(WPI) Watson Pharmaceuticals Wins Favorable Ruling Against Teva Pharmaceutical Industries

Watson Pharmaceuticals Inc. (WPI) recently announced that the United States District Court for the District of Nevada denied Teva Pharmaceutical Industries Ltd.’s (TEVA) request for a preliminary injunction and a temporary restraining order to prevent Watson Pharma from launching a generic version of Teva’s birth control drug, Seasonique.

Earlier, in March, the US Court of Appeals for the Federal Circuit had ruled in favor of Watson Pharma in a case pertaining to a patent infringement suit involving Seasonique. The Appeals Court reversed and remanded a March 2010 ruling of the United States District Court for the District of Nevada, saying that Teva’s ‘969 patent is invalid and unenforceable, and Watson Pharma’s generic drug does not infringe the patent.

Watson Pharma had filed an Abbreviated New Drug Application (ANDA) with the US Food and Drug Administration (FDA) for a generic version of Seasonique in January 2008. We believe that since the company was the first-to-file for the generic version of Seasonique, it will have 180 days of market exclusivity.

Meanwhile, earlier this month, the FDA approved Watson Pharma’s generic version of Pfizer Inc.’s (PFE) oral contraceptive Lybrel. Watson Pharma plans to launch the generic drug, levonorgestrel and ethinyl estradiol tablets, USP, 0.09 mg/0.02 mg, shortly.

Also this month, the company filed an ANDA with the FDA to market its generic version of Pfizer’s erectile dysfunction (ED) drug, Viagra (sildenafil citrate) tablets.

In response, Pfizer filed a lawsuit against Watson Pharma in the United States District Court for the Southern District of New York. Since Pfizer filed the suit within 30 days of the ANDA filing, the FDA cannot approve Watson Pharma’s generic Viagra until November 6, 2013 or the court ruling, whichever is earlier.

Our View

We currently have a Zacks #2 Rank (short-term Buy rating). We expect new generic product launches over regular intervals to help drive the company’s Global Generic segment’s sales, which are expected in the range of $2.9 billion to $3.1 billion in 2011. First quarter 2011 Global Generics sales amounted to $600.0 million, representing a year-over-year increase of 10%.

Longer-term we have a Neutral recommendation on Watson Pharma.

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