Shares in Shire surged more than 6 per cent after the Basingstoke based drugs group settled its legal spat with a division of American group Barr Laboratories over the marketing of a generic version of Adderall, its highly successful treatment for attention deficit disorders.

Although no direct payments were made in settlement of pending litigation, Shire said as part of its disclosure that Duramed Pharmaceuticals, a Barr subsidiary, would pay $63 million for the rights to sell its original version of Adderall in the United States.

This product accounted for $43 million of sales for Shire last year but just $18.9 million so far this year, according to analysts at Collins Stewart.

That, and the removal of the legal uncertainty surrounding the rumbling legal battle, sent shares in Shire sharply higher on the London Stock Exchange. They jumped 54.5p to 936p, a rise of 6.2 per cent against last night's 881.5p close, before settling early on at 929p.

Matthew Emmens, the chief executive, said: "We are very pleased to have reached this settlment on terms that are consistent with our beliefs that Shire's patents are valid and enforceable and infringed by would-be generic competitors.

"We are also excited about the opportunity of a new development and licensing agreement in the speciality area of women's health, particularly in Europe."

Shire struck an agreement with Duramed related to women's healthcare technology that it will apply to at least five of its own treatments. Shire will pay $25 million to cover previously incurred expenses at Duramed, rising to a maximum of $140 million over the next eight years.

As well as acting to prevent rivals from producing cheap copycat versions of their best-selling drugs, leading pharmaceuticals groups have been battling to find new products as existing sole rights to sell some treatments expire.

Under the terms of today's settlement, Barr will be banned from producing a copycat Adderall in the United States until April 1, 2009 - unless another third party is permitted to do so.

Navid Malik, pharmaceuticals analyst at Collins Stewart, said selling the original Adderall to Duramed was "a sensible move by Shire and does not make a significant impact to Shires profit as these sales were declining to a nominal level".

He added that: "Shire is now on a very strong footing for the pending approval of NRP104 (successor to Adderall XR) in October this year. Shire can then prepare its switching strategy into NRP104 and complete the bulk of it by 2009."

Mr Malik also noted that the settlement makes Shire a more attractive target for acquisition. He cited specialist drugs firms Serono, MedImmune and Forest Labs as potential buyers.

For more on Shire's shares click here

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