Ebb & Flow

Shire(LSE:SHP; SHPGY) is taking its lumps for making a conscious decision to invest in marketing at the expense of current earnings growth. SHP dropped 225p (30%) to 525p on the week after announcing that its 2002 growth may be "compromised" due to pressures from generic competition against its Adderall ADHD therapy as well as marketing costs associated with its once-daily Adderall XR.

"Our biggest single issue, in growth terms, is that we are choosing to maintain our current rate of investment in development, and if necessary, at the expense of growing the EPS in the short term," Group R&D Director Wilson Totten told Ebb & Flow. "We could make a different decision if we felt it was the right thing to do, but we don't, and our judgment is to invest in the projects we have and keep up the promotional and marketing spends to make Adderall XR a really big product." ...