Watson Pharmaceuticals Inc. (WPI) recently announced the generic launch of Novartis AG’s (NVS) Famvir, following the approval of its Abbreviated New Drug Application (ANDA) by the US Food and Drug Administration (FDA). Watson Pharma has approval for the 125 mg, 250 mg and 500 mg dosage strengths of the drug.
Novartis markets the drug as a treatment for recurrent genital herpes or recurrent cold sores or herpes simplex infections of the skin and mucosa in HIV infected patients.
In a separate development, earlier this month, the United States District Court for the District of Delaware ruled in Watson Pharma’s favor in a patent infringement case regarding Cephalon Inc.’s (CEPH) pain drug, Fentora. The District Court said that Watson Pharma’s generic drug does not infringe two (‘604 and ‘590) of the three patents under dispute. The decision on the third patent (‘981) is pending.
The FDA approved the generic version of Fentora in January. The regulatory body granted approval to market the 0.1, 0.2, 0.4, 0.6 and 0.8 mg strengths of the drug.
Watson Pharma’s Global Generics segment posted sales of $646 million in the fourth quarter of 2010, reflecting an increase of 38.2%. The upside was driven by contribution from new international markets, the launch of new products such as metoprolol succinate extended-release, a generic version of Bayer AG’s (BAYRY) Yasmin and diltiazem extended-release. International product sales for the division came in at $148.6 million.
For 2011, Watson Pharma anticipates the Generics segment revenue to lie in the range of $2.8 billion to $3.0 billion. The company expects the US Generics business to face competition in 2011, particularly for generic Toprol XL, generic Micro-K, and generics of oral contraceptives.
Our Take
We currently have a Neutral recommendation on Watson Pharma, supported by a Zacks #3 Rank (short-term Hold rating). We believe that new product launches over regular intervals should help drive the Generics business. Further, the launches of generic versions of Johnson & Johnson’s (JNJ) Concerta and Pfizer Inc.’s (PFE) Lipitor in the US in 2011 should help boost generic segment revenues.
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