Shire Pharmaceuticals was forced to admit yesterday that its exciting new kidney drug will not get approval for launch in Europe this month and would now have to wait until next year.

Shire's shares plunged 60p in a frantic five minutes of trading between the announcement and the close of the market, ending down 33p, or 5 per cent, at 590p, as analysts struggled to assess the impact on future profits of a delay of at least three months.

In a terse statement, Shire said that regulators had raised a number of issues over the safety or efficacy of Fosrenol in a telephone call with the company yesterday.

The company refused to give details of the issues raised or even to name the European country in which it is seeking initial approval for the drug, the so-called "reference member state".

Under European Union rules, approval in a single EU country will trigger approval across all the 15 member states.

Shire said: "As part of the approval process Shire is in regular contact with the reference member state reviewing the substantial data set submitted. Shire has just been informed that the process of addressing the remaining issues, including external expert review, will not complete before the end of [the third quarter] as previously indicated by the company."

Fosrenol is a chewy sweet for dialysis patients who are suffering a build-up of phosphate in the blood, which can lead to bone and cardiovascular problems. Fosrenol was expected to have sales of more than £50m by 2005.

Shire's shares had already been under pressure earlier in the day as some dealers took fright at a profits warning from Genzyme, a US rival, which said sales of a similar kidney drug had been disappointing.

Fosrenol is seen as the most significant product in Shire's efforts to reduce its dependence on sales of Adderall, its blockbusting treatment for hyperactivity in children. The various versions of Adderall accounted for 43 per cent of group revenues in the first half of this year.

Shire Pharmaceuticals insisted it believed all the issues raised by the regulators yesterday could be resolved within a few months and that it continues to plan for a European launch in 2003. A spokesman said Shire had presented the regulator with a vast file of data from human trials and that its sheer complexity was slowing the process. Analysts noted that Shire has already missed the first date pencilled in for European approval – which was originally in July – and some suggested the delay did not bode well for the approval process in the United States, the world's largest drugs market.

Shire has submitted an application for approval by the Food and Drug Administration in the US as well, and yesterday stuck by its prediction that a decision will be made there in the first half of next year.