Shire at the river’s edge

Although Shire Pharmaceuticals Group plc gained its ADHD franchise via the purchase of Richwood Pharmaceutical Co. Inc. in 1997, the company’s next four acquisitions all shared a similar theme: to lessen the company’s dependence on revenues from its ADHD drugs. That is, until last week, when Shire said it would pay $2.6 billion in cash to buy partner New River Pharmaceuticals Inc.

Shire’s rationale is that the purchase will give it full control over ADHD compound Vyvanse (formerly NRP104), which it plans to position as the replacement for Adderall XR. The latter will face generic competition starting in 2009 under a patent infringement settlement between Shire (LSE:SHP; SHPGY, Basingstoke, U.K.) and Barr Laboratories Inc. (BRL, Pomona, Calif.).

Last Friday, the proposed acquisition paid its first dividend, as FDA approved Vyvanse. SHP expects to launch the product for pediatric ADHD next quarter.

Compared to SHP’s two marketed ADHD drugs - Adderall XR and Daytrana transdermal methylphenidate patch - Vyvanse is an NCE with a composition of matter patent. According to the company, the IP, Vyvanse’s product profile and the improving dynamics of the ADHD market make the company comfortable with having one compound as its primary revenue source.

Revenue exposure

There’s no question that the Adderall franchise has been very good to SHP, growing from $85.7 million in 1998 to $864 million last year. The problem is that generic competition was always looming on the horizon. The first-generation compound was never patented, and generics entered the market just four years after Adderall was launched.

SHP did get a patent for second-generation drug Adderall

Read the full 2604 word article

How to gain access

Continue reading with a
two-week free trial.