Forest Labs President Prefers Drug Partnerships, Not Big M&A

Forest Laboratories Inc. (FRX) prefers to sign partnerships to fill its pipeline ahead of a key patent expiration in 2012, although it remains open to "tuck-in" acquisitions.

Lawrence Olanoff, president and chief operating officer of Forest Labs, said partnerships allow the company to spread around risk and cash, while sharing the costs of drug development. He made the comments in an interview on the sidelines of the Lazard Capital Markets health-care conference in New York.

He declined to comment on billionaire investor Carl Icahn's new 1 million share stake in Forest, which was reported in a filing with the Securities and Exchange Commission late Monday. Icahn has a history of interest in drug makers, confronting their management and pushing for a strategy change or sale of the company.

Forest Lab shares slipped 22 cents Tuesday to $28.75.

Dr. Olanoff said the company doesn't comment on the intentions of individual investors, but noted that Forest has a history of dealing with large investors and they "are happy with our business strategy going forward."

Part of that strategy for Forest, which tends to focus on developing products rather than discovering them, is replacing the revenue from its largest product, antidepressant Lexapro, which makes up the majority of revenue but will face generic competition in 2012.

Dr. Olanoff acknowledged that "2013 is going to be a down year for us" and the company is focused on driving revenue growth in the subsequent year by building its pipeline.

It plans to do that by filling its pipeline with products that are partnered in order to share the costs and risks of development, rather than taking a major bet on an acquisition.

"We would rather make a few smaller mistakes, rather than one big mistake," Dr. Olanoff said.

- By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

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