Watson Pharmaceuticals Inc.
) recently announced that the US Food and Drug Administration (FDA)
granted final approval to the company's abbreviated new drug
application (ANDA) for its generic version of
Endo Health Solutions Inc.
) drug, Lidoderm. Lidoderm (lidocaine patch 5%) is currently
approved for the relief of pain associated with post herpetic
Watson Pharma intends to begin shipments of its generic version
of Lidoderm in September 2013 per the terms of its settlement
agreement with Endo. Watson believes it is entitled to a 180-day
period of marketing exclusivity under the provisions of the
According to IMS Health, US sales of Lidoderm amounted to $1.2
billion for the twelve months ended June 30, 2012.
We note that earlier in May 2012, Watson reported that it
entered into an agreement with Endo to settle two patent
infringement lawsuits related to Lidoderm. Under the terms of the
agreement, Watson is allowed to launch the generic version of
Lidoderm on September 15, 2013.
Meanwhile, Endo will provide $12 million (wholesale acquisition
cost) worth of branded Lidoderm product to Watson Pharma every
month from January through August 2013.
Endo cannot launch an authorized generic unless any company
other than Watson Pharma launches generic Lidoderm or for 7.5
months following the launch of Watson Pharma's product, whichever
Watson Pharma is required to pay a royalty of 25% on gross
profit during any exclusivity period it may enjoy following the
launch of its generic product. The royalty will be payable until
another generic including an authorized generic enters the
We currently have a Neutral recommendation on Watson Pharma.
However the stock carries a Zacks #2 Rank (Buy rating) in the short
We expect new generic product launches over regular intervals to
help drive the company's Global Generic segment sales, which
climbed 26% during the second quarter 2012 to $995 million, driven
by the generic launch of
) Lipitor and
ENDO PHARMACEUT (ENDP): Free Stock Analysis
PFIZER INC (PFE): Free Stock Analysis Report
SANOFI-AVENTIS (SNY): Free Stock Analysis
WATSON PHARMA (WPI): Free Stock Analysis Report
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