The announcement this morning that one of Shire's drugs could be reproduced by its competition as a generic alternative was widely expected.
What was not so expected was the timing of the decision around 18 months earlier than first thought.
The Food and Drug Administration (FDA) in the US agreed that a copycat version of its hyperactivity drug Adderall XR, could be made by rival Watson, sending shares in Shire down 227p, 11.6%, to £17.39.
The drug had been one of the key treatments in the company's ADHD stable and are particularly popular in the US. It is the company's second biggest-selling drug.
The company attempted to put a brave face on the decision, saying "continues to expect to deliver good full year 2012 earnings growth".
But analysts don't seem to see it that way, with nearly all downgrading forecasts.
Panmure Gordon said: "Adderall XR is a $500m business currently for Shire based on the revenues generated in the past 12 months. We now expect this business to shrink precipitously."
It added that Adderall XR forecasts will slip from $500m a year for the next three years, to $300m in 2012, $150m, in 2013 and $100m in 2014.
Deutsche Bank said: "Shire has been living with the threat of additional generic competition to Adderall XR for many years. Nevertheless news that the FDA has at last set in place generic guidelines and approved a non-authorised generic is still a surprise."
While Merrill Lynch was slightly more cautious about the impact.
It said: "The approval carries up to 20% risk to our EPS [earnings per share] estimates"
It explained a number of factors will determine Shire's profit margins for the drug, depending on when the rival drug comes to market, how much cheaper it could be, could other generic versions be approved and could Shire introduce cost-cutting measures to combat the potential fall.
Either way, it appears to be a major blow for Shire, reflected in the share price, which is at its lowest level since 2005 when the threat of a generic drug was first mooted.
