Shire, Prasco Ink Deal - Analyst Blog

Shire ( SHPGY ) recently entered into an agreement with Prasco Laboratories, a US based privately held generics company. The agreement grants Prasco the US distribution rights to the authorized generic version of Carbatrol (carbamazepine) extended-release capsules in various strengths (100 mg, 200 mg and 300 mg). Detailed terms of the agreement were not provided.

Carbatrol is an anticonvulsant drug for several types of seizures including partial, tonic-clonic, mixed and several types of nerve pain including trigeminal and glossopharyngeal neuralgia. Carbatrol generated revenues of $45.6 million in the first nine months of 2011, representing 1.46% of Shire's total revenues.

Generic Threats

Shire is facing generic threats for several of its key marketed products. The company is already facing generic competition for Adderall XR, one of its top revenue-generating products. Teva Pharmaceutical Industries, Ltd. ( TEVA ) and Impax Laboratories, Inc. ( IPXL ) had launched generic versions of Adderall XR in April 2009 and October 2009, respectively.

Following the entry of generic competition, Adderall XR sales have nose-dived. Sales fell from $1,101.7 million in 2008 to $626.5 million in 2009. 2010 sales came in at $360.8 million. Watson Laboratories, Inc. ( WPI ) has also filed an abbreviated new drug application ("ANDA"), which is currently under litigation.

Vyvanse, currently the top revenue grosser at Shire, is also facing patent challenges. Six companies, including Sandoz, Inc., Amneal Pharmaceuticals LLC, Watson Laboratories, Roxane Laboratories, Inc., Mylan Pharmaceuticals, Inc. ( MYL ) and Actavis Elizabeth LLC and Actavis Inc. (both together) have filed ANDAs for their generic versions of Vyvanse. Shire has filed patent infringement lawsuits against all these companies.

Shire is currently fighting patent infringement lawsuits for several of its other products as well including Intuniv, Fosrenol and Lialda.

Our Recommendation

We currently have a Neutral recommendation on Shire. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

Shire's Movetis and Advanced BioHealing Inc. acquisitions have added immense potential to its pipeline. However, with several of its products already facing or likely to face generic competition, the company's pipeline needs to deliver.

IMPAX LABORATRS ( IPXL ): Free Stock Analysis Report

MYLAN INC ( MYL ): Free Stock Analysis Report

SHIRE PLC-ADR ( SHPGY ): Free Stock Analysis Report

TEVA PHARM ADR ( TEVA ): Free Stock Analysis Report

WATSON PHARMA ( WPI ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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