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Earnings Roundup

Drug maker posts profit, names CEO

August 03, 2007|From Times Wire Services

Generic medicine maker Watson Pharmaceuticals Inc. reported a second-quarter profit Thursday and said its retiring chief executive would be succeeded by a manager from a rival company.

Net income was $36.4 million, or 33 cents a share, contrasted with a loss of $15.6 million, or 15 cents, a year earlier after costs to write down the value of two drugs, Watson said.

Separately, the company said Paul Bisaro, chief operating officer of Barr Pharmaceuticals Inc., would take over when Watson President and CEO Allen Chao retired Sept. 4.

Earnings excluding certain items beat analysts' estimates by 7 cents. Shares of Watson, based in Corona, rose $1.39 to $31.74.

Watson has struggled to introduce new products after its $1.9-billion purchase of Andrx Corp. in November, and analysts said a change in management might help spark growth.

"Change may be a good thing at the top, may be a good thing for investors longer term," said Tim Chiang of FTN MidWest Securities Corp. in New York.

Second-quarter revenue rose to $603 million from $510.4 million. The company was expected to bring in $616.5 million, according to the average of analysts in a Bloomberg survey.

Purdue Pharma in February discontinued Watson's authorized copies of the painkiller Oxycontin, which had been one of the generic company's best-performing products.

Revenue from generic drugs fell 18% to $345.6 million, including $91.4 million from lower-cost copies of brand-name birth control pills. Sales of Watson's own brands, which include products for anemia, and related revenue rose 23% to $110.7 million.

Andrx's distribution business added $146.6 million in revenue in the quarter.

The company said it expected 2007 profit excluding certain items to be $1.25 to $1.30 a share on revenue of about $2.5 billion. Watson on May 1 had forecast adjusted earnings of $1.20 to $1.30 a share, with $2.5 billion to $2.6 billion in revenue.

Chao, 61, said he had been planning to retire within the next few years. "It is the right time to turn over the reins" to someone new, he said.

Bisaro, 46, is an ideal choice to lead Watson because he has 15 years of experience at Woodcliff Lake, N.J.-based Barr, which also makes generic and brand-name medicines, Chao said.

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