The maker of a leading hyperactivity drug has suffered a £1 billion hit to its value after a rival was given permission to make a copycat version.
Regulators in the United States approved a cut-price version of hyperactivity drug Adderall XR, which accounted for more than 10% of Shire's product sales in the last quarter, leading analysts to warn of "potentially severe" downgrades to earnings forecasts.
The legal blow for Shire, which employs 300 staff at its UK office in Basingstoke and is a market leader in developing drugs to treat attention deficit hyperactivity disorder (ADHD), came at least a year before such a move had been expected.
Although Shire said it would still deliver good earnings growth this year, it was the biggest faller in the FTSE 100 Index, with more than £1 billion wiped from its value.
Jeremy Batstone-Carr, an analyst at Charles Stanley Securities, said a worst case scenario could see sales of the drug hit by 50% this year and a further 50% the following year.
This could cause earnings per share for 2013 to be 10% lower than currently forecast.
But he added that it was not clear whether Actavis, which has been given permission to produce the drug, would decide to launch the product immediately, while it was also unclear how much they would sell the drug for.
Shire, which employs 5,000 staff globally, also owns another leading ADHD drug, Vyvanse.