001 sales of $17.1 million. Shire achieved a prescription share of 26 per cent
  of the total U.S. AGRYLIN market, including Hydrea and generic hydroxyurea, in
  March 2002 compared to 20 per cent in March 2001.
  
  Sales of PENTASA, licensed for the treatment of ulcerative colitis, at $17.5
  million, were 22 per cent higher than the comparable period last year. PENTASA
  had a 18 per cent share of the oral mesalamine/obsalazine market in March 2002
  and March 2001.
  
  Sales of PROAMATINE, for the treatment of postural hypotension, were $9.6
  million, 26 per cent higher than first quarter 2001 sales of $7.6 million. The
  U.S. prescription market for PROAMATINE and Florinef prescriptions indiciates
  that PROAMATINE had a 24 per cent share in March 2002, an increase from 22 per
  cent in March 2001.
  
  CARBATROL containing carbamazapine for the treatment of epilepsy, recorded sales
  growth of 20 per cent from sales of $9.6 million in the three months ended March
  31, 2001 to $11.6 million in the three months ended March 31, 2002. This
  translates to 36 per cent of the U.S. extended release carbamazepine
  prescription market in March 2002, compared to 33 per cent in March 2001.
  
  Royalties
  Royalties increased by $6.7 million in the three months ended March 31, 2002, up
  20 per cent from the three months ended March 31, 2001, to $39.6 million. The
  Company receives royalties from GlaxoSmithKline on the worldwide sales of 3TC,
  for the treatment of HIV infection / AIDS, and ZEFFIX, an oral treatment for
  chronic hepatitis B, with the exception of Canada where a commercialisation
  partnership with GSK exists. ZEFFIX royalties, which represented 13 per cent of
  Shire's royalty income in the first quarter 2002, increased by 40 per cent. The
  Company also receives royalties from J&J on sales of REMINYL, for the treatment
  of Alzheimer's disease.
  
  Cost of revenues
  Gross margin on product sales increased from 81 per cent for the three months
  ended March 31, 2001 to 87 per cent for the three months ended March 31, 2002.
  This is a reflection of the product mix as the higher margin products, ADDERALL
  XR, ADDERALL and AGRYLIN, represented approximately 65 per cent of total product
  sales in the three months ended March 31, 2002 compared to 58 per cent in the
  three months ended March 31, 2001. Improved pricing in respect of the ADHD
  franchise has also contributed to the higher gross margin for the three months
  ended March 31, 2002.
  
  Research and development
  Research and development expenditure increased 32 per cent to $49.7 million for
  the three months ended March 31, 2002 (2001: $37.7 million). R&D expenditure in
  first quarter 2002 represented 20 per cent of revenues, consistent with the
  first quarter 2001.
  
  Selling, general and administrative
  Selling, general and administrative expenses, excluding the effects of a stock
  option compensation credit of $0.3 million (2001: charge $2.1 million) and
  depreciation and amortization of $10.2 million (2001: $10.8 million), increased
  by 50 per cent to $84.2 million for the three months ended March 31, 2002 (2001:
  $56.2 million). This reflects the sustained high level of promotional spend
  associated with the ADDERALL XR launch. As a percentage of product sales,
  selling, general and administrative costs represented 42 per cent for the first
  quarter 2002 (2001: 37 per cent).
  
  The 6 per cent decrease in depreciation and amortization for the three months
  ended March 31, 2002 is attributable to the introduction of a new US reporting
  standard (SFAS No. 142 "Goodwill and Other Intangible Assets"), under which
  goodwill is no longer amortised.
  
  Interest income and expense
  For the three months ended March 31, 2002, the Company received interest income
  of $4.7 million (Q1 2001: $5.1 million). Interest expense decreased from $3.0
  million to $2.0 million. This decrease reflects an improved debt profile
  resulting from the repayment of a $125 million term loan in May 2001 and the
  subsequent issue of the $400 million convertible notes in August 2001, which
  bear interest at the comparatively lower fixed rate of 2% per annum.
  -17-
  
  Income taxes
  For the three months ended March 31, 2002 income taxes increased $6.8 million to
  $20.7 million from $13.9 million for the three months ended March 31, 2001. The
  Company's effective tax rate before the stock compensation credit was 27 per
  cent for the three months ended March 31, 2002 (Q1 2001: 25 per cent). The
  Company has recorded net deferred tax assets of $35.2 million at March 31, 2002.
  Realization is dependent upon generating sufficient taxable income to utilize
  such assets. Although realization on these assets is not assured, management
  believes it is more likely than not that the deferred tax assets will be
  realized.
  
  Liquidity and Financial Condition
  The Company's funding requirements depend on a number of factors, including the
  Company's product development programs, business and product acquisitions, the
  level of resources required for the expansion of marketing capabilities as the
  product base expands, increased investment in accounts receivable and inventory
  which may arise as sales levels increase, competitive and technological
  developments, the timing and cost of obtaining required regulatory approvals for
  new products and the continuing revenues generated from sales of its key
  products.
  
  At March 31, 2002, the Company had net cash funds available as follows:
  
                                                  March 31,         December 31,
                                                       2002                 2001
                                                      $'000                $'000
                                             --------------       --------------
  Cash and cash equivalents                         706,457              118,040
  Marketable securities and other current
    asset investments                               237,113              723,911
  Debt                                            (406,967)            (406,806)
                                             --------------       --------------
  Net cash                                          536,603              435,145
                                             --------------       --------------
  
  Net cash provided by operating activities for the three months ended March 31,
  2002 was $105.8 million compared to $63.4 million for the three months ended
  March 31, 2001.
  
  Investing activities provided $481.9 million for the three months ended March
  31, 2002 (2001: $139.8 million). This was due to an inflow of $486.8 million
  cash by reducing cash placed on short-term deposit, and outflows in respect of
  net capital expenditure on long-term investments and fixed assets of $4.9
  million.
  
  Investing activities for the three months ended March 31, 2001 included $46.0
  million from the redemption of marketable securities, an inflow of $130.0
  million cash by reducing cash placed on short-term deposit, and outflows in
  respect of net capital expenditure on long-term investments, intangible assets
  and fixed assets of $36.2 million.
  
  Financing activities provided $0.8 million from exercises of employee stock
  options for the three months ended March 31, 2002.
  
  Financing activities for the three months ended March 31, 2001, which totalled a
  $72.3 million outflow, included $4.3 million received from exercises of employee
  stock options and repayments of long-term debt of $76.5 million.
  
  Capital expenditure
  Capital expenditure on tangible fixed assets for the three months ended March
  31, 2002 was $3.1 million, which primarily related to laboratory and computer
  equipment purchased across the Group. Other capital expenditure related to the
  purchase of long-term investments ($1.8 million).
  
  Capital expenditure on tangible fixed assets for the three months ended March
  31, 2001 was $2.6 million. This included $1.5 million for tangible fixed assets
  related to the Group's head office facility purchased in quarter four 2000, the
  purchase of research and development equipment, and investment in computer
  equipment across all operational areas. Capital expenditure on new products of
  $25.7 million included $18.4 million for new products to be marketed by the
  Group's Spanish and Italian operations. Other capital expenditure related to the
  purchase of long-term investments ($8.5 million).
  -18-
  
  ITEM 3.  Qualitative and Quantitative Disclosures about Market Risk
  
  There have been no material changes in the Group's market risk exposure since
  December 31, 2001. Item 7A of the Group's Annual Report on Form 10-K for the
  year ended December 31, 2001 contains a detailed discussion of the Group's
  market risk exposure in relation to interest rate market risk and foreign
  exchange market risk.
  
  PART II.   OTHER INFORMATION
  
  ITEM 1. LEGAL PROCEEDINGS
  (i) Phentermine
  Until April 1998, Shire US Inc. ("SUS', and formerly known as Shire Richwood
  Inc.) 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 SUS has ceased to
  distribute phentermine, the drug remains both approved and available in the U.S.
  SUS 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. ) SUS is a defendant in 14 lawsuits still pending in
  both U.S. federal and state courts related to phentermine. 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 SUS did not promote phentermine for long term combined use as part of
  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.
  
  Legal expenses have been paid by Eon Labs Manufacturing Inc. ("Eon"), the
  supplier to SUS or Eon's insurance carriers but such insurance is now exhausted.
  Eon has agreed to defend and indemnify SUS in this litigation pursuant to an
  agreement dated November 30, 2000 between Eon and SUS.
  
  At the present stage of litigation, Shire is unable to estimate the level of
  future legal costs after taking into account any available product liability
  insurance and enforceable indemnities. To the extent that any legal costs are
  not covered by insurance or available indemnities, these will be expensed as
  incurred.
  
  (ii) ADDERALL
  On September 22, 2000, a lawsuit was filed against Shire in the United States
  District Court for the District of North Dakota. The suit involves an incident
  in 1999 in which a young North Dakota man, Ryan Ehlis, shot and killed his
  infant daughter and wounded himself, allegedly as a result of a psychotic
  reaction to ADDERALL. Mr Ehlis' physician had prescribed ADDERALL for the
  treatment of ADHD. Shire filed its answer to the complaint on November 24, 2000
  and discovery related to the litigation is ongoing. Shire intends to vigorously
  defend such action.
  
  On July 27, 2001, Shire received service of a complaint filed in state court in
  Texas that alleged that ADDERALL caused or contributed to a stroke. The
  plaintiff, an adult female aged 39, was prescribed ADDERALL as treatment for her
  ADHD. The complaint alleges that the plaintiff used ADDERALL during the period
  from January 1999 to September 1999. Also named as defendants are two doctors
  who were involved in diagnosing the plaintiff's ADHD and for prescribing
  ADDERALL for its treatment. Discovery in this litigation is ongoing. Shire
  intends to vigorously defend such action.
  
  On October 3, 2001, a lawsuit was filed against Shire in Boone County Kentucky
  Circuit Court. The suit involves an automobile accident that is alleged to have
  been the result of a psychotic episode experienced by the driver of the car
  following an ingestion of ADDERALL. As a result of the accident, the driver's
  young son was killed. Shire has filed an answer to this lawsuit and intends to
  vigorously defend such action.
  -19-
  
  (iii) AGRYLIN
  Shire US Inc. has been named as a defendant in a recently filed lawsuit in a
  Texas state court involving AGRYLIN. The complaint was filed in late December
  and served on Shire on December 26, 2001. Shire's contract manufacturer for
  AGRYLIN, Mallinckrodt, Inc., is also a named defendant.
  
  The complaint alleges that the Plaintiff suffered a debilitating stroke due to
  the fact that the Plaintiff was allegedly unable to procure this product in some
  fashion. Shire has filed an answer to the complaint in which it denies the
  allegations in the Plaintiffs original petition. Shire intends to vigorously
  defend such action.
  
  (iv) Emory
  Shire BioChem is involved in worldwide patent disputes with Emory University
  ("Emory") relating to lamivudine wherein Shire BioChem is opposing certain
  patents and patent applications of Emory and wherein Emory is opposing certain
  patents and patent applications of Shire BioChem. Further detail regarding these
  disputes is provided below. In November 2001, Shire and GlaxoSmithKline ("GSK")
  signed an agreement as to the key terms of a global settlement agreement with
  Emory. The parties are in the process of finalizing the settlement agreement.
  Pursuant to the settlement agreement, Emory will grant Shire and GSK an
  exclusive license under Emory's patent rights for lamivudine. The agreement
  provides for the resolution of the below noted worldwide patent disputes between
  the parties relating to lamivudine. The settlement involves an upfront payment
  to Emory by Shire of $2.5 million and a royalty payment from Shire of 0.5% on
  worldwide sales of lamivudine over an 11 year period commencing on January 1,
  2001 and a licence under Shire's FTC patent rights, in consideration for the
  settlement of all claims against Shire and GSK relating to lamivudine. The total
  cost to Shire in 2001 of the settlement (including upfront payment) was $7.7
  million.
  
  Emory filed oppositions to two of Shire BioChem's granted patent applications in
  Europe which cover oxathiolane nucleosides including lamivudine and dioxolane
  nucleosides, including troxacitabine, related nucleoside analogues and use of
  these analogues for treating viral infections. In oral hearings held in 1999,
  both of these oppositions were dismissed by the Opposition Division of the
  European Patent Office. Emory is not pursuing its appeal of the decision
  relating to oxathiolanes. Emory has not to date filed revocation actions with
  respect to any Shire BioChem lamivudine patents in issue in individual European
  countries.
  
  Emory has filed an appeal against the dioxolane-related decision and this appeal
  is pending in the European Patent Office. This appeal does not relate to
  lamivudine and is not included in the settlement agreement with Emory.
  
  In Japan, Emory filed an opposition to Shire 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's
  opposition to Shire BioChem's patent covering lamivudine. Emory has filed
  revocation actions in Australia and South Korea against Shire BioChem's granted
  patents covering lamivudine. Shire BioChem is aggressively defending these
  patents.
  
  On July 23, 1996, Emory filed a complaint in the U.S. alleging infringement from
  the commercialization of EPIVIR by Shire BioChem and GSK, Shire BioChem's
  exclusive licensee in the U.S., of an Emory U.S. patent granted that same day.
  Shire BioChem considers this patent infringement suit to be without merit and
  has successfully challenged the validity of Emory's patent.
  
  On May 19, 1998, the USPTO declared an interference between the Emory patent
  that is the subject of a lawsuit and a pending patent application of Shire
  BioChem. The Board of Patent Appeals and Interferences issued a decision on
  December 21, 2000 invalidating Emory's patent. Emory has appealed the decision.
  Pusuant to the lamivudine settlement agreement, Emory will accept the Board's
  decision as final and the infringement suit will be dismissed with prejudice.
  
  Emory has obtained a granted patent application in Europe relating to
  oxathiolane nucleosides, including lamivudine. Shire BioChem and GSK filed an
  opposition to this grant and are vigorously opposing the grant. An examined
  patent application, filed by Emory claiming lamivudine, was successfully opposed
  by Shire BioChem in Australia and Norway. Emory has filed an appeal from the
  Australian decision in the Federal Court of Australia. Shire BioChem also filed
  an appeal from certain portions of the decision. An examined patent application
  filed by Emory claiming lamivudine was also opposed by Shire BioChem in Japan.
  The opposition was dismissed in April 1999 because it was improperly filed by a
  representative who had previously represented
  -20-
  
  Emory. Notwithstanding the dismissal, the Japanese Patent Office issued an
  ex-officio action rejecting all of Emory's claims. There can be no assurance
  that Emory will not be able to overcome this rejection.
  
  An examined patent application filed by Emory claiming lamivudine was opposed
  by Shire BioChem and GSK in South Korea and such Emory claims to lamivudine were
  cancelled by the South Korean Patent Office. Shire BioChem is aware that Emory
  has filed patent applications in other countries, which Shire BioChem believes
  may claim similar subject matter.
  
  (v) Yale
  On November 23, 1999, the USPTO declared an interference between Shire's
  hepatitis B patent for lamivudine and a patent application filed by Yale
  University (Yale) claiming methods of treating hepatitis B using lamivudine. The
  Company believes that this application is licensed to Vion Pharmaceuticals, Inc.
  (Vion), formerly known as OncoRx, Inc., a New Haven, Connecticut-based company.
  On March 28, 2002, the Board of Patent Appeals and Interferences issued an order
  awarding priority to the Company's patent. There can also be no reassurance that
  Yale will not appeal from the Board's judgement on priority against Yale and, if
  successful, obtain claims in the US directed to methods of treatment for
  hepatitis B using lamivudine. The Company is not aware of corresponding patent
  applications by Yale or Vion in countries other than the US.
  
  On April 14, 2000, the USPTO declared a further interference between BioChem's
  hepatitis B patent for lamivudine and a patent application by GSK claiming
  methods of treating hepatitis B using lamivudine. There is no guarantee that
  Shire will be successful in this interference and that Shire's patent will be
  maintained.
  -21-
  
  ITEM 2. CHANGES IN SECURITIES
  
  None
  
  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
  
  None
  
  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:    May 14, 2002                       By:  /s/ Angus C Russell
                                                   -------------------------------
                                                   Angus C Russell
                                                   Group Finance Director
  
  Date:    May 14, 2002                       By:  /s/ Rolf Stahel
                                                   -------------------------------
                                                   Rolf Stahel
                                                   Chief Executive