Shire in deal with Barr to delay launch of rival to its ADHD drug

Shire, the FTSE 100 pharmaceuticals firm, is asking competition regulators to approve a deal that will delay the launch of a cut-price rival to its best-selling drug.

The company's shares rose yesterday after it unveiled a three-part agreement with Barr Laboratories, a US company which had been threatening to start selling a copycat version of Adderall XR, a treatment for American children with attention-deficit/hyperactivity disorder, which had sales of $427m (£225m) in the first six months of the year. Shire shares rose 6.5p to 888p.

A court battle over patent rights, scheduled for October, will now be dropped. Shire claims the drug is protected by patents until 2019, but the City feared it could lose the case, enabling Barr to launch perhaps as early as next year. Now, Barr will start selling Adderall XR in April 2009.

The deal gives Shire more time to persuade US doctors to switch children on to a new generation of its attention-deficit drugs.

However, some analysts feared the deal could become bogged down with the Federal Trade Commission, which has taken a tough line against some deals between branded pharmaceuticals firms and generic manufacturers. Last month, a deal between Bristol-Myers Squibb and Apotex, a Canadian generics manufacturer, collapsed and BMS is now under investigation by the Department of Justice's competition arm for trying to hold off cut-price competition to its heart drug Plavix.

Matt Emmens, the chief executive of Shire, said that no payments are being made to Barr. "It is a no-no to pay someone off," he said, so the deal had been structured to be "FTC-friendly".

Bruce Downey, Barr's chief executive, said: "The agreements enable a pro-competitive and pro-consumer introduction of a generic version of Adderall XR more than nine years earlier than might otherwise have been possible."

Shire has also agreed to sell an early version of its attention deficit drug, simply called Adderall, to Barr for $63m (£33m). Sales of Adderall, which already faces generic competition, were $19m in the first six months of 2006.

Shire is also going to bankroll the development of a range of hormone replacement therapies and other female health drugs, including the oral contraceptive Seasonique. That could cost it up to $165m over eight years. Shire will have the right to sell the drugs in Europe, but Barr will bank the profits from the US market.

The FTC will examine whether the terms of the side deals are such that Shire is, in effect, paying Barr to drop its challenge to Adderall XR. Both sides, though, insisted the deals were signed on economic terms.