Generic Drugmaker Watson Pharma Expands Asian Operations as it Consolidates in U.S.

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Food and Drug Administration (FDA) has granted U.S.-based drug company Watson Pharmaceuticals Incorporated (NYSE:WPI ) (Corona, California) its first product approval in India. The approval is expected to be just one of many the company anticipates seeking for the production of additional solid-dosage drug products at its generics plant in Goa, which the company purchased from Doctor Reddy’s Laboratories in 2005. While exporting the majority of its Goa products to the U.S., Watson is shedding sites domestically. This year, the company sold its sole sterile injectable manufacturing site in Phoenix and closed another site in Puerto Rico.

Along with the Goa plant, Watson also acquired Mumbai-based Sekhsaria, which offers global pharma industry process R&D and contract-manufacturing services in an FDA-approved manufacturing facility, including the development and manufacturing of active pharmaceutical ingredients (API) and intermediates. Watson has also indicated that it plans to build a generic product-development center in India.

Thus far, Watson acquisitions in India have proved to follow a much smoother path than those in the U.S. Last November, the company purchased drugmaker Andrx for nearly $2 billion, acquiring a controlled-release production site in Davie, Florida. The plant is currently under the shadow of a negative FDA manufacturing-quality ruling that dates back to 2005, preventing the introduction of new products. The company is awaiting and anticipating a favorable plant reinspection.

Watson has undergone considerable changes over the past 18 months, all with an eye to increasing profitability. The changes appear to be working, as revenues in the second quarter of 2007 totaled $603 million, an increase of 18% year over year. The increased sales resulted in profits of $0.33 per share, compared with a loss of $0.15 per share in the prior-year quarter. After stopping the sale of its generic version of the controversial painkiller Oxycontin CR in February 2007, Watson saw its generic product sales decrease 22% for the second quarter of 2007 from the same period last year.

The FDA has more than 70 Abbreviated New Drug Applications (ANDAs) from Watson, which includes 15 tentative approvals and 11 first-to-file or shared exclusive opportunities. ANDAs, while the bane of branded manufacturers, are the heart of the generic sector, with successful applicants hitting the market first with their copy-cat products. In addition to its generics portfolio, the company also has interest in several of its own branded products.

Continuing its pattern of change, Watson announced last month the retirement of its President and CEO Allen Chao, who founded the company more than two decades ago. Effective September 4, 2007, he was replaced by Paul Bisaro, the chief operating officer at generic rival Barr Pharmaceuticals (NYSE:BRL ) (Pomona, New York). Although Watson has been surpassed by Barr as the leader in the oral contraceptive market, it posted $91.4 million in sales of generic oral contraceptives during the second quarter, a 16% increase over last year's quarter. Contributing to the increase in that sector were sales of a product that Bisaro is uniquely familiar with – Quasense, a generic copy of Barr's Seasonale oral contraceptive that Watson began selling later last year.

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