Watson's Generic Launches Continue - Analyst Blog


Watson Pharmaceuticals Inc. ( WPI ) recently announced the launch of a generic version of Teva Pharmaceutical Industries Ltd. 's ( TEVA ) LoSeasonique. The drug is used for the prevention of pregnancy. The launch of the generic drug took place as a part of a settlement agreement between the two companies.

We note that since Watson Pharma was the first company to file an Abbreviated New Drug Application (ANDA) for the generic version of LoSeasonique, as a result, it has 180-day marketing exclusivity for the generic drug.

According to IMS Health, LoSeasonique sales amounted to $28 million for the twelve months ended September 30, 2011.

Last month, Watson Pharma announced the launch of an authorized generic version of Pfizer Inc. 's ( PFE ) drug, Lipitor. Pfizer markets Lipitor as an adjunct to diet, to reduce elevated total cholesterol, LDL (bad cholesterol), triglycerides and to increase HDL (good) cholesterol.

According to the supply and distribution agreement, Pfizer will manufacture and supply all dosage strengths of the authorized generic product to Watson Pharma, who, thereafter, will market and distribute the same in the US. In return, Pfizer will receive a share of the net sales from Watson Pharma. The agreement, which runs until November 30, 2016, is expected to add about 48 to 53 cents per share to Watson Pharma's 2011 earnings.

According to IMS Health, Lipitor sales amounted to $7.8 billion for the twelve months ended September 30, 2011.

In November, Watson Pharma also announced that the US Food and Drug Administration (FDA) approved its ANDA for Bayer 's ( BAYRY ) oral contraceptive pill, Yaz. We note that Watson Pharma and Bayer are currently involved in a patent litigation lawsuit concerning this product.

According to IMS Health, Yaz sales came in at $173 million for the twelve months ended September 30, 2011.

Our Take

We currently have an Outperform recommendation on Watson Pharma. The stock carries a Zacks #2 Rank (Buy rating) in the short run.

We expect the new generic product launches over regular intervals to help drive the company's Global Generic segment's sales, which climbed 39% to $802.5 million in the third quarter 2011. Additionally, we expect Watson Pharma's 2011 results to be positively impacted by the sales of generic versions of Lipitor and Johnson & Johnson 's ( JNJ ) Concerta.

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WATSON PHARMA ( WPI ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BAYRY , JNJ , PFE , TEVA , WPI



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