MORE THAN £1 billion (€1.2 billion) was wiped from Shire’s market capitalisation yesterday after the US Food and Drug Administration widened the use of generic competition for one of its biggest medicines.
The FTSE 100 drugmaker’s shares fell 13 per cent after the FDA granted approval for Watson Pharmaceuticals’ Actavis unit to produce a cut-price version of Adderall XR, one of Shire’s top-selling treatments, for attention deficit and hyperactivity disorder.
Although there are two generics of Adderall XR on the market – produced under licence by Israel’s Teva Pharmaceuticals and Impax Laboratories of the US – the looming introduction of a new cut-price version sent analysts scrambling to trim their earnings forecasts.
Savvas Neophytou at Panmure Gordon cut Adderall XR’s 2013 sales expectations from $500 million to $150 million, and downgraded his estimate for Shire’s earnings per share by 7.2 per cent to 227.53 cent.
The news pushed the drugmaker’s shares down 256p to £17.10 in midday London trading, knocking £1.4 billion from the group’s £11 billion market capitalisation.
Analysts led by Brian Bourdot at Barclays cut their 2013 profit forecast for the Dublin-based company by 14 per cent.
“We had expected Adderall XR’s contribution to decline over time, but generic entry comes two years earlier than we had anticipated,” Mr Bourdot and colleagues wrote in a note to clients.
In spite of the setback, Shire said it would remain competitive in the ADHD market through the distribution of Adderall XR and the two authorised generics.
Adderall XR was Shire’s second-biggest selling drug in 2011, with sales jumping almost 50 per cent year on year to $533 million.
The ruling is the latest in a string of setbacks for Shire, which included the FDA last month putting the brakes on a move to bolster its manufacturing capacity at a new facility in Lexington, Massachusetts.
In March, Shire abandoned efforts to win US regulatory approval for Replagal, one of its treatments for Fabry disease, a rare genetic disorder. – Copyright The Financial Times Limited 2012
