Shire's Search for Tranquility

Executives of Shire Pharmaceuticals (SHPGY) say 2006 will be an active year, the keys to which will be its new product pipeline and the regulatory uncertainty surrounding drugs for attention deficit hyperactivity disorder.

The company's revenue guidance for 2006, with growth forecast in the "low double-digit range," is based on several assumptions, including the absence of generic competition for its best-selling product, Adderall XR for attention deficit hyperactivity disorder, and a 5% prescription growth rate in the U.S.

"Any launch of a generic version of Adderall XR during 2006 would have a material impact on the company's performance and would materially impact the revenue growth guidance," Shire said. The drug is prescribed for children, teens and adults.

Adderall XR's worldwide revenue, most of which was in the U.S., reached $730.8 million, or 46% of corporate revenue last year. Adderall XR is a once-a-day drug. Its older cousin Adderall contributed $43.1 million to overall sales.

Shire continues to negotiate with or sue generic companies seeking to break the Adderall XR patent in the U.S. Shire says it's effective into 2018. Last month, Shire settled one fight with Impax Laboratories (IPXL). That settlement protects Shire's drug through 2009 and calls for Impax to pay royalties on its sales of generic copies.

The company is trying to negotiate a similar deal with Barr Pharmaceuticals (BRL), and discussions are progressing, Shire said.

Making financial predictions even more complicated is the fact that the Adderall franchise and most ADHD drugs are being re-examined by the Food and Drug Administration. The agency wants to assess if doctors and patients should be warned about the risks of potential heart problems or sudden death. A tougher label could hurt sales of all of these drugs, the majority of which are stimulants.

Under Review

Just to make things more interesting, Shire wants to bring two new ADHD drugs to market in collaboration with partners. In December, the FDA granted conditional approval to Noven Pharmaceuticals (NOVN) to sell a transdermal patch to deliver an ADHD stimulant-type drug, designed for children ages six to 12.