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, 2001
  
                           Commission File Number: 0-29630
  
                           SHIRE PHARMACEUTICALS GROUP PLC
               (Exact name of registrant as specified in its charter)
  
                      England and Wales                              N.A.
                (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 April 24, 20001
    Common Stock: Ordinary Shares               258,031,902
  
  
  
  
  
  
  <PAGE>
  
  
  THE "SAFE HARBOR" STATEMENT UNDER SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
  1934 (AMENDED) AND SECTION 27A OF THE SECURITIES ACT OF 1933 (AMENDED). The
  statements in this form 10-Q that are not historical facts are forward-looking
  statements that involve risks and uncertainties, including but not limited to,
  risks associated with the inherent uncertainty of pharmaceutical research,
  product development and commercialization, the impact of competitive products,
  patents, and other risks and uncertainties, including those detailed from time
  to time in periodic reports, including the Annual Report filed on Form 10-K by
  Shire with the Securities and Exchange Commission.
  
  
  
  <PAGE>
  
  
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  Financial Statements
  
                           SHIRE PHARMACEUTICALS GROUP PLC
  
                             CONSOLIDATED BALANCE SHEETS
  
           (In thousands of U.S. dollars, except share and per share data)
  
                               March 31, December 31,
  <TABLE>
  <CAPTION>
                                                                                 2001                  2000
                                                                          (Unaudited)
  <S>                                                                   <C>                    <C>
  ASSETS                                                                  -----------           -----------
  Current assets:
  Cash and cash equivalents                                                    82,835                46,598
  Marketable securities and other current asset investments                   142,553               139,745
  Accounts receivable, net                                                     70,993                93,830
  Inventories, net                                                             43,773                47,109
  Deferred tax asset                                                           18,722                26,971
  Prepaid expenses and other current assets                                    14,373                 9,736
                                                                         ------------          ------------
  Total current assets                                                        373,249               363,989
  
  Investments                                                                   5,756                 6,139
  Property, plant and equipment, net                                           47,867                49,685
  Intangible assets, net                                                      561,458               556,013
  Deferred tax asset                                                            8,047                 6,298
  Other assets                                                                 21,850                22,608
                                                                         ------------          ------------
  Total assets                                                              1,018,227             1,004,732
                                                                         ------------          ------------
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
  Current installments of long-term debt                                        1,470                 1,448
  Accounts and notes payable                                                   97,313                99,437
  Other current liabilities                                                    19,765                10,528
                                                                         ------------          ------------
  Total current liabilities                                                   118,548               111,413
  
  Long-term debt, excluding current instalments                               126,436               126,364
  Other long-term liabilities                                                  11,532                14,196
                                                                         ------------          ------------
  Total liabilities                                                           256,516               251,973
                                                                         ------------          ------------
  Shareholders' equity:
  Common stock, 5p par value; 400,000,000 shares authorized; and
  257,950,135 shares issued and outstanding (2000: 257,088,451)                21,097                21,035
  Additional paid-in capital                                                  945,735               938,493
  Accumulated other comprehensive losses                                     (52,121)              (27,814)
  Accumulated deficit                                                       (153,000)             (178,955)
                                                                         ------------          ------------
  Total shareholders' equity                                                  761,711               752,759
                                                                         ------------          ------------
  Total liabilities and shareholders' equity                                1,018,227             1,004,732
                                                                         ------------          ------------
  </TABLE>
  
  
      The accompanying notes are an integral part of these financial statements
  
  <PAGE>
  
  
                           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 to               3 months to
                                                                                March 31, 2001            March 31, 2000
                                                                                  ------------              ------------
  <S>                                                                             <C>                       <C>
  Product sales                                                                        151,404                   113,165
  Licensing and development                                                              3,041                     4,910
  Royalties                                                                                921                       605
  Other revenues                                                                           275                       298
                                                                                  ------------              ------------
  Total revenues                                                                       155,641                   118,978
  
  Costs and expenses:
  Cost of revenues                                                                      27,713                    20,905
  Research and development                                                              27,165                    26,072
  Selling, general and administrative (inclusive of stock option
  compensation charge of $2,121 and $23,246 respectively)                               60,238                    66,046
  Losses on disposal of assets                                                             607                         -
                                                                                  ------------              ------------
  Total operating expenses                                                             115,723                   113,023
                                                                                  ------------              ------------
  Operating income                                                                      39,918                     5,955
  
  Interest income                                                                        2,536                     1,371
  Interest expense                                                                     (2,801)                   (3,405)
  Other expense                                                                        (1,668)                     (431)
                                                                                  ------------              ------------
  Total other expenses, net                                                            (1,933)                   (2,465)
                                                                                   -----------               -----------
  Income before income taxes                                                            37,985                     3,490
  
  Income taxes                                                                        (12,030)                   (7,756)
                                                                                  ------------              ------------
  Net income/(loss)                                                                     25,955                   (4,266)
                                                                                  ------------              ------------
  
  Net income/(loss) per share:
  Basic                                                                                  $0.10                   ($0.02)
  Diluted                                                                                $0.10                   ($0.02)
  
  Weighted average number of shares:
  Basic                                                                            257,390,769               246,672,276
  Diluted                                                                          262,649,651               246,672,276
  
  
  </TABLE>
  
  
  <PAGE>
  
  
                           SHIRE PHARMACEUTICALS GROUP PLC
  
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
  
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
  <TABLE>
  <CAPTION>
  
                                                                                 3 months to      3 months
                                                                                  March  31,    to   March
                                                                                        2001      31, 2000
                                                                                  ----------    ----------
  <S>                                                                             <C>             <C>
  Cash flows from operating activities:
  Net income/(loss)                                                                   25,955       (4,266)
  Adjustments to reconcile net income/(loss) to net cash provided by/(used
  in) operating activities:
  Depreciation and amortization                                                        8,600         7,592
  Stock option compensation                                                            2,121        23,246
  Tax benefit of stock option compensation charged directly to equity                  3,090         1,072
  Non cash exchange gains and losses                                                (10,311)         (151)
  Loss on disposal of fixed assets                                                       607             -
  Decrease/(increase) in accounts receivable                                          22,837      (16,671)
  Decrease/(increase) in inventory                                                     3,336         (290)
  Decrease in deferred tax asset                                                       6,500             -
  (Increase)/decrease in prepayments and other current asset investments             (4,779)           683
  Decrease in other assets                                                               758         1,578
  Decrease in accounts and notes payable                                             (2,105)       (7,814)
  Increase/(decrease) in other current liabilities                                     2,601      (39,938)
  Decrease in other long term liabilities                                            (1,164)         (804)
                                                                                  ----------    ----------
  Net cash provided by/(used in) operating activities                                 58,046      (35,763)
                                                                                  ----------    ----------
  Cash flows from investing activities:
  Redemption of marketable securities, net                                            46,000        31,687
  Increase in cash placed on short-term deposit                                     (48,808)
                                                                                                   (5,363)
  Expenses of acquisition of subsidiaries                                                  -         (212)
  Purchase of intangible assets                                                     (18,335)             -
  Purchase of fixed assets                                                           (1,544)       (1,935)
  Collection on notes receivable                                                           -           520
                                                                                  ----------    ----------
  Net cash (used in)/provided by investing activities                               (22,687)        24,697
                                                                                  ----------    ----------
  
  Cash flows from financing activities:
  Movements on long term debt                                                             94       (2,549)
  Proceeds from issue of common stock                                                      -         3,033
  Payment of stock issuance costs                                                       (16)       (3,385)
  Proceeds from exercise of options                                                    2,109        27,192
                                                                                  ----------    ----------
  Net cash provided by financing activities                                            2,187        24,291
                                                                                  ----------    ----------
  Effect of foreign exchange rate changes on cash and cash equivalents               (1,309)             -
                                                                                  ----------    ----------
  Net increase in cash and cash equivalents                                           36,237        13,225
  Cash and cash equivalents at beginning of period                                    46,598        54,082
                                                                                  ----------    ----------
  Cash and cash equivalents at end of period                                          82,835        67,307
                                                                                  ----------    ----------
  
  </TABLE>
  <PAGE>
  
  
                           SHIRE PHARMACEUTICALS GROUP PLC
  
  
                CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)
  
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  
  
  <TABLE>
  <CAPTION>
                                                                            3 months to           3 months to
                                                                         March 31, 2001        March 31, 2000
                                                                           ------------          ------------
  <S>                                                                      <C>                   <C>
  Net income/(loss)                                                              25,955               (4,266)
  Foreign currency translation adjustments                                     (24,097)               (2,819)
  Unrealized holding loss on non-current investments                              (210)                     -
                                                                           ------------          ------------
  Comprehensive income/(loss)                                                     1,648               (7,085)
                                                                           ------------          ------------
  There are no tax effects related to the items included above.
  </TABLE>
  
  
  
  <PAGE>
  
  
                           SHIRE PHARMACEUTICALS GROUP PLC
  
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  
  1.       Summary of Significant Accounting Policies
  
  a) Description of Operations and Principles of Consolidation
  
  Shire Pharmaceuticals Group plc is an international specialty pharmaceutical
  company with a strategic focus on four therapeutic areas: central nervous system
  disorders, metabolic diseases, oncology and gastroenterology. The Company's
  principal products include Adderall, for the treatment of Attention Deficit
  Hyperactivity Disorder, Agrylin, for the treatment of thrombocythemia, and
  Pentasa, for the treatment of ulcerative colitis.
  
  The Group has operations in the United States, Europe and the rest of the world.
  Within these geographic operating segments, revenues are derived from three
  sources: sales of products by the Company's own sales and marketing operations,
  licensing and development fees, and royalties.
  
  The accompanying consolidated financial statements include the accounts of Shire
  Pharmaceuticals Group plc and all its subsidiary undertakings after elimination
  of intercompany accounts and transactions.
  
  b) New Accounting Pronouncements
  
  In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
  Instruments and Hedging Activities". This Statement requires that all
  derivatives be recorded in the balance sheet as either an asset or liability
  measured at its fair value and that changes in the derivative's fair value be
  recognized currently in earnings unless specific hedge accounting criteria are
  met. In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
  Instruments and Hedging Activities - Deferral of the Effective Date of FASB
  Statement No. 133". This Statement defers for one year the effective date of
  SFAS 133 to all fiscal quarters of all fiscal years beginning after June 15,
  2000.
  
  In June 2000, the FASB issued Statement No. 138, "Accounting for Certain
  Derivative Instruments and Certain Hedging Activities - an Amendment of FASB
  Statement No. 133". SFAS 138 amends SFAS 133 to (a) exclude from the scope of
  SFAS No. 133 nonfinancial assets that will be delivered in quantities expected
  to be used or sold by the company over a reasonable period in the normal course
  of business and for which physical delivery is probable, (b) permit hedging of a
  benchmark interest rate, (c) allow hedging of foreign-currency-denominated
  assets and liabilities and (d) allow for limited hedging of net foreign currency
  exposures.
  
  The Company has not entered into any derivative contracts during the three
  months ended March 31, 2001 nor were any open as of December 31, 2000.
  Accordingly, there is no impact on results of operations for the three months
  ended March 31, 2001 or on the financial position as at March 31, 2001 following
  the adoption of this statement.
  
  c) Basis of Presentation
  
  The accompanying consolidated financial statements, which include the operations
  of the Company and its wholly owned subsidiaries and the financial information
  included herein, are unaudited. They have been prepared in accordance with
  generally accepted accounting principles in the United States and Securities and
  Exchange Commission regulations for interim reporting. Certain information and
  footnote disclosures normally included in financial statements prepared in
  accordance with generally accepted accounting principles in the United States
  have been condensed or omitted pursuant to such rules and regulations. However,
  such information includes all adjustments (consisting solely of normal recurring
  adjustments), which are, in the opinion of management, necessary to fairly state
  the results of the interim periods. Interim results are not necessarily
  indicative of results to be expected for the full year. These consolidated
  financial statements should be read in conjunction with the Company's audited
  consolidated financial statements for the three years ended December 31, 2000
  and notes thereto. The results for the period ended March 31, 2001 are not
  necessarily indicative of the results that may be expected for the year ending
  December 31, 2001.
  
  
  <PAGE>
  
  
  2.       Inventory
  
                                 March 31,            March 31,
                                      2001                 2000
                                     $'000                $'000
                            --------------       --------------
  Finished goods                    20,970               27,720
  Work-in-process                   12,520                6,008
  Raw materials                     10,283                6,100
                            --------------       --------------
                                    43,773               39,828
                            --------------       --------------
  
  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 geographic, each being
  managed and monitored separately and serving different markets. The Company
  evaluates performance based on operating income.
  
  <TABLE>
  <CAPTION>
  Three months ended March 31, 2001                                                            Rest of
                                                                U.S.           Europe            World              Total
                                                               $'000            $'000            $'000              $'000
                                                          ----------       ----------       ----------         ----------
  <S>                                                     <C>              <C>              <C>                <C>
  Product sales                                              126,804           18,330            6,270            151,404
  Licensing and development                                    2,085              956                -              3,041
  Royalties                                                       60              358              503                921
  Other revenues                                                   -                -              275                275
                                                          ----------       ----------       ----------         ----------
  Total revenues                                             128,949           19,644            7,048            155,641
                                                          ----------       ----------       ----------         ----------
  
  Cost of revenues                                            17,877            6,529            3,307             27,713
  Research and development                                    19,916            7,188               61             27,165
  Selling, general and administrative                         40,275           18,162            1,801             60,238
  Losses on disposal of assets                                   591               14                2                607
                                                          ----------       ----------       ----------         ----------
  Total operating expenses                                    78,659           31,893            5,171            115,723
                                                          ----------       ----------       ----------         ----------
  Operating income/(loss)                                     50,290         (12,249)            1,877             39,918
                                                          ----------       ----------       ----------         ----------
  
  Three months ended March 31, 2000                                                            Rest of
                                                                U.S.           Europe            World              Total
                                                               $'000            $'000            $'000              $'000
                                                          ----------       ----------       ----------         ----------
  Product sales                                               93,102           15,243            4,820            113,165
  Licensing and development                                    1,376            3,534                -              4,910
  Royalties                                                       44              561                -                605
  Other revenues                                                   3                -              295                298
                                                          ----------       ----------       ----------         ----------
  Total revenues                                              94,525           19,338            5,115            118,978
                                                          ----------       ----------       ----------         ----------
  Cost of revenues                                            12,955            5,730            2,220             20,905
  Research and development                                    17,247            8,808               17             26,072
  Selling, general and administrative                         26,138           37,795            2,113             66,046
                                                          ----------       ----------       ----------         ----------
  Total operating expenses                                    56,340           52,333            4,350            113,023
                                                          ----------       ----------       ----------         ----------
  
  
  
  Operating income/(loss)                                     38,185         (32,995)              765              5,955
                                                          ----------       ----------       ----------         ----------
  </TABLE>
  
  <PAGE>
  4.  Net income/(loss) per share
  
  Basic net income/(loss) per share is based upon the net income/(loss) available
  to common stockholders divided by the weighted-average number of common shares
  outstanding during the period. Diluted net income/(loss) per share is based upon
  net income/(loss) available to common stockholders divided by the
  weighted-average number of common shares outstanding during the period and
  adjusted for the effect of all dilutive potential common shares that were
  outstanding during the period.
  
  The following table sets forth the computation of basic and diluted net
  income/(loss) per share:
  
  <TABLE>
  <CAPTION>
                                                                                 3 months to      3 months to
                                                                              March 31, 2001   March 31, 2000
                                                                                       $'000            $'000
                                                                            ----------------  ----------------
  <S>                                                                       <C>               <C>
  Numerator for basic net income/(loss) per share                                     25,955          (4,266)
  Interest charged on convertible debt, net of tax                                        44                -
                                                                            ----------------  ----------------
  Numerator for diluted net income/(loss) per share                                   25,999          (4,266)
                                                                            ----------------  ----------------
  Weighted average number of shares:                                           No. of shares    No. of shares
                                                                            ----------------  ----------------
  Basic  - weighted average number of shares                                     257,390,769      246,672,276
  Effect of dilutive stock options                                                 4,666,975                -
  Convertible debt                                                                   591,907
                                                                                                            -
                                                                            ----------------  ----------------
  Diluted - weighted average number of shares                                    262,649,651      246,672,276
                                                                            ----------------  ----------------
  Basic net income/(loss) per share                                                    $0.10          $(0.02)
                                                                            ----------------  ----------------
  Diluted net income/(loss) per share                                                  $0.10          $(0.02)
                                                                            ----------------  ----------------
  
  </TABLE>
  
  The calculation of the diluted weighted average number of shares for the three
  months ended March 31, 2000 excludes the effects of dilutive stock options and
  convertible debt securities issued by the Company because these have an
  antidilutive effect on the calculation in a loss making period.
  
  5. Consolidated statement of changes in shareholders' equity
  <PAGE>
  
  <TABLE>
  <CAPTION>
  
                                                                                            Accumulated
                                      Common        Common      Additional                  other comp-        Total
                                       Stock        Stock        paid-in     Accumulat-ed    prehensive    shareholders'
                                      Amount      No. Shares     capital       deficit         losses          Equity
                                       $'000        000's         $'000         $'000          $'000           $'000
                                    ------------- ------------- ------------- ------------- -------------   -------------
  
  <S>                                <C>           <C>          <C>           <C>           <C>             <C>
  As at January 1, 2001                  21,035       257,088       938,493     (178,955)        (27,814)         752,759
  Net income                                  -             -             -        25,955               -          25,955
  Foreign currency translation                -             -             -             -        (24,097)        (24,097)
  Unrealized holding loss on
  non-current investments                     -             -             -             -           (210)           (210)
  Options exercised                          62           862         2,047             -               -           2,109
  Issuance costs                              -             -          (16)             -               -            (16)
  Stock option compensation                   -             -         2,121             -               -           2,121
  Tax benefit associated with
  exercise of stock options                   -             -         3,090             -               -           3,090
                                    ------------- ------------- ------------- -------------  -------------   -------------
  As at March 31, 2001                   21,097       257,950       945,735     (153,000)        (52,121)         761,711
                                    ------------- ------------- ------------- -------------  -------------   -------------
  </TABLE>
  
  
  6. Contingent liabilities
  
  Until April 1998, Shire Richwood Inc. ("SRI") distributed products containing
  phentermine, a prescription drug approved in the U.S. as a single agent for
  short term use in obesity. Contrary to the approved labeling of these products,
  physicians in the U.S. co-prescribed phentermine with fenfluramine or
  dexfenfluramine for management of obesity. This combination was popularly known
  as the "fen/phen" diet. In mid 1997, following concerns raised about cardiac
  valvular side effects alleged to be associated with this diet regime, the
  fenfluramine and dexfenfluramine elements of the "fen/phen" diet were withdrawn
  from the U.S. market. Although SRI has ceased to distribute phentermine, the
  drug remains both approved and available in the U.S. SRI and a number of other
  pharmaceutical companies are being sued for damages for personal injury and
  medical monitoring arising from phentermine used either alone or in combination.
  As of March 31, 2001, SRI was named as a defendant in approximately 3,781
  lawsuits and had been dismissed from approximately 3,439 of these cases. There
  were approximately 158 additional cases pending dismissal as of March 31, 2001.
  In only 42 cases in which SRI has been named as a defendant, has it been alleged
  in the complaint or subsequent discovery that the plaintiff had used SRI's
  particular product. Although there have been reports of substantial jury awards
  and settlements in respect of fenfluramine and/or dexfenfluramine, to date Shire
  is not aware of any jury awards made against, or any settlements made by, any
  phentermine defendant. Shire denies liability on a number of grounds including
  lack of scientific evidence that phentermine, properly prescribed, causes the
  alleged side effects and that SRI did not promote phentermine for long term
  combined use as the "fen/phen" diet. Accordingly, Shire intends to defend
  vigorously any and all claims made against the Company in respect of phentermine
  and believes that a liability is neither probable nor quantifiable at this stage
  of litigation.
  
  On August 31, 2000 Shire entered into an agreement (the "Termination Agreement")
  with the former shareholders of SRI, pursuant to which the ordinary shares
  placed in escrow at the time of the purchase of SRI by Shire were released and
  the escrow agreement and the escrow fund were terminated. The escrow agreement
  with the SRI shareholders was initially established by Shire in 1997 in
  anticipation of possible phentermine related claims against the Company. Under
  the terms of the termination Agreement, monies in the approximate amount of $7
  million were received by Shire and the escrow fund was terminated. The remaining
  shares were distributed to the former SRI shareholders.
  
  Legal expenses have been paid by Eon Labs Manufacturing Inc. ("Eon"), the
  suppliers to SRI or Eon's insurance carriers but such insurance is now
  exhausted. Eon has agreed to defend and indemnify SRI in this litigation
  pursuant to an agreement dated November 30, 2000 between Eon and SRI.
  
  At the present stage of litigation, Shire is unable to estimate the level of
  future legal costs after taking into account any available product liability
  insurance and enforceable indemnities. To the extent that any legal costs are
  not covered by insurance or available indemnities, these will be expensed as
  incurred.
  
  <PAGE>
  
  ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
  of Operations
  
  Results of operations for the three months ended March 31, 2001, as compared
  with those for the three months ended March 31, 2000
  
  Overview of financial results
  Total revenues for the three months ended March 31, 2001 increased by 31 per
  cent to $155.6 million as compared to the three months ended March 31, 2000,
  primarily the result of a $38.2 million increase in product sales. The Company
  recorded first quarter net income of $26.0 million (Q1 2000: $4.3 million net
  loss).
  
  Sales and marketing
  Product sales of $151.4 million represented 97 per cent of total revenues, an
  increase of 34 per cent over first quarter 2000 product sales of $113.2 million.
  Product sales in the U.S. continue to represent a significant percentage of our
  worldwide sales, 84 per cent in the three months ended March 31, 2001, compared
  to 82 per cent in the equivalent period last year.
  
  The Company manages and controls the business on geographic lines. The following
  table presents the Company's net product sales by operating segment:
  
  Product sales by segment      3 months to     3 months to
                             March 31, 2001  March 31, 2000
  
                                      $'000           $'000        % change
  
  United States                     126,804          93,102            36.2
  Europe                             18,330          15,243            20.3
  Rest of World                       6,270           4,820            30.1
                               ------------    ------------    ------------
  Total product sales               151,404         113,165            33.8
                               ------------    ------------    ------------
  
  
  First quarter sales of Adderall, marketed in the U.S. for the treatment of
  Attention Deficit Hyperactivity Disorder (ADHD), were $70.1million, representing
  growth of 29 per cent over the first quarter of 2000. Adderall had a 33.3 per
  cent share of the prescription market for ADHD in the U.S. in March 2001
  compared to 29.7 per cent in March 2000. Adderall continues to be the brand
  leader in the U.S. market for ADHD.
  <PAGE>
  
  
  Sales of Agrylin, the only U.S. product licensed for the treatment of essential
  thrombocythemia were $17.1 million, a 56 per cent increase over quarter one 2000
  sales of $11.0 million. Sales in quarter one 2000 were slightly below trend due
  to wholesaler de-stocking. Shire achieved a scrip share of 20.4 per cent of the
  total U.S. Agrylin market, including Hydrea and generic hydroxyurea, in March
  2001 compared to 14.3 per cent in March 2000.
  
  Sales of Pentasa, licensed for the treatment of ulcerative colitis, at $14.4
  million, were 39 per cent higher than the comparable period last year, when
  sales were below trend due to wholesaler de-stocking following a price increase
  in quarter four 1999. Pentasa had a 17.8 per cent share of the oral
  mesalamine/obsalazine market in March 2001 compared to 18.0 per cent in March
  2000.
  
  Carbatrol, one of the most widely used first line treatments for epilepsy,
  recorded sales growth of 72 per cent from sales of $5.6 million in the three
  months ended March 31, 2000 to $9.6 million in the three months ended March 31,
  2001. This translates to 32.5 per cent of the U.S. extended release
  carbamazepine prescription market in March 2001, compared to 26.0 per cent in
  March 2000.
  
  Licensing
  Licensing and development fees in the three months ended March 31, 2001 fell by
  38 per cent to $3.0 million compared to $4.9 million in the three months ended
  March 31, 2000. The decrease is mainly due to the reduction in development stage
  activities for Reminyl and hence the ending of reimbursement revenues for actual
  costs incurred on raw materials. Royalties increased by $0.3 million to $0.9
  million.
  Cost of sales and operating expenses
  Gross margin on product sales, at 82 per cent, was consistent with the same
  period last year. This is reflected in the product mix as the higher margin
  products, Adderall and Agrylin, represented approximately 57 per cent of total
  product sales in the three months ended March 31, 2001 and 2000.
  
  R&D expenditure increased 4 per cent to $27.2 million (Q1 2000: $26.1 million).
  R&D expenditure in first quarter 2001 represented 17 per cent of revenues
  compared to 22 per cent in first quarter 2000 when costs were particularly high
  due to an upfront payment for the in-licensing of SPD 421 from D-Pharm Ltd. The
  relatively low R&D to revenue ratio in first quarter 2001 is also affected by
  the phasing of project costs.
  
  Selling, general and administrative expenses, excluding the effects of a minor
  stock option compensation charge of $2.1 million (Q1 2000: $23.2 million),
  increased by 36 per cent to $58.1 million (Q1 2000: $42.8 million). This
  increase reflects the growth in the US sales force since first quarter 2000 and
  increased marketing activities in respect of the anticipated launch of Adderall
  XR. As a percentage of product sales, selling, general and administrative costs
  represented 38 per cent, consistent with first quarter 2000.
  
  A significant component of selling, general and administrative expenses are
  depreciation and amortization, which increased by 13 per cent to $8.6 million
  (Q1 2000: $7.6 million). This increase is attributable to the purchase of
  several new products since March last year.
  
  Income taxes
  For the three months ended March 31, 2001 income taxes increased $4.2 million
  from $7.8 million to $12.0 million. The Company's effective tax rate before the
  stock compensation charge was 30 per cent for the three months ended March 31,
  2001 (Q1 2000: 29 per cent). The Company has recorded net deferred tax assets of
  $26.8 million. Realization is dependent upon generating sufficient taxable
  income to utilize such assets. Although realization on these assets is not
  assured, management believes it is more likely than not that the deferred tax
  assets will be realized.
  
  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, 2001, the Company had net cash funds available as follows:
  
  <PAGE>
  
  <TABLE>
  <CAPTION>
  
                                                                            March 31,         December 31,
                                                                                 2001                 2000
                                                                                $'000                $'000
                                                                       --------------       --------------
  <S>                                                                   <C>                  <C>
  Cash and cash equivalents                                                    82,835               46,598
  Marketable securities and other current asset investments                   142,553              139,745
  Debt                                                                      (127,906)            (127,812)
                                                                       --------------       --------------
  Net cash                                                                     97,482               58,531
                                                                       --------------       --------------
  
  </TABLE>
  
  Net cash provided by operating activities in the three months ended March 31,
  2001 was $58.0 million compared to a cash outflow of $35.8 million in the three
  months to March 31, 2000. Cash payments in respect of restructuring and merger
  related expenses following the acquisition of Roberts Pharmaceutical Corporation
  in December 1999 were a major contributor to the outflow in first quarter 2000.
  
  Investing activities utilized $22.7 million, which mainly comprised acquisitions
  of new products ($18.3 million) and tangible fixed assets ($1.5 million), and a
  net $2.8 million increase in cash placed on deposit.
  
  Financing activities provided $2.2 million, which mainly comprised proceeds from
  the exercise of stock options.
  
  
  Capital expenditure
  Capital expenditure in the three months to March 31, 2001 included $1.5 million
  for tangible fixed assets, mainly related to the Company's new head office
  facility purchased in quarter four 2000, and $18.4 million for new products to
  be marketed by the Group's Spanish and Italian operations.
  
  Other matters
  On December 11, 2000 the Company announced that it had entered into an agreement
  to merge with BioChem Pharma Inc., the merger to be achieved through an exchange
  of shares. Each of the resolutions considered at the Company's Extraordinary
  Meeting of Shareholders on March 29, 2001 were duly passed and gave the Board
  approval to complete the merger upon satisfaction of all conditions. The Company
  received notification on May 8, 2001 from the Minister of Industry, the minister
  responsible for the Investment Canada Act, that the merger has been approved.
  The merger became effective on May 11, 2001.
  
  ITEM 3.  Qualitative and Quantitative Disclosures about Market Risk
  
  There have been no material changes in the Company's market risk exposure since
  December 31, 2000. Item 7A of the Company's Annual Report on Form 10-K for the
  year ended December 31, 2000 contains a detailed discussion of the Company's
  market risk exposure in relation to interest rate market risk and foreign
  exchange market risk.
  
  
  <PAGE>
  
  
  PART II.   OTHER INFORMATION
  
  ITEM 1. LEGAL PROCEEDINGS
  
  We are currently a defendant in both federal and state courts involved in cases
  that seek damages for, among other things, personal injury arising from
  phentermine products supplied for the treatment of obesity by us and several
  other pharmaceutical companies. We have 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 dexfenfluramine. There
  are 42 suits in which we have been named as a defendant, where the plaintiffs
  specifically alleged in the complaint or subsequent discovery that they used
  phentermine products manufactured or distributed by us. The lawsuits generally
  allege the following claims:
  
  o    the defendants marketed phentermine and the other products for the
       treatment of obesity and misled users about the products and the dangers
       associated with them;
  
  o    the defendants failed to adequately test phentermine individually and when
       taken in combination with the other drugs; and
  
  o    the defendants knew or should have known about the negative effects of the
       drug and should have informed the public about such risks and/or failed to
       provide appropriate warning labels.
  
  We became involved with phentermine through the acquisition of certain assets of
  Rexar Pharmaceutical Corp. in January 1994. In addition to liability as a result
  of our own manufacturing and distributing of phentermine products, plaintiffs
  may seek to impose liability on us as a successor to Rexar. Class certification
  has been sought for certain of the claims made against us and the other
  defendants. In addition, pending federal lawsuits have been consolidated as a
  multidistrict litigation in the Eastern District of Pennysylvania.
  
  Over the last year, the extent of management time has reduced as we have been
  dismissed by the courts from a significant number of cases. Similarly, the
  number of cases where we are still incurring defense costs or where there is
  potential for compensation has been reduced. As of March 31, 2001, we had been
  named in approximately 3,781 cases. We have been dismissed from 3,439 of these
  cases with approximately 158 cases pending dismissal. If we are found liable in
  some or all of the outstanding lawsuits for damages in excess of our assets, we
  would be required to consider reorganizing and seeking protection in bankruptcy
  or initiating insolvency proceedings.
  
  On August 31, 2000, we entered into an agreement (the "Termination Agreement")
  with the former shareholders of Shire Richwood Inc. ("SRI"), pursuant to which
  the ordinary shares placed into escrow at the time of the purchase of SRI by
  Shire were released and the escrow agreement and the escrow fund were terminated
   . The escrow agreement with the SRI shareholders was initially established by
  Shire in 1997 in anticipation of possible phentermine related claims against the
  Company. Under the terms of the Termination Agreement, monies in the approximate
  amount of $7 million were received by Shire and the escrow fund was terminated.
  The remaining shares were distributed to the former SRI shareholders.
  
  Legal expenses have been paid by our supplier, Eon Labs Manufacturing Inc.
  ("Eon") or Eon's insurance carriers, but such insurance is now exhausted. Eon
  has agreed to defend and indemnify us in this litigation pursuant to an
  agreement dated November 30, 2000 between ourselves and Eon.
  
  We have our own insurance up to a maximum of $3 million for lawsuits filed in
  the period to April 28, 1998, an additional $85 million of coverage put in place
  during 2000, and an unlimited indemnity given by Eon for phentermine it
  manufactured for us. We have already spent a substantial amount of resources in
  managing these lawsuits and will continue to do so.
  
  <PAGE>
  
  
  
  
  
  
  
  ITEM 2. CHANGES IN SECURITIES
  
  None
  
  
  ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
  None
  
  
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
  An Extraordinary General Meeting of Shareholders was held on March 29, 2001. The
  following resolutions were adopted by the margins indicated:
  
  Ordinary resolution to approve the Company's merger with BioChem Pharma Inc., to
  increase the authorized share capital of the Company, to grant authority to the
  Directors to allot such share capital and to create new Special Voting Shares
  which attach certain rights and restrictions to those shares.
  
           For        Against        Open        Abstentions
       115,010,174    412,946       261,602       3,641,875
  
  
  Special resolution to increase the Director's powers to allot equity shares for
  cash, free of the pre-emption rights conferred by the Companies Act 1985.
  
          For         Against          Open         Abstentions
       116,835,752    497,137         171,978        1,821,730
  
  
  ITEM 5. OTHER INFORMATION
  
  None
  
  
  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
  
  (a)      Exhibits
  
           None
  
  (b)      Reports on Form 8-K
  
           During the first quarter ended March 31, 2001, the following reports on
           Form 8-K were filed by the Company with the Securities and Exchange
           Commission:
  
           Form 8-K (Item 7 - Financial Statements and Exhibits), date of earliest
           event reported February 15, 2001, with respect to Pro Forma Financial
           Data filed in relation to the Company's proposed merger with BioChem
           Pharma Inc.
  
           Form 8-K (Item 5 - Other Events), date of earliest event reported May
           4, 2001, with respect to announcement of first quarter results.
  
           Form 8-K (Item 5 - Other Events), date of earliest event reported May
           9, 2001, with respect to first quarter results and BioChem merger.
  
  
  <PAGE>
  
  
  SIGNATURES
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  Registrant has duly caused this Report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
  SHIRE PHARMACEUTICALS GROUP PLC
  (Registrant)
  
  
  
  
  
  Date:    14, May 2001               By:  /s/  Angus C Russell
                                           -------------------------------
                                           Group Finance Director
  
  
  
  
  
  Date:    14, May 2001               By:  /s/ 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, 2001
  
                           Commission File Number: 0-29630
  
                           SHIRE PHARMACEUTICALS GROUP PLC
               (Exact name of registrant as specified in its charter)
  
                      England and Wales                              N.A.
                (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 April 24, 20001
    Common Stock: Ordinary Shares               258,031,902
  THE "SAFE HARBOR" STATEMENT UNDER SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
  1934 (AMENDED) AND SECTION 27A OF THE SECURITIES ACT OF 1933 (AMENDED). The
  statements in this form 10-Q that are not historical facts are forward-looking
  statements that involve risks and uncertainties, including but not limited to,
  risks associated with the inherent uncertainty of pharmaceutical research,
  product development and commercialization, the impact of competitive products,
  patents, and other risks and uncertainties, including those detailed from time
  to time in periodic reports, including the Annual Report filed on Form 10-K by
  Shire with the Securities and Exchange Commission.
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  Financial Statements
  
                           SHIRE PHARMACEUTICALS GROUP PLC
  
                             CONSOLIDATED BALANCE SHEETS
  
           (In thousands of U.S. dollars, except share and per share data)
  
                               March 31, December 31,
  2001                  2000
                                                                          (Unaudited)
  ASSETS                                                                  -----------           -----------
  Current assets:
  Cash and cash equivalents                                                    82,835                46,598
  Marketable securities and other current asset investments                   142,553               139,745
  Accounts receivable, net                                                     70,993                93,830
  Inventories, net                                                             43,773                47,109
  Deferred tax asset                                                           18,722                26,971
  Prepaid expenses and other current assets                                    14,373                 9,736
                                                                         ------------          ------------
  Total current assets                                                        373,249               363,989
  
  Investments                                                                   5,756                 6,139
  Property, plant and equipment, net                                           47,867                49,685
  Intangible assets, net                                                      561,458               556,013
  Deferred tax asset                                                            8,047                 6,298
  Other assets                                                                 21,850                22,608
                                                                         ------------          ------------
  Total assets                                                              1,018,227             1,004,732
                                                                         ------------          ------------
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
  Current installments of long-term debt                                        1,470                 1,448
  Accounts and notes payable                                                   97,313                99,437
  Other current liabilities                                                    19,765                10,528
                                                                         ------------          ------------
  Total current liabilities                                                   118,548               111,413
  
  Long-term debt, excluding current instalments                               126,436               126,364
  Other long-term liabilities                                                  11,532                14,196
                                                                         ------------          ------------
  Total liabilities                                                           256,516               251,973
                                                                         ------------          ------------
  Shareholders' equity:
  Common stock, 5p par value; 400,000,000 shares authorized; and
  257,950,135 shares issued and outstanding (2000: 257,088,451)                21,097                21,035
  Additional paid-in capital                                                  945,735               938,493
  Accumulated other comprehensive losses                                     (52,121)              (27,814)
  Accumulated deficit                                                       (153,000)             (178,955)
                                                                         ------------          ------------
  Total shareholders' equity                                                  761,711               752,759
                                                                         ------------          ------------
  Total liabilities and shareholders' equity                                1,018,227             1,004,732
                                                                         ------------          ------------
  The accompanying notes are an integral part of these financial statements
  SHIRE PHARMACEUTICALS GROUP PLC
  
                          CONSOLIDATED STATEMENTS OF INCOME
           (In thousands of U.S. dollars, except share and per share data)
                                     (Unaudited)
  3 months to               3 months to
                                                                                March 31, 2001            March 31, 2000
                                                                                  ------------              ------------
  Product sales                                                                        151,404                   113,165
  Licensing and development                                                              3,041                     4,910
  Royalties                                                                                921                       605
  Other revenues                                                                           275                       298
                                                                                  ------------              ------------
  Total revenues                                                                       155,641                   118,978
  
  Costs and expenses:
  Cost of revenues                                                                      27,713                    20,905
  Research and development                                                              27,165                    26,072
  Selling, general and administrative (inclusive of stock option
  compensation charge of $2,121 and $23,246 respectively)                               60,238                    66,046
  Losses on disposal of assets                                                             607                         -
                                                                                  ------------              ------------
  Total operating expenses                                                             115,723                   113,023
                                                                                  ------------              ------------
  Operating income                                                                      39,918                     5,955
  
  Interest income                                                                        2,536                     1,371
  Interest expense                                                                     (2,801)                   (3,405)
  Other expense                                                                        (1,668)                     (431)
                                                                                  ------------              ------------
  Total other expenses, net                                                            (1,933)                   (2,465)
                                                                                   -----------               -----------
  Income before income taxes                                                            37,985                     3,490
  
  Income taxes                                                                        (12,030)                   (7,756)
                                                                                  ------------              ------------
  Net income/(loss)                                                                     25,955                   (4,266)
                                                                                  ------------              ------------
  
  Net income/(loss) per share:
  Basic                                                                                  $0.10                   ($0.02)
  Diluted                                                                                $0.10                   ($0.02)
  
  Weighted average number of shares:
  Basic                                                                            257,390,769               246,672,276
  Diluted                                                                          262,649,651               246,672,276
  SHIRE PHARMACEUTICALS GROUP PLC
  
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
  
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  3 months to      3 months
                                                                                  March  31,    to   March
                                                                                        2001      31, 2000
                                                                                  ----------    ----------
  Cash flows from operating activities:
  Net income/(loss)                                                                   25,955       (4,266)
  Adjustments to reconcile net income/(loss) to net cash provided by/(used
  in) operating activities:
  Depreciation and amortization                                                        8,600         7,592
  Stock option compensation                                                            2,121        23,246
  Tax benefit of stock option compensation charged directly to equity                  3,090         1,072
  Non cash exchange gains and losses                                                (10,311)         (151)
  Loss on disposal of fixed assets                                                       607             -
  Decrease/(increase) in accounts receivable                                          22,837      (16,671)
  Decrease/(increase) in inventory                                                     3,336         (290)
  Decrease in deferred tax asset                                                       6,500             -
  (Increase)/decrease in prepayments and other current asset investments             (4,779)           683
  Decrease in other assets                                                               758         1,578
  Decrease in accounts and notes payable                                             (2,105)       (7,814)
  Increase/(decrease) in other current liabilities                                     2,601      (39,938)
  Decrease in other long term liabilities                                            (1,164)         (804)
                                                                                  ----------    ----------
  Net cash provided by/(used in) operating activities                                 58,046      (35,763)
                                                                                  ----------    ----------
  Cash flows from investing activities:
  Redemption of marketable securities, net                                            46,000        31,687
  Increase in cash placed on short-term deposit                                     (48,808)
                                                                                                   (5,363)
  Expenses of acquisition of subsidiaries                                                  -         (212)
  Purchase of intangible assets                                                     (18,335)             -
  Purchase of fixed assets                                                           (1,544)       (1,935)
  Collection on notes receivable                                                           -           520
                                                                                  ----------    ----------
  Net cash (used in)/provided by investing activities                               (22,687)        24,697
                                                                                  ----------    ----------
  
  Cash flows from financing activities:
  Movements on long term debt                                                             94       (2,549)
  Proceeds from issue of common stock                                                      -         3,033
  Payment of stock issuance costs                                                       (16)       (3,385)
  Proceeds from exercise of options                                                    2,109        27,192
                                                                                  ----------    ----------
  Net cash provided by financing activities                                            2,187        24,291
                                                                                  ----------    ----------
  Effect of foreign exchange rate changes on cash and cash equivalents               (1,309)             -
                                                                                  ----------    ----------
  Net increase in cash and cash equivalents                                           36,237        13,225
  Cash and cash equivalents at beginning of period                                    46,598        54,082
                                                                                  ----------    ----------
  Cash and cash equivalents at end of period                                          82,835        67,307
                                                                                  ----------    ----------
  SHIRE PHARMACEUTICALS GROUP PLC
  
                CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)
  
                           (In thousands of U.S. dollars)
                                     (Unaudited)
  3 months to           3 months to
                                                                         March 31, 2001        March 31, 2000
                                                                           ------------          ------------
  Net income/(loss)                                                              25,955               (4,266)
  Foreign currency translation adjustments                                     (24,097)               (2,819)
  Unrealized holding loss on non-current investments                              (210)                     -
                                                                           ------------          ------------
  Comprehensive income/(loss)                                                     1,648               (7,085)
                                                                           ------------          ------------
  There are no tax effects related to the items included above.
  SHIRE PHARMACEUTICALS GROUP PLC
  
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  
  1.       Summary of Significant Accounting Policies
  
  a) Description of Operations and Principles of Consolidation
  
  Shire Pharmaceuticals Group plc is an international specialty pharmaceutical
  company with a strategic focus on four therapeutic areas: central nervous system
  disorders, metabolic diseases, oncology and gastroenterology. The Company's
  principal products include Adderall, for the treatment of Attention Deficit
  Hyperactivity Disorder, Agrylin, for the treatment of thrombocythemia, and
  Pentasa, for the treatment of ulcerative colitis.
  
  The Group has operations in the United States, Europe and the rest of the world.
  Within these geographic operating segments, revenues are derived from three
  sources: sales of products by the Company's own sales and marketing operations,
  licensing and development fees, and royalties.
  
  The accompanying consolidated financial statements include the accounts of Shire
  Pharmaceuticals Group plc and all its subsidiary undertakings after elimination
  of intercompany accounts and transactions.
  
  b) New Accounting Pronouncements
  
  In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
  Instruments and Hedging Activities". This Statement requires that all
  derivatives be recorded in the balance sheet as either an asset or liability
  measured at its fair value and that changes in the derivative's fair value be
  recognized currently in earnings unless specific hedge accounting criteria are
  met. In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
  Instruments and Hedging Activities - Deferral of the Effective Date of FASB
  Statement No. 133". This Statement defers for one year the effective date of
  SFAS 133 to all fiscal quarters of all fiscal years beginning after June 15,
  2000.
  
  In June 2000, the FASB issued Statement No. 138, "Accounting for Certain
  Derivative Instruments and Certain Hedging Activities - an Amendment of FASB
  Statement No. 133". SFAS 138 amends SFAS 133 to (a) exclude from the scope of
  SFAS No. 133 nonfinancial assets that will be delivered in quantities expected
  to be used or sold by the company over a reasonable period in the normal course
  of business and for which physical delivery is probable, (b) permit hedging of a
  benchmark interest rate, (c) allow hedging of foreign-currency-denominated
  assets and liabilities and (d) allow for limited hedging of net foreign currency
  exposures.
  
  The Company has not entered into any derivative contracts during the three
  months ended March 31, 2001 nor were any open as of December 31, 2000.
  Accordingly, there is no impact on results of operations for the three months
  ended March 31, 2001 or on the financial position as at March 31, 2001 following
  the adoption of this statement.
  
  c) Basis of Presentation
  
  The accompanying consolidated financial statements, which include the operations
  of the Company and its wholly owned subsidiaries and the financial information
  included herein, are unaudited. They have been prepared in accordance with
  generally accepted accounting principles in the United States and Securities and
  Exchange Commission regulations for interim reporting. Certain information and
  footnote disclosures normally included in financial statements prepared in
  accordance with generally accepted accounting principles in the United States
  have been condensed or omitted pursuant to such rules and regulations. However,
  such information includes all adjustments (consisting solely of normal recurring
  adjustments), which are, in the opinion of management, necessary to fairly state
  the results of the interim periods. Interim results are not necessarily
  indicative of results to be expected for the full year. These consolidated
  financial statements should be read in conjunction with the Company's audited
  consolidated financial statements for the three years ended December 31, 2000
  and notes thereto. The results for the period ended March 31, 2001 are not
  necessarily indicative of the results that may be expected for the year ending
  December 31, 2001.
  2.       Inventory
  
                                 March 31,            March 31,
                                      2001                 2000
                                     $'000                $'000
                            --------------       --------------
  Finished goods                    20,970               27,720
  Work-in-process                   12,520                6,008
  Raw materials                     10,283                6,100
                            --------------       --------------
                                    43,773               39,828
                            --------------       --------------
  
  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 geographic, each being
  managed and monitored separately and serving different markets. The Company
  evaluates performance based on operating income.
  Three months ended March 31, 2001                                                            Rest of
                                                                U.S.           Europe            World              Total
                                                               $'000            $'000            $'000              $'000
                                                          ----------       ----------       ----------         ----------
  Product sales                                              126,804           18,330            6,270            151,404
  Licensing and development                                    2,085              956                -              3,041
  Royalties                                                       60              358              503                921
  Other revenues                                                   -                -              275                275
                                                          ----------       ----------       ----------         ----------
  Total revenues                                             128,949           19,644            7,048            155,641
                                                          ----------       ----------       ----------         ----------
  
  Cost of revenues                                            17,877            6,529            3,307             27,713
  Research and development                                    19,916            7,188               61             27,165
  Selling, general and administrative                         40,275           18,162            1,801             60,238
  Losses on disposal of assets                                   591               14                2                607
                                                          ----------       ----------       ----------         ----------
  Total operating expenses                                    78,659           31,893            5,171            115,723
                                                          ----------       ----------       ----------         ----------
  Operating income/(loss)                                     50,290         (12,249)            1,877             39,918
                                                          ----------       ----------       ----------         ----------
  
  Three months ended March 31, 2000                                                            Rest of
                                                                U.S.           Europe            World              Total
                                                               $'000            $'000            $'000              $'000
                                                          ----------       ----------       ----------         ----------
  Product sales                                               93,102           15,243            4,820            113,165
  Licensing and development                                    1,376            3,534                -              4,910
  Royalties                                                       44              561                -                605
  Other revenues                                                   3                -              295                298
                                                          ----------       ----------       ----------         ----------
  Total revenues                                              94,525           19,338            5,115            118,978
                                                          ----------       ----------       ----------         ----------
  Cost of revenues                                            12,955            5,730            2,220             20,905
  Research and development                                    17,247            8,808               17             26,072
  Selling, general and administrative                         26,138           37,795            2,113             66,046
                                                          ----------       ----------       ----------         ----------
  Total operating expenses                                    56,340           52,333            4,350            113,023
                                                          ----------       ----------       ----------         ----------
  
  Operating income/(loss)                                     38,185         (32,995)              765              5,955
                                                          ----------       ----------       ----------         ----------
  4.  Net income/(loss) per share
  
  Basic net income/(loss) per share is based upon the net income/(loss) available
  to common stockholders divided by the weighted-average number of common shares
  outstanding during the period. Diluted net income/(loss) per share is based upon
  net income/(loss) available to common stockholders divided by the
  weighted-average number of common shares outstanding during the period and
  adjusted for the effect of all dilutive potential common shares that were
  outstanding during the period.
  
  The following table sets forth the computation of basic and diluted net
  income/(loss) per share:
  3 months to      3 months to
                                                                              March 31, 2001   March 31, 2000
                                                                                       $'000            $'000
                                                                            ----------------  ----------------
  Numerator for basic net income/(loss) per share                                     25,955          (4,266)
  Interest charged on convertible debt, net of tax                                        44                -
                                                                            ----------------  ----------------
  Numerator for diluted net income/(loss) per share                                   25,999          (4,266)
                                                                            ----------------  ----------------
  Weighted average number of shares:                                           No. of shares    No. of shares
                                                                            ----------------  ----------------
  Basic  - weighted average number of shares                                     257,390,769      246,672,276
  Effect of dilutive stock options                                                 4,666,975                -
  Convertible debt                                                                   591,907
                                                                                                            -
                                                                            ----------------  ----------------
  Diluted - weighted average number of shares                                    262,649,651      246,672,276
                                                                            ----------------  ----------------
  Basic net income/(loss) per share                                                    $0.10          $(0.02)
                                                                            ----------------  ----------------
  Diluted net income/(loss) per share                                                  $0.10          $(0.02)
                                                                            ----------------  ----------------
  The calculation of the diluted weighted average number of shares for the three
  months ended March 31, 2000 excludes the effects of dilutive stock options and
  convertible debt securities issued by the Company because these have an
  antidilutive effect on the calculation in a loss making period.
  
  5. Consolidated statement of changes in shareholders' equity
  Accumulated
                                      Common        Common      Additional                  other comp-        Total
                                       Stock        Stock        paid-in     Accumulat-ed    prehensive    shareholders'
                                      Amount      No. Shares     capital       deficit         losses          Equity
                                       $'000        000's         $'000         $'000          $'000           $'000
                                    ------------- ------------- ------------- ------------- -------------   -------------
  As at January 1, 2001                  21,035       257,088       938,493     (178,955)        (27,814)         752,759
  Net income                                  -             -             -        25,955               -          25,955
  Foreign currency translation                -             -             -             -        (24,097)        (24,097)
  Unrealized holding loss on
  non-current investments                     -             -             -             -           (210)           (210)
  Options exercised                          62           862         2,047             -               -           2,109
  Issuance costs                              -             -          (16)             -               -            (16)
  Stock option compensation                   -             -         2,121             -               -           2,121
  Tax benefit associated with
  exercise of stock options                   -             -         3,090             -               -           3,090
                                    ------------- ------------- ------------- -------------  -------------   -------------
  As at March 31, 2001                   21,097       257,950       945,735     (153,000)        (52,121)         761,711
                                    ------------- ------------- ------------- -------------  -------------   -------------
  6. Contingent liabilities
  
  Until April 1998, Shire Richwood Inc. ("SRI") distributed products containing
  phentermine, a prescription drug approved in the U.S. as a single agent for
  short term use in obesity. Contrary to the approved labeling of these products,
  physicians in the U.S. co-prescribed phentermine with fenfluramine or
  dexfenfluramine for management of obesity. This combination was popularly known
  as the "fen/phen" diet. In mid 1997, following concerns raised about cardiac
  valvular side effects alleged to be associated with this diet regime, the
  fenfluramine and dexfenfluramine elements of the "fen/phen" diet were withdrawn
  from the U.S. market. Although SRI has ceased to distribute phentermine, the
  drug remains both approved and available in the U.S. SRI and a number of other
  pharmaceutical companies are being sued for damages for personal injury and
  medical monitoring arising from phentermine used either alone or in combination.
  As of March 31, 2001, SRI was named as a defendant in approximately 3,781
  lawsuits and had been dismissed from approximately 3,439 of these cases. There
  were approximately 158 additional cases pending dismissal as of March 31, 2001.
  In only 42 cases in which SRI has been named as a defendant, has it been alleged
  in the complaint or subsequent discovery that the plaintiff had used SRI's
  particular product. Although there have been reports of substantial jury awards
  and settlements in respect of fenfluramine and/or dexfenfluramine, to date Shire
  is not aware of any jury awards made against, or any settlements made by, any
  phentermine defendant. Shire denies liability on a number of grounds including
  lack of scientific evidence that phentermine, properly prescribed, causes the
  alleged side effects and that SRI did not promote phentermine for long term
  combined use as the "fen/phen" diet. Accordingly, Shire intends to defend
  vigorously any and all claims made against the Company in respect of phentermine
  and believes that a liability is neither probable nor quantifiable at this stage
  of litigation.
  
  On August 31, 2000 Shire entered into an agreement (the "Termination Agreement")
  with the former shareholders of SRI, pursuant to which the ordinary shares
  placed in escrow at the time of the purchase of SRI by Shire were released and
  the escrow agreement and the escrow fund were terminated. The escrow agreement
  with the SRI shareholders was initially established by Shire in 1997 in
  anticipation of possible phentermine related claims against the Company. Under
  the terms of the termination Agreement, monies in the approximate amount of $7
  million were received by Shire and the escrow fund was terminated. The remaining
  shares were distributed to the former SRI shareholders.
  
  Legal expenses have been paid by Eon Labs Manufacturing Inc. ("Eon"), the
  suppliers to SRI or Eon's insurance carriers but such insurance is now
  exhausted. Eon has agreed to defend and indemnify SRI in this litigation
  pursuant to an agreement dated November 30, 2000 between Eon and SRI.
  
  At the present stage of litigation, Shire is unable to estimate the level of
  future legal costs after taking into account any available product liability
  insurance and enforceable indemnities. To the extent that any legal costs are
  not covered by insurance or available indemnities, these will be expensed as
  incurred.
  ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
  of Operations
  
  Results of operations for the three months ended March 31, 2001, as compared
  with those for the three months ended March 31, 2000
  
  Overview of financial results
  Total revenues for the three months ended March 31, 2001 increased by 31 per
  cent to $155.6 million as compared to the three months ended March 31, 2000,
  primarily the result of a $38.2 million increase in product sales. The Company
  recorded first quarter net income of $26.0 million (Q1 2000: $4.3 million net
  loss).
  
  Sales and marketing
  Product sales of $151.4 million represented 97 per cent of total revenues, an
  increase of 34 per cent over first quarter 2000 product sales of $113.2 million.
  Product sales in the U.S. continue to represent a significant percentage of our
  worldwide sales, 84 per cent in the three months ended March 31, 2001, compared
  to 82 per cent in the equivalent period last year.
  
  The Company manages and controls the business on geographic lines. The following
  table presents the Company's net product sales by operating segment:
  
  Product sales by segment      3 months to     3 months to
                             March 31, 2001  March 31, 2000
  
                                      $'000           $'000        % change
  
  United States                     126,804          93,102            36.2
  Europe                             18,330          15,243            20.3
  Rest of World                       6,270           4,820            30.1
                               ------------    ------------    ------------
  Total product sales               151,404         113,165            33.8
                               ------------    ------------    ------------
  
  First quarter sales of Adderall, marketed in the U.S. for the treatment of
  Attention Deficit Hyperactivity Disorder (ADHD), were $70.1million, representing
  growth of 29 per cent over the first quarter of 2000. Adderall had a 33.3 per
  cent share of the prescription market for ADHD in the U.S. in March 2001
  compared to 29.7 per cent in March 2000. Adderall continues to be the brand
  leader in the U.S. market for ADHD.
  Sales of Agrylin, the only U.S. product licensed for the treatment of essential
  thrombocythemia were $17.1 million, a 56 per cent increase over quarter one 2000
  sales of $11.0 million. Sales in quarter one 2000 were slightly below trend due
  to wholesaler de-stocking. Shire achieved a scrip share of 20.4 per cent of the
  total U.S. Agrylin market, including Hydrea and generic hydroxyurea, in March
  2001 compared to 14.3 per cent in March 2000.
  
  Sales of Pentasa, licensed for the treatment of ulcerative colitis, at $14.4
  million, were 39 per cent higher than the comparable period last year, when
  sales were below trend due to wholesaler de-stocking following a price increase
  in quarter four 1999. Pentasa had a 17.8 per cent share of the oral
  mesalamine/obsalazine market in March 2001 compared to 18.0 per cent in March
  2000.
  
  Carbatrol, one of the most widely used first line treatments for epilepsy,
  recorded sales growth of 72 per cent from sales of $5.6 million in the three
  months ended March 31, 2000 to $9.6 million in the three months ended March 31,
  2001. This translates to 32.5 per cent of the U.S. extended release
  carbamazepine prescription market in March 2001, compared to 26.0 per cent in
  March 2000.
  
  Licensing
  Licensing and development fees in the three months ended March 31, 2001 fell by
  38 per cent to $3.0 million compared to $4.9 million in the three months ended
  March 31, 2000. The decrease is mainly due to the reduction in development stage
  activities for Reminyl and hence the ending of reimbursement revenues for actual
  costs incurred on raw materials. Royalties increased by $0.3 million to $0.9
  million.
  Cost of sales and operating expenses
  Gross margin on product sales, at 82 per cent, was consistent with the same
  period last year. This is reflected in the product mix as the higher margin
  products, Adderall and Agrylin, represented approximately 57 per cent of total
  product sales in the three months ended March 31, 2001 and 2000.
  
  R&D expenditure increased 4 per cent to $27.2 million (Q1 2000: $26.1 million).
  R&D expenditure in first quarter 2001 represented 17 per cent of revenues
  compared to 22 per cent in first quarter 2000 when costs were particularly high
  due to an upfront payment for the in-licensing of SPD 421 from D-Pharm Ltd. The
  relatively low R&D to revenue ratio in first quarter 2001 is also affected by
  the phasing of project costs.
  
  Selling, general and administrative expenses, excluding the effects of a minor
  stock option compensation charge of $2.1 million (Q1 2000: $23.2 million),
  increased by 36 per cent to $58.1 million (Q1 2000: $42.8 million). This
  increase reflects the growth in the US sales force since first quarter 2000 and
  increased marketing activities in respect of the anticipated launch of Adderall
  XR. As a percentage of product sales, selling, general and administrative costs
  represented 38 per cent, consistent with first quarter 2000.
  
  A significant component of selling, general and administrative expenses are
  depreciation and amortization, which increased by 13 per cent to $8.6 million
  (Q1 2000: $7.6 million). This increase is attributable to the purchase of
  several new products since March last year.
  
  Income taxes
  For the three months ended March 31, 2001 income taxes increased $4.2 million
  from $7.8 million to $12.0 million. The Company's effective tax rate before the
  stock compensation charge was 30 per cent for the three months ended March 31,
  2001 (Q1 2000: 29 per cent). The Company has recorded net deferred tax assets of
  $26.8 million. Realization is dependent upon generating sufficient taxable
  income to utilize such assets. Although realization on these assets is not
  assured, management believes it is more likely than not that the deferred tax
  assets will be realized.
  
  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, 2001, the Company had net cash funds available as follows:
  March 31,         December 31,
                                                                                 2001                 2000
                                                                                $'000                $'000
                                                                       --------------       --------------
  Cash and cash equivalents                                                    82,835               46,598
  Marketable securities and other current asset investments                   142,553              139,745
  Debt                                                                      (127,906)            (127,812)
                                                                       --------------       --------------
  Net cash                                                                     97,482               58,531
                                                                       --------------       --------------
  Net cash provided by operating activities in the three months ended March 31,
  2001 was $58.0 million compared to a cash outflow of $35.8 million in the three
  months to March 31, 2000. Cash payments in respect of restructuring and merger
  related expenses following the acquisition of Roberts Pharmaceutical Corporation
  in December 1999 were a major contributor to the outflow in first quarter 2000.
  
  Investing activities utilized $22.7 million, which mainly comprised acquisitions
  of new products ($18.3 million) and tangible fixed assets ($1.5 million), and a
  net $2.8 million increase in cash placed on deposit.
  
  Financing activities provided $2.2 million, which mainly comprised proceeds from
  the exercise of stock options.
  
  Capital expenditure
  Capital expenditure in the three months to March 31, 2001 included $1.5 million
  for tangible fixed assets, mainly related to the Company's new head office
  facility purchased in quarter four 2000, and $18.4 million for new products to
  be marketed by the Group's Spanish and Italian operations.
  
  Other matters
  On December 11, 2000 the Company announced that it had entered into an agreement
  to merge with BioChem Pharma Inc., the merger to be achieved through an exchange
  of shares. Each of the resolutions considered at the Company's Extraordinary
  Meeting of Shareholders on March 29, 2001 were duly passed and gave the Board
  approval to complete the merger upon satisfaction of all conditions. The Company
  received notification on May 8, 2001 from the Minister of Industry, the minister
  responsible for the Investment Canada Act, that the merger has been approved.
  The merger became effective on May 11, 2001.
  
  ITEM 3.  Qualitative and Quantitative Disclosures about Market Risk
  
  There have been no material changes in the Company's market risk exposure since
  December 31, 2000. Item 7A of the Company's Annual Report on Form 10-K for the
  year ended December 31, 2000 contains a detailed discussion of the Company's
  market risk exposure in relation to interest rate market risk and foreign
  exchange market risk.
  PART II.   OTHER INFORMATION
  
  ITEM 1. LEGAL PROCEEDINGS
  
  We are currently a defendant in both federal and state courts involved in cases
  that seek damages for, among other things, personal injury arising from
  phentermine products supplied for the treatment of obesity by us and several
  other pharmaceutical companies. We have 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 dexfenfluramine. There
  are 42 suits in which we have been named as a defendant, where the plaintiffs
  specifically alleged in the complaint or subsequent discovery that they used
  phentermine products manufactured or distributed by us. The lawsuits generally
  allege the following claims:
  
  o    the defendants marketed phentermine and the other products for the
       treatment of obesity and misled users about the products and the dangers
       associated with them;
  
  o    the defendants failed to adequately test phentermine individually and when
       taken in combination with the other drugs; and
  
  o    the defendants knew or should have known about the negative effects of the
       drug and should have informed the public about such risks and/or failed to
       provide appropriate warning labels.
  
  We became involved with phentermine through the acquisition of certain assets of
  Rexar Pharmaceutical Corp. in January 1994. In addition to liability as a result
  of our own manufacturing and distributing of phentermine products, plaintiffs
  may seek to impose liability on us as a successor to Rexar. Class certification
  has been sought for certain of the claims made against us and the other
  defendants. In addition, pending federal lawsuits have been consolidated as a
  multidistrict litigation in the Eastern District of Pennysylvania.
  
  Over the last year, the extent of management time has reduced as we have been
  dismissed by the courts from a significant number of cases. Similarly, the
  number of cases where we are still incurring defense costs or where there is
  potential for compensation has been reduced. As of March 31, 2001, we had been
  named in approximately 3,781 cases. We have been dismissed from 3,439 of these
  cases with approximately 158 cases pending dismissal. If we are found liable in
  some or all of the outstanding lawsuits for damages in excess of our assets, we
  would be required to consider reorganizing and seeking protection in bankruptcy
  or initiating insolvency proceedings.
  
  On August 31, 2000, we entered into an agreement (the "Termination Agreement")
  with the former shareholders of Shire Richwood Inc. ("SRI"), pursuant to which
  the ordinary shares placed into escrow at the time of the purchase of SRI by
  Shire were released and the escrow agreement and the escrow fund were terminated
   . The escrow agreement with the SRI shareholders was initially established by
  Shire in 1997 in anticipation of possible phentermine related claims against the
  Company. Under the terms of the Termination Agreement, monies in the approximate
  amount of $7 million were received by Shire and the escrow fund was terminated.
  The remaining shares were distributed to the former SRI shareholders.
  
  Legal expenses have been paid by our supplier, Eon Labs Manufacturing Inc.
  ("Eon") or Eon's insurance carriers, but such insurance is now exhausted. Eon
  has agreed to defend and indemnify us in this litigation pursuant to an
  agreement dated November 30, 2000 between ourselves and Eon.
  
  We have our own insurance up to a maximum of $3 million for lawsuits filed in
  the period to April 28, 1998, an additional $85 million of coverage put in place
  during 2000, and an unlimited indemnity given by Eon for phentermine it
  manufactured for us. We have already spent a substantial amount of resources in
  managing these lawsuits and will continue to do so.
  ITEM 2. CHANGES IN SECURITIES
  
  None
  
  ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
  None
  
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
  An Extraordinary General Meeting of Shareholders was held on March 29, 2001. The
  following resolutions were adopted by the margins indicated:
  
  Ordinary resolution to approve the Company's merger with BioChem Pharma Inc., to
  increase the authorized share capital of the Company, to grant authority to the
  Directors to allot such share capital and to create new Special Voting Shares
  which attach certain rights and restrictions to those shares.
  
           For        Against        Open        Abstentions
       115,010,174    412,946       261,602       3,641,875
  
  Special resolution to increase the Director's powers to allot equity shares for
  cash, free of the pre-emption rights conferred by the Companies Act 1985.
  
          For         Against          Open         Abstentions
       116,835,752    497,137         171,978        1,821,730
  
  ITEM 5. OTHER INFORMATION
  
  None
  
  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
  
  (a)      Exhibits
  
           None
  
  (b)      Reports on Form 8-K
  
           During the first quarter ended March 31, 2001, the following reports on
           Form 8-K were filed by the Company with the Securities and Exchange
           Commission:
  
           Form 8-K (Item 7 - Financial Statements and Exhibits), date of earliest
           event reported February 15, 2001, with respect to Pro Forma Financial
           Data filed in relation to the Company's proposed merger with BioChem
           Pharma Inc.
  
           Form 8-K (Item 5 - Other Events), date of earliest event reported May
           4, 2001, with respect to announcement of first quarter results.
  
           Form 8-K (Item 5 - Other Events), date of earliest event reported May
           9, 2001, with respect to first quarter results and BioChem merger.
  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:    14, May 2001               By:  /s/  Angus C Russell
                                           -------------------------------
                                           Group Finance Director
  
  Date:    14, May 2001               By:  /s/ Rolf Stahel
                                           -------------------------------
                                           Chief Executive