The Company is engaged in the development, manufacture, marketing, sale and distribution of brand and off-patent pharmaceutical products.
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‘Watson revitalized with the acquisition of Andrx’. Watson Pharmaceuticals has the best of both worlds. The company makes both branded and generic drugs. Through internal product development and synergistic acquisitions of products and businesses, the Company has grown into a diversified specialty pharmaceutical company and will now operate with three segments namely Generic, Brand and Distribution.
The company has expanded its horizon with the recent acquisition of Andrx Corporation. Andrx distributes pharmaceutical products primarily to independent and chain pharmacies and physicians’ offices and is considered a leader in formulating and commercializing difficult-to-replicate controlled-release pharmaceutical products and selective immediate-release products. This acquisition is not only expected to strengthen the distribution channel of the company but also add $1.2 billion of annualized revenues in the year ahead. The outlook for 2007 for Andrx appears positive as it is expected to be driven by new approvals and royalty from Takeda’s drug Actoplus for the treatment of type 2 diabetes. This drug holds potential when we consider the fact that diabetes is the seventh leading cause of death in the US and is expected to grow at an average annual rate of 8.3% in 2007.
The growth for the company in the third quarter of 2006 has primarily come from recently launched authorized generic products including Oxycodone and Pravastatin sodium. Any fluctuations in the generic segment would have a serious impact on the overall revenues of the company as it contributes 80% to the overall revenues. One concern though for the company is the negative growth from its Branded product segment. However, we believe synergy with favorable acquisition of Andrx Corporation and positive outlook of the generic drug market in the upcoming year will help the company to grow in 2007.
For the fiscal ended 2006, revenues surged 48% to $621.2 million, thanks to a 30% rise in sales of generic drugs to $421.2 million. Sales of branded drugs improved 11% mainly because of higher revenues from Ferrlecit and lower pricing on Trelstar. Watson Pharma has announced that for 2007, it expects adjusted EPS to be between $1.30 and $1.40, while EBITDA to range between $527 and $547 million. This could be possible with the strategic acquisitions and collaborations that have taken shape.In Jan 2007, Watson Pharma announced the positive top-line data from two Phase 3 studies of Silodosin, its investigational drug being studied for the treatment of signs and symptoms of benign prostatic hyperplasia (BPH). This drug would help the company to gain grounds in the existing US generics market.Watson Pharma announced the acquisition of Andrx Corp. The purchase price was approximately $1.9 billion in cash. Andrx, whose capabilities complement those of Watson, is considered a leader in formulating difficult-to-replicate products and developing 'best-in-class' drug delivery technologies. Watson Pharma will now have more than 70 pending abbreviated NDAs on file with the FDA, including 17 products which have received tentative approval.Watson’s strong drug pipeline and its focus on less competitive segments augur well for its long-term growth prospects. Its generic line includes niche products such as analgesics Vicodin & Percocet, and smoking cessation products Nicorette, Habitrol and Zyban. The drug maker is expected to sign an agreement with Bristol-Myers Squibb for the distribution of Pravastatin Sodium tablets.The generic division markets over 140 generic prescription drugs. Watson is the third largest manufacturer and distributor of generic drugs in the US. A strong market position in the generic segment enables the company to invest in developing branded drugs.