March 18 (Bloomberg) -- Shire Plc, the U.K.'s third-largest drugmaker, rose the most in 17 months in London trading after UBS analysts said AstraZeneca Plc may be interested in making a bid.

Shire, based in Basingstoke, England, soared 61.5 pence, or 6.2 percent, to 1,060 pence, the most since October 2006. The stock gained 5 percent on March 14 on market speculation that New York-based Pfizer Inc. may make an offer.

AstraZeneca needs new products to boost revenue as generic drugmakers threaten sales of some of its biggest medicines. The London-based company has three lawsuits pending against companies seeking to sell copies of ulcer treatment Nexium, its best- selling product. Shire last year got $1 billion from Adderall XR, an attention deficit hyperactivity disorder therapy that it sells alongside similar medicines Vyvanse and Daytrana.

``AstraZeneca can pay up to 1,425 pence, greater than a 40 percent premium, and achieve an economically accretive acquisition,'' UBS analyst Gbola Amusa and colleagues wrote in a note to clients today. ``A financial deal could boost margins and give AstraZeneca better comparisons relative to peers.''

Shire spokeswoman Jessica Mann said the company doesn't comment on market speculation. AstraZeneca spokesman Chris Sampson also declined to comment.

Confidence Shaken

Charles Stanley Group Plc analyst Jeremy Batstone-Carr said he was skeptical that a takeover would occur so soon after more than $195 billion in asset writedowns and credit losses worldwide has shaken confidence in financial markets.

``I'm a little wary about why now,'' Batstone-Carr said in an interview. ``Shire's got a raft of products which enjoy long patent protection and would fit the bill for both companies very nicely. But it may require credit markets to settle down a bit.''

AstraZeneca last year took on debt for the first time to fund the $15.2 billion purchase of U.S. biotechnology company MedImmune Inc. AstraZeneca paid about 11 times MedImmune's sales, a price that failed to impress analysts and investors. The stock has fallen about 37 percent since the U.K. drugmaker announced the takeover in April.

``The difference between Pfizer and Astra is that Astra has got quite a lot of debt following the MedImmune acquisition,'' said Batstone-Carr, who rates Shire ``buy'' and AstraZeneca ``reduce.'' ``But I'm not discounting either rumor.'' He doesn't rate Pfizer shares.

AstraZeneca shares gained 41 pence, or 2.4 percent, to 1,789 pence in London trading. The stock has declined about 17 percent this year.

To contact the reporter on this story: Trista Kelley in London at tkelley2@bloomberg.net.

Last Updated: March 18, 2008 13:11 EDT