* Q2 earnings up 26 pct, beating expectations
* Sees double-digit earnings growth for year
* Says new Adderall XR generic will have limited impact
* Shares up 7 pct
By Paul Sandle
LONDON, Aug 1 (Reuters) - Shire said cheap, copycat competition would have only a limited impact on sales of its hyperactivity drugs in the key back-to-school period, reassuring investors that earnings would still rise by a double-digit percentage this year.
Shares in the pharmaceutical company, which fell as much as 13 percent in June when U.S. regulators approved a cut-price version of Adderall XR, rose more than 7 percent on Wednesday after it gave the earnings target along with a beat for the second quarter.
“Although of decreasing importance in our ADHD (Attention Deficit Hyperactivity Disorder) portfolio, we believe that branded Adderall XR will remain competitive in the U.S. marketplace despite the approval of a new generic product,” the company said on Wednesday.
Shire, which also makes expensive drugs to treat rare diseases, reported non-GAAP diluted earnings per ADS (American Depositary Share) of $1.68, up 26 percent, on revenue of $1.2 billion, up 14 percent. Both beat analysts’ forecasts.
Analysts at Deutsche Bank said growth of the two key franchises, ADHD and rare disease medicines, remained in double digits, up 20 percent and 14 percent respectively, with the former helped by strong sales of Vyvanse and the latter by well above-consensus sales of new drug Firazyr.
They said that, although Shire trimmed its revenue target to double-digits from low to mid teens, it was on track to deliver “double digit earnings growth for 2012”.
“This should help to reassure a nervous market, albeit there are still litigation and competitive challenges to overcome.”
Shire’s chief executive Angus Russell said analysts had downgraded forecasts on the approval of the generic Adderall XR, so the company was reassuring investors about the group’s continued growth.
“We feel confident about putting a floor under our earnings (growth) this year of 10 percent,” he said.
Finance director Graham Hetherington said earnings growth for 2012 would be at least market consensus, which stood around 10 percent, while there would be “sound growth” of up to 10 percent in 2013.
Adderall, first in a standard version and later in extended release, was the foundation of Shire’s hyperactivity portfolio, although the newer Vyvanse now sells more than twice as much.
Two authorised generic versions of Adderall XR, from Teva Pharmaceuticals and Impax, were already on the market before Actavis, which is being acquired by Watson Pharmaceuticals, won its application.
Russell said the Actavis product would be priced in line with the two existing generics, which have targeted mainly pharmacy sales rather than managed accounts.
Actavis would also need to secure a quota to supply the drug, which as an amphetamine is a controlled substance.
“They obviously don’t have a substantial quota at this stage, so that will very much limit their ability to supply during the back to school period this year,” he said.
Shire is also facing a challenge to its newer non-stimulant ADHD drug Intuniv from Actavis, which has won tentative approval for a generic version.
Russell said a hearing was scheduled for September, although he was open to a settlement.
The company had been expected to report revenues of $1.19 billion and non GAAP earnings per ADS of $1.53, according to a company-supplied consensus of 19 analysts.