Shire hints at settlement with Barr over ADHD drug

Shire Pharmaceuticals, Britain's third-biggest drug maker, hinted yesterday there could soon be a settlement with Barr Pharmaceuticals which wants to make a copycat version of its top-selling hyperactivity drug, Adderall XR.

Adderall captured a record 26 per cent of the American drug market for Attention Deficit Hyperactivity Disorder (ADHD) last year, with sales of $730.8m (£420m), but faces the threat of competition from generic drug makers.

Shire's chief executive, Matthew Emmens, said: "We are encouraged by our discussions with Barr." A settlement would delay the launch of a cheap generic version of Adderall and give Shire more time to switch patients on to its next-generation treatment, NRP 104. Mr Emmens believes it could be even bigger than Adderall and turn out to be a blockbuster drug with annual sales of $1bn.

Shire has already settled a similar dispute with Impax Laboratories, which prevents Impax from launching a generic version of Adderall before 2010 unless agreed by Shire.

The group has tried to reduce its reliance on Adderall by investing in a raft of new drugs and is targeting five launches by the middle of next year, including NRP 104.

Its annual results showed a 19 per cent rise in product sales to $1.3bn and a 5 per cent increase in royalties to $242.9m last year. Shire expects low double-digit growth in revenues this year. Further investment in last year's £800m acquisition of the US group Transkaryotic Therapies is expected to weigh on earnings this year. Spending on research and development has shot up to 21 per cent as a proportion of sales, mainly because Shire has taken on two major R&D projects as part of the TKT deal.

In the long run, that figure is expected to fall back to the mid-teens.

A group representing 30 per cent of TKT shares has challenged the acquisition as too low under Delaware legislation originally designed to protect minority shareholders in hostile takeovers, and a trial is to start at the end of the year. Mr Emmens was confident the judge would decide in Shire's favour. "We paid a full and fair price," he said, noting that most of the dissident shareholders had bought into the company late.