Shire's ($SHPGY) Adderall XR just took a torpedo to the keel. U.S. regulators have approved the first third-party rival to the big-selling ADHD drug. The agency thus ushers onto the market a lower-priced rival from Actavis ($ACT) more than a year earlier than expected.
As Reuters reports, Shire has been the only Adderall XR supplier. It sells a branded version, of course, and supplies two authorized generics to Teva Pharmaceutical Industries ($TEVA) and Impax Laboratories ($IPXL). The company's shares plummeted by 12% on the news, and analysts predicted earnings-per-share downgrades for 2012 and 2013. Already Deutsche Bank cut its forecasts by 5-6%.
The big question is this: How will Actavis price its copy? If the company aggresively undercuts Teva and Impax, Shire stands to lose authorized-generic revenues as well as branded business.
Shire itself says it believes its Adderall XR franchise will remain competitive "through the distribution of branded Adderall XR and through its two authorized generic partners, Teva and Impax." And, the company said, it expects "good, full year 2012 earnings growth."