Recently, Watson Pharmaceuticals Inc. (WPI) found itself in the news yet again with the approval of Lovenox’s generic (100mg/mL and 150mg/mL strengths). Sanofi-Aventis' (SNY) Lovenox is indicated for the prophylaxis and treatment of deep vein thrombosis and prophylaxis of ischemic complications in unstable angina and non-Q-wave myocardial infarction.
Watson Pharma has a distribution agreement with Amphastar Pharmaceuticals Inc., under which the latter will supply generic Lovenox to Watson Pharma, which will market, sell and distribute the product to US retail pharmacy channels.
Amphastar will market, sell and distribute the product to all other channels, and receive 50-55% of Watson Pharma's gross profits on product sales, depending on the number of competitors in the market.
Amphastar plans to launch the generic drug in the US in the fourth quarter of 2011.
According to IMS Health, US sales of Lovenox and its generic equivalents amounted to about $2.6 billion for the twelve months ended July 30, 2011.
Last week Watson Pharma had announced the launch of levetiracetam extended release tablets in 500 mg and 750 mg formulations. Levetiracetam is the generic version of UCB’s (UCBJF) Keppra XR. The drug is indicated for the treatment of partial onset seizures in patients aged 16 years and above.
According to IMS Health, US sales of Keppra came in at $163 million for the 12 months ended July 31, 2011.
Our Take
We currently have a Neutral recommendation on Watson Pharma. The stock carries Zacks #2 Rank (Buy rating) in the short-run.
We expect new generic product launches over regular intervals to help drive the company’s Global Generic segment’s sales. Additionally, the acquisition of Specifar Pharmaceuticals in May 2011 is expected to contribute to Watson Pharma’s earnings through its commercial presence in key European markets.
Moreover, through this acquisition, Watson Pharma acquired the rights to certain ex-US markets of the generic version of AstraZeneca plc’s (AZN) gastroesophageal reflux disease drug, Nexium (esomeprazole).
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