Watson Pharmaceuticals, Inc. (WPI) recently announced that it has filed an abbreviated new drug application (ANDA) with the U.S. Food and Drug Administration (FDA) seeking approval to market its generic version of Warner Chilcott’s (WCRX) Lo Loestrin FE. Approval has been sought to market the generic version of the drug for the prevention of pregnancy.
In response, Warner Chilcott filed a suit against Watson Pharma in an U.S. District Court, to prevent the latter from selling its generic version of Lo Loestrin FE prior to the expiration of the drug’s patents in the U.S.
By filing the patent infringement lawsuit, Warner Chilcott has ensured that the ANDA cannot be cleared by the U.S. regulatory body for up to 30 months from the date that Warner Chilcott received notice of the ANDA filing or until the matter is resolved in court, whichever happens earlier.
We note that the branded version of the drug was launched by Warner Chilcott in January 2011. According to data released by IMS Health, the drug recorded sales of approximately $86 million in the U.S. for the twelve months ended March 31, 2012.
We note that Warner Chilcott received some disappointing news on the generic front in April 2012 regarding the 150 mg dosage of its dermatological product Doryx. On April 30, 2012, a U.S. district court issued a verdict regarding Mylan Laboratories (MYL) and Impax Laboratories’ (IPXL) applications to the FDA to sell their generic versions of the drug. The court ruled that the generic versions of neither company infringed the patent of Doryx. Following the verdict, Mylan entered the U.S. market with its generic version of Doryx 150 mg.
Following the adverse court ruling regarding Doryx 150 mg, Warner Chilcott trimmed its 2012 guidance. The company expects to earn in the range of $3.30-$3.40 per share (on an adjusted basis) on revenues between $2.4 billion and $2.5 billion. Earlier, the company had said that it expected to end 2012 with adjusted earnings in the range of $3.60-$3.70 per share on revenues between $2.5 billion and $2.6 billion.
Neutral on Warner Chilcott and Watson Pharma
Currently, we are Neutral on both Warner Chilcott and Watson Pharma in the long run. However, the short-term ratings are different. While Warner Chilcott carries a Zacks #4 Rank (Sell rating), Watson Pharma carries a Zacks #2 Rank (Buy rating) in the short run.
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