EFTA Document EFTA01385517

> Healthcare Deutsche Bank Q Shire Richard Parkes, BUY, close 3875p, 5000p tgt, 29% upside • We expect new long-term targets to help rebuild investor confidence. We expect these targets to reassure that Shire can continue to grow despite headwinds to haemophilia. Between this, execution on deleveraging and completion of the Neuroscience Review (at end-17), the share price should recover. • Synergies and deleveraging should offset headwinds in '18, delivering revenue growth. Growth of Immunology and from recent launches should drive top-line growth. ■ More long-term safety data needed before Shire could be displaced in haemophilia (24% of sales). Hemlibra is a competitive threat to Shire, but a majority of patients will need more evidence on safety given safety issues observed in its inhibitors trials. ■ Expert feedback suggests Shire will emerge as dominant in HAE with Lanadelumab (launch expected in 2H18). • Shares are far too cheap at just 8x 19E PE and 9x EV/EBITDA. Shire is the cheapest stock in our coverage after '17 underperformance, driven by earnings downgrades. ■ Consensus has overlooked new pipeline opportunities. We see positive surprise potential on these programmes, particularly if clinical data supports attractive pricing for SHP621 (est. 150k patients in the US alone, many of whom have few effective treatments). Related DB Research: Shire: Headline HAVEN 3 data incrementally better than anticipated {Parkes( Pharma: 2018 Outlook: Fundamentals solid but fewer debates than in prior years (Parkest Bull/bear case: blue sky yields almost 45% upside 6000p 5500p -I 5000p 1 '-' :. 400Op 4500I) 1 31128 3500p -1 2500p -j 2000p -I 3000p -I, m_ 594p 1500p .. 7 — i to s e i e +0 Source: Deutsche Bank 380p 5377p 817p 258p 216p 4997p IOW 4523p 11111111•1•11101 Shares are now very cheap on lyr PE vs. EU Pharma PE rel to sector (x). 1 V fwd 16 1.2 0.8 0.4 Dec 11 Dec 13 Dec 15 Jan 10 Source: Deutsche Bank Shire 1yr fwd PE rel to EU Pharma Rel to EU Pharma 4yr Ave +1 s.d. -1 s.d. Dec 17 Deutsche, Bank Research* European. Equity Focus - Jamaiy 2016 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL SDNY_GM_00232987 DB-SDNY-0086803 EFTA01385517