Shire Sinks On Generic Adderall XR Approval But Rebound Seen

--Shire rival cleared to market Adderall XR generic

--Shares sink more than 10%

--Shire says expects to remain competitive in Adderall XR market

 
   By Sten Stovall 
 

LONDON--Shire PLC (SHP.LN), usually a darling of investors, had a rare bad news day Monday after a rival was cleared to market a cut-price generic version of its hyperactivity drug Adderall XR, but analysts expect the U.K. specialized drug maker to rebound quickly once attention returns to its strong portfolio of innovative drugs.

Shire shares sank more than 10% after U.S. regulators ruled against the company and approved generic copies of its hyperactivity medicine Adderall XR from Watson Pharmaceuticals' (WPI) recently acquired Actavis unit.

Until Monday, there have only been two authorized generic forms of Adderall XR on the market, both supplied by Shire.

The arrival of a low-cost version of the drug had been expected but analysts said the U.S. Food and Drug Administration's ruling had come sooner than expected.

Shire said it nonetheless expects to remain competitive in the Adderall XR marketplace through the distribution of its branded versions of the therapy and through its two authorized generic partners, Teva Pharmaceutical Industries Ltd. (TEVA) and Impax Laboratories Inc. (IPXL).

"While recognizing that there will be multiple dynamics affecting the overall market following the approval of the Actavis generic, Shire continues to believe that it will deliver good, full-year 2012 earnings growth," the company said.

"We have prepared for this event and have a variety of options which we can and will consider to offset any downward pressure on profitability from this," a Shire spokesperson said. "We will continue to invest and reduce costs in the discretionary expenses area of the business."

Amphetamine-based Adderall XR began to see generic competition three years ago. Since then, Shire has focused on Vyvanse, its next-generation medicine for attention deficit hyperactivity disorder, or ADHD, which is growing more than twice as fast as the overall U.S. market for hyperactivity drugs.

Vyvanse has a different delivery mechanism than Adderall, in that the drug can only be absorbed through the gut and cannot be crushed for injection, limiting the potential for abuse.

"The importance of Adderall XR to Shire's long-term financial health is diminishing as other franchises grow rapidly," said analysts at Shore Capital.

Analysts say sentiment towards Shire should be reinforced by the strong performance of Vyvanse in the booming ADHD market as well as the medicine's potential of treating other disease areas.

Growth prospects also look strong for Shire's skin substitute Dermagraft, its Firazyr treatment for acute attacks of a hereditary angioedema, and data for its new Human Genetic Therapies products.

At 1210 GMT, shares in Shire were down 12.56% to GBP17.20, making it the FTSE-100 index's top faller.

-Write to Sten Stovall at [e-mail]