Shire looking beyond attention-deficit drugs

Shire P.L.C. is hoping that one day soon investors will pay less attention to its attention-deficit drug franchise.

The company's drugs in this category, which include Adderall XR and Vyvanse, accounted for about one-third of Shire's second-quarter sales. That figure at one time was as high as 50 percent.

But even though the company has diversified its revenues, attention-deficit hyperactivity disorder treatments remain so dominant that after Adderall XR faced its first generic competition in April, Shire's second-quarter sales shrank 19 percent from a year ago.

Chief executive Angus Russell, who is based at the Wayne U.S. headquarters of the British company, thinks that performance signals success. Second-quarter sales of Adderall XR, after all, fell 77 percent in the last year, but growth in the rest of the portfolio led to a $44 million quarterly profit. Investors, however, have yet to decide whether the company has overcome the patent-expiration hurdle.

Shares have traded the last year between $31.66 and $54.03. They closed yesterday at $50.56, up 35 cents.

About six years ago, Shire overhauled its business model, a remake that Russell said has worked. Shire dropped in-house research and development because it requires squadrons of expensive scientists whose efforts often fail.

"You're just kind of drilling holes, and a lot of them come up dry," Russell said in an interview.

Instead, Shire buys drugs from other companies after they have showed some promise in human testing. Case in point: A 2005 partnership with New River Pharmaceuticals to develop Vyvanse eventually led Shire to buy the company for $2.6 billion in 2007, just a few months before the drug went on the market. In the first half of this year, Vyvanse generated $335 million in sales, a 120 percent yearly increase, according to data provider IMS Health.

In 2005, Shire bought Boston's Transkaryotic Therapies Inc. for $1.6 billion and now markets several of its drugs, including Replagal for Fabry disease and Elaprase for Hunter syndrome.

At the time of the acquisition, Transkaryotic was losing money and employed 390 people. Russell told the company's employees that Transkaryotic reminded him of Shire in its early days and predicted it would soon be profitable.

"They all thought I was crazy," Russell said. Today, Transkaryotic is earning money and employs 1,000 of Shire's total 3,700 employees worldwide. About 700 of those work in Wayne.