LONDON (Reuters) - London-listed drugmaker Shire reported a solid start to the year on Thursday with first-quarter earnings up 6 percent despite challenges on several fronts as it works towards a deal to be acquired by Takeda Pharmaceutical.

The rare-disease specialist said on Wednesday it was willing to support a $64 billion (46 billion pounds) offer from Takeda, in what would be the biggest takeover in the sector since 2000, but investors see risks to the ambitious deal being consummated.

Takeda's falling share price has already reduced the value of the cash-and-shares deal to around $61.5 billion.

Chief Executive Flemming Ornskov said Shire's board would engage in talks with Takeda on the terms of a possible offer, and both parties would conduct due diligence.

"We will provide more information when possible," he said, adding that takeover rules meant he could not comment further as he presented results that gave little cause for Takeda to raise its offer.

Shares in Shire were trading at 38.55 pounds at 1420 GMT, up 1 percent on the day but still far adrift from the fifth offer from Takeda that persuaded Shire to engage.

Takeda has until May 8 to make a binding offer, under UK takeover rules. Assuming this is endorsed by the Shire board, Shire then needs the support of 75 percent of votes at an extraordinary general meeting to back the takeover.

At the same time, Takeda also needs two-thirds shareholder support to issue the new shares needed for the acquisition - a potential flashpoint with sceptical investors.

The deal would be the drug industry's biggest since Pfizer 2000 acquisition of Warner Lambert, and a coup for Takeda's mild-mannered French CEO, Christophe Weber.

Aside from the deal, Ornskov said Shire was off to a "solid start to 2018", with product sales up 7 percent to $3.6 billion, driven by its immunology franchise, recently launched drugs and international markets.

Currency factors also flattered sales, as Shire felt the impact of falling sales of its flagship ulcerative colitis drug Lialda. Early generic competition to Lialda has added to Shire's recent problems.

Non-GAAP earnings per share rose 6 percent to $3.86, beating analysts' expectations of $3.69 thanks to higher sales of drugs for rare diseases and a lower tax rate, while revenue rose 5 percent to $3.77 billion, also just beating forecasts.

Takeda's approach was worth 49.01 pounds per share on Wednesday, but the drop in the value of Takeda's stock - down 18 percent since news of its interest broke - has reduced it to under 47 pounds.

Analysts at Barclays said the results were "solid enough, but a sideshow". They said it was a little bizarre to have no reference whatsoever to the takeover situation beyond its being cited as a guidance uncertainty.

UBS said sales of Vyvanse, Shire's hyperactivity blockbuster, were strong, as was haemophilia, an area where it faces increased competition, but its new ADHD medicine Mydayis, ophthalmic treatment Xiidra and immunoglobulin were weak.

SMART DEALS

In the 30 years since it started out as a small business selling calcium supplements from above a shop in southern England in 1986, Shire has become a poster child for a nimble specialty drugs firm, driven by smart deal-making.

But the stock lost its lustre two years ago after its biggest-ever deal, the $32 billion acquisition of Baxalta, which increased its exposure to the haemophilia treatment market at a time of major uncertainty.

Roche's new haemophilia drug Hemlibra is taking market share from other players, and gene therapy promises even more radical changes to treatment in the years ahead.

Shire's debt pile in the wake of Baxalta has also put on hold the Dublin-based firm's past business model of regular bolt-on deals, piling pressure on Ornskov to find new ways to unlock value.

Prior to Takeda's approach Ornskov had already decided to split its rare disease and hyperactivity drugs into separate units and, more recently, it divested its oncology drugs to France's Servier for $2.4 billion.

"We have one disposal of oncology and that is the only one I can comment on," he said on Thursday, when asked about further disposals.

"We have announced previously that we continue to focus the company on rare diseases, but in this context the only one that has been announced and the only one I can talk about is oncology and I do not want to speculate on other plans."

Shire, which has long been seen as a likely takeover target, was nearly bought by AbbVie in 2014, until U.S. tax- rule changes caused the deal to fall apart.

At the time, Ornskov promised ambitious long-term targets as part of Shire's defence and ramped sales forecasts further after buying Baxalta. In January, however, he was forced to drop a 2020 revenue target of $20 billion due to mounting drug competition.

(Reporting by Paul Sandle and Ben Hirschler; editing by Sarah Young and Georgina Prodhan)

By Paul Sandle and Ben Hirschler