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Watson Profit Rises on Strong Drug Sales

The pharmaceutical firm's net income climbs 49%, beating analyst estimates. Revenue jumps to $336.9 million.

May 07, 2003|Ronald D. White | Times Staff Writer

Watson Pharmaceuticals Inc. said Tuesday that its first-quarter profit jumped by 49% as revenue rose 18% because of strong generic and branded prescription drug sales.

The Corona-based drug maker said first-quarter profit rose to $47.8 million, or 44 cents a share, compared with net income of $32.1 million, or 30 cents, a year earlier.

Analysts had expected the company to earn 42 cents, according to those polled by Thomson First Call.

Sales increased to $336.9 million from $285.7 million in last year's first quarter.

"We're very excited about where we are with our business today," Watson Chairman and Chief Executive Allen Chao said during the company's conference call with analysts. "We have delivered four consecutive quarters of record revenues and earnings growth, meeting or exceeding our forecasts each time."

The results pushed Watson's shares to a 52-week high of $33.31 on Tuesday, before closing at $33.15, up $3.10 for the day, on the New York Stock Exchange.

"Their results were superb and they are showing strength and consistency, and the markets are rewarding them for that," said analyst David W. Maris of Banc of America Securities.

Watson's generic drug sales grew by 23% in the quarter to $143.2 million, from $116.1 million a year ago, in part because of five new product launches.

Sales of the company's branded drugs, which have higher profit margins, rose 14% in the quarter to $183.8 million, Watson said.

Watson is the second-biggest seller of oral contraceptives behind Johnson & Johnson.

Later this month, Watson will start selling its new skin patch incontinence drug, Oxytrol.

On Monday, the company also announced an expanded marketing agreement with India's No. 2 drug company, Cipla Ltd. Cipla will develop, manufacture and supply as many as 16 additional products to Watson.

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