CEPH Cephalon (MM)

Watson Pharmaceuticals Inc. (WPI) recently announced that it plans to launch the bioequivalent version of Sanofi-Aventis' (SNY) anemia drug, Ferrlecit. The drug, which will be marketed as Nulecit in the US, is approved for the treatment of iron deficiency anemia in adults and children aged six years and above. The patients targeted by the drug are undergoing chronic hemodialysis in addition to receiving supplemental epoetin therapy.

The bioequivalent version of Ferrlecit is originally GeneraMedix Inc.'s, while Watson Pharma has an agreement with the former. As per the agreement Watson Pharma has the exclusive US marketing rights to Nulecit.

It has been a very eventful week for Watson Pharma with the United States District Court for the District of Delaware ruling against the company in a patent infringement lawsuit regarding the generic version of Cephalon Inc.’s (CEPH) pain drug, Fentora.

The court said that Watson Pharma’s generic version infringed Fentora’s ‘981 patent. Watson Pharma said that it will review the court's decision along with evaluating whether it would appeal the decision or not.

In a separate development, Watson Pharma filed an Abbreviated New Drug Application (ANDA) with the US Food and Drug Administration (FDA) for generic versions of 10, 15, 20, 30, 40, 60 and 80 mg strengths of Purdue Pharma's OxyContin. The drug is indicated for the management of moderate-to-severe pain.

Watson Pharma also announced that the US Court of Appeals for the Federal Circuit ruled in its favor in a patent infringement suit involving Teva Pharmaceutical Industries Ltd.’s (TEVA) birth control drug, Seasonique. The Appeals Court reversed and remanded a March 2010 ruling of the United States District Court for the District of Nevada. The Appeals Court stated that Teva’s ‘969 patent is invalid and unenforceable and Watson Pharma’s generic drug does not infringe the patent.

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 will help drive the Generics business segment of the company. Further, the launch of generic drugs of Johnson & Johnson’s (JNJ) Concerta and Pfizer Inc.’s (PFE) Lipitor in the US in 2011 will help boost generic segment revenues.

 
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