Shares in Shire have taken a bashing this morning after the US Food and Drug Administration gave the green light to Actavis' generic version of the attention-deficit hyperactivity disorder treatment Adderall XR.

Shire had filed a citizen petition with the agency seeking to delay generic competition to Adderall XR (mixed amphetamine salts) by asking that firms supply more robust bioequivalence data. The FDA has responded saying it requires that all Abbreviated New Drug Applications, or ANDAs, have to establish bioequivalence "using partial area under the curve measurements at five hours and beyond five hours, for both d- and l- amphetamine".

However, the agency informed Shire that it has approved the ANDA for generic Adderall XR filed by Actavis, now part of Watson. Although off-patent, the drug is still a big earner, posting flat sales for the first-quarter of $111.4 million.

Shire said it believes that it will remain competitive through the distribution of branded Adderall XR and through its two authorised generic partners Teva and Impax. The company added that "while recognising that there will be multiple dynamics affecting the overall market following the approval of the Actavis generic, Shire continues to believe that it will deliver good, full-year 2012 earnings growth".

Investors are not so sure, however, and Shire shares were down 12.4% to £17.23 at 10.10am (UK time). Analyst Savvas Neophytou at Panmure Gordon issued a research note saying that Adderall XR is a $500 million concern and "we now expect this business to shrink precipitously".