(Corrects typo in spelling of Valeant Pharma in para 4)
* First-quarter earnings up a forecast-beating 38 pct
* Raises 2014 growth target percentage to mid-to-high twenties
* CEO declines to comment on M&A speculation
* Shares up 1.7 pct
By Paul Sandle
LONDON, May 1 (Reuters) - Shire, a pharmaceutical group created by acquisition, soundly beat expectations for first-quarter earnings and raised its outlook on Thursday, underlining its own appeal as a target in the merger frenzy gripping the sector.
The London-listed group, which has franchises in drugs to treat hyperactivity and rare diseases, reported earnings per share of $2.36, by its preferred non-GAAP measure, on revenue of $1.35 billion, boosted by strong sales of its ADHD (attention deficit hyperactivity disorder) drug Vyvanse.
The group raised its outlook for earnings growth this year to a percentage in the mid-to-high twenties from its previous prediction of similar growth to the 23 percent recorded in 2013.
Shire, a perennial subject of takeover speculation, has attracted interest from Botox maker Allergan Inc in recent months. Allergan, which itself has received an unsolicited bid from Valeant Pharmaceuticals, is preparing an approach for Dublin-based Shire, Reuters reported on Tuesday.
Shire Chief Executive Flemming Ornskov declined to comment on any specifics regarding what he described as the "merger frenzy" in the sector.
"My perspective is to focus on growth and profitability," he said. "That's what I can control and will continue to focus on."
Shire, which has a market capitalisation of $33 billion, has long outpaced its big pharma rivals' growing revenues and profits. Its base in Dublin, which has a lower rate of corporation tax than many countries, including the United States, adds to its appeal.
Ornskov said he saw innovation coming from two sources: internal, which is the group's pipeline, and external, both through business development and mergers and acquisitions.
In terms of seeking deals, Ornskov said size is not the main factor. "It's really, do we think the compounds in the pipeline or on the market would bring significant innovation and value? And would we be the best owner of these assets from a patient perspective, from an innovation perspective and an efficiency perspective?" he said.
Shares in Shire, which hit a record of 34.91 pounds on Tuesday, were trading 1.7 percent higher at 34.37 pounds at 1312 GMT.
Analysts at Jefferies said earnings per share beat the consensus forecast by 6 percent, driven by lower costs.
"Ongoing M&A speculation is likely to overshadow these financials," they said, adding that their "buy" rating is driven by the company's attractive valuation in the longer term.
Ornskov said he believed that the company had an opportunity to double revenues in its neuroscience unit by the end of the decade, helped by the potential use of Vyvanse to treat binge eating disorder and a drug candidate for adults with ADHD.
The new drug, SHP465, is a long-lasting combination of amphetamine salts, Ornskov said. Based on feedback from the U.S. regulator, it could launch as early as the first half of 2015, he added.
Analysts had expected Shire to post revenue of $1.38 billion and non-GAAP earnings per american depositary share (ADS) of $2.22, according to a company-compiled poll of 19 brokers.
(Editing by David Goodman)