Shire Plc fell the most in more than nine years after U.S. drug regulators unexpectedly approved a copycat version of its second-biggest selling drug.
Shire sank 11 percent to 1,743 pence at the close of trading in London, the biggest intraday drop since January 2003. The stock was the biggest loser on the FTSE 350 Index.
The U.S. Food and Drug Administration approved a generic version of Shire’s hyperactivity medicine Adderall XR made by Actavis Group Hf, Shire said in a statement June 23. Analysts led by Brian Bourdot at Barclays Plc cut their 2013 profit forecast for the Dublin-based company by 14 percent.
“We had expected Adderall XR’s contribution to decline over time, but generic entry comes two years earlier than we had anticipated,” Bourdot and colleagues wrote in a note to clients. They rate the stock equal weight.
Shire expects to “remain competitive” with its branded version of the medicine as well as generics it approved through partners Teva Pharmaceutical Industries Ltd. and Impax Laboratories Inc., and said in the statement it anticipates “good full-year 2012 earnings growth.” The company said in April that gross margins would be “marginally lower” this year, reflecting costs from its $750 million acquisition of Advanced BioHealing Inc.
While Adderall XR’s patent expired in 2009, the complexity of its formulation and a petition by Shire demanding more rigorous testing of generics led to delays in the FDA approving the copycats, Luisa Hector, an analyst at Credit Suisse Group AG in London, wrote in a note today.
The drug earned Shire $533 million last year, or 13 percent of sales, making it the company’s second-biggest seller behind Vyvanse, the attention-deficit pill Shire introduced to replace revenue of Adderall XR following its patent expiry. Vyvanse’s patent is valid until 2023.
Watson Pharmaceuticals Inc. agreed in April to buy Actavis for 4.25 billion euros ($5.3 billion).