Shire Falls Most Since June on Adderall XR Competition
Stock Chart for Shire PLC (SHP)
Shire Plc, the world’s largest maker of drugs for attention-deficit hyperactivity disorder, fell the most in almost eight months after its once-best-selling Adderall XR treatment got a new generic competitor.
Shire dropped 5.5 percent to 2,027 pence, the biggest single-day decline since June 25, giving the company a market value of 11.3 billion pounds ($17.5 billion).
Teva Pharmaceutical Industries Ltd., the world’s biggest maker of generic medicines, won approval from the U.S. Food and Drug Administration Feb. 12 for a version of Adderall XR, according to the FDA website. A copy sold by Actavis Inc. created a “double negative effect” last year in which Shire lost sales and missed out on royalties from a version of the drug sold by Impax Laboratories Inc., UBS AG analysts including Guillaume van Renterghem wrote in a note today.
“Since Actavis launched its generic XR, Shire Adderall XR lost 3.8 percent in Adderall XR market shares and Impax lost 23.2 percent, creating a double negative effect,” said van Renterghem, who recommends buying Shire shares. “The reason why Adderall XR lost so little market shares is because of the heavy discount provided” to the U.S. Medicaid program, which Teva is unlikely to beat, he said.
Sales of Adderall XR declined 35 percent to $82 million in the fourth quarter, Dublin-based Shire said in a statement today. Shire expects earnings per share excluding some items to increase about 10 percent this year, meeting analysts’ estimates, the company said.
“We believe that branded Adderall XR can continue to compete successfully in a generic market as it has done over the last four years,” the company said in the statement.
The stock has lost 10 percent, including reinvested dividends, in 12 months, compared with a 20 percent return for the Bloomberg Europe Pharmaceutical Index.
Earnings excluding some items rose to $1.58 per American depositary receipt from $1.51 a year earlier, Shire said. Analysts predicted profit of $1.57 per ADS, the average of 11 estimates compiled by Bloomberg.
Sales in the quarter gained 5 percent to $1.2 billion, meeting the average analyst estimate.
Revenue from Vyvanse, approved since 2007 as a treatment for children with attention-deficit hyperactivity disorder, climbed 18 percent to $256.5 million.
Sales of Replagal, a treatment for a rare genetic illness called Fabry disease, slipped 2 percent to $118.2 million partly because of the timing of certain orders, Shire said. Among 1,000 patients outside the U.S. who switched to Replagal because of a viral contamination at a Genzyme plant in 2009 that had led to a shortage, about 90 percent are sticking with Shire’s drug, the company has said.
Angus Russell, the chief executive officer since 2008, is retiring in May, to be replaced by Flemming Ornskov, a marketing executive from Bayer AG. Sylvie Gregoire, the head of Shire’s rare genetic diseases unit, is leaving the company at the end of March, Shire said today.
“Dr. Ornskov is taking over a company with good prospects, although I am sure he will be disappointed that Sylvie Gregoire has decided to leave Shire,” Mick Cooper, an analyst at Edison Investment Research, said in a statement.
Shire plans to start advanced tests of an experimental device designed to pump drugs into the brain of patients suffering from certain rare genetic diseases, the company said.
The company also said it’s still in talks over a lawsuit it brought against Actavis for infringing its patents on Intuniv, another drug for ADHD. Actavis said in July it won tentative U.S. approval for a generic version of the pill. Discussions with Actavis on Intuniv are “on-going,” and they are “constructive,” Russell said during a conference call with reporters today. He declined to comment further.
The restructuring of the Advanced BioHealing business, acquired in 2011 for $750 million, is “pretty much finished, the new commercial model has been rolled out in the past few weeks, and we’re seeing clear signs of a turnaround,” Russell said. “We have expectations to grow this business into the future. We still think it’s a good platform in terms of the product itself, Dermagraft,” a treatment for diabetic foot ulcers.
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