Watson Up After FDA Approval

Shares of Watson Pharmaceuticals Inc. of Corona closed at their highest level since December 2001 on Tuesday as federal regulators granted the specialty drug manufacturer its second approval in as many days for a generic version of a brand-name drug.

Watson Pharmaceuticals said that it received U.S. Food and Drug Administration approval for a generic alternative to Pfizer Inc.’s diabetes drug Glucotrol, which accounted for $320 million in sales last year.

Because it was the first company to win FDA approval, Watson will have exclusive U.S. rights for six months to sell a 5-milligram version of the diabetes medication. Watson said it also received tentative approval for the more commonly prescribed 10-milligram dosage, but it probably would not be the first generic version of that dose on the market.

On Monday, the No. 2 U.S. oral contraceptives maker also received FDA approval for two strengths of a generic version of Endo Pharmaceuticals Holdings Inc.’s Percocet painkiller.

The announcements capped a major turnaround for the company that was cited by the FDA last year for quality control problems at one of its Corona facilities. Watson’s stock has risen more than 77% since May 3, 2002. Its shares rose 4 cents on the New York Stock Exchange on Tuesday to close at $44.33, a 52-week high.

“We see opportunities in both brand-name and generic drugs. We have been doing very well,” said Watson Chairman and Chief Executive Allen Chao.

“The company has refocused and capitalized on some of the strong fundamentals that are in place for the generic industry,” said CIBC World Markets analyst Elliott Wilbur. “They have a strong product cycle and the patents on several brand-name products are expiring.”

Patty Eisenhaur, director of investor relations for Watson, said that Glipizide, the company’s generic name for Glucotrol, would represent the 13th generic product launched by the company this year.

Watson has 3,729 employees. About 1,200 of them are in California.