Shire Pharmaceuticals, the FTSE 100 drug development group that issued a devastating profit warning in February, said yesterday that it would grow earnings this year after all. The company said it was making "brilliant" progress in switching users of its off-patent lead drug – Adderall, a treatment for hyperactive children – to a new improved version that does have patent protection.
Its shares, which had appeared moribund since the warning, surged 14 per cent after results for the first three months of the year.
Shire posted sales growth of 30 per cent to $243.2m (£167m), saying the combined sales of Adderall and Adderall XR, the new once-a-day version, were up 54 per cent to $108.0m. Adderall XR now has a 16 per cent share of the market. Group income before tax was $77.5m, up 40 per cent on the first quarter of last year.
Rolf Stahel, chief executive, rounded on analysts, investors and commentators who he said had misunderstood February's warning. "What people didn't pick up on three months ago is that we are going through a major transition and strengthening of the company. We are switching our patients from an unpatented product, Adderall, to Adderall XR, which is patent protected. While from a revenue point of view we may not be growing the brand, since we are cannibalising our own sales, we are doing it for the right reasons."
Shire's shares plunged more than 30 per cent at the time of its annual results, when it said "competitive and cost pressures may compromise our ability to grow in 2002". Analysts were left in the dark over the likely impact on earnings of generic competition to Adderall. Yesterday it promised "earnings per share equivalent to 2001, with the prospect of some earnings growth".
One copycat, or generic, version of Adderall has been on the market in the US since February and another is likely to be launched over the summer. But Mr Stahel said the latest data showed Adderall XR winning market share from other generic hyperactivity drugs as well as Adderall itself.
Together with income from Shire's other drugs, Mr Stahel said he expected percentage sales growth in the low to mid-teens. Shire shares leapt 71p to 580p as analysts digested the first-quarter figures, which were ahead of forecasts, and news that operating margins are already at the top end of Shire's 25-30 per cent target range and are set to carry on growing.
Mr Stahel also dropped hints of a big product acquisition within weeks. Analysts think it is likely to be of a drug to treat renal problems, which would complement Foznol, a drug for reducing blood phosphate levels in people with kidney failure that Shire expects to launch in Europe over the summer.