Watson’s profit up slightly; sales jump

Watson Pharmaceuticals Inc., the second-largest U.S. maker of generic medicines, said quarterly profit rose less than 1% on revenue from a new drug-distribution unit.

Net income increased to $34.6 million, or 31 cents a share, in the third quarter from $34.4 million, or 31 cents, a year earlier, the Corona-based company said. Earnings excluding certain items were 33 cents a share, beating the 31-cent average in a Bloomberg survey. Revenue jumped 35% to $594.7 million, exceeding analysts’ expectations for $611.2 million.

Watson has struggled to introduce new drugs, and its Andrx Corp. unit, bought for $1.9 billion a year ago, has been barred from getting medicines approved until it corrects deficiencies at a Florida plant. Because the profit margin on generics usually falls as more rivals enter the market, analysts say Watson needs new products to grow.

Watson shares fell 10 cents to $29.95. The drug maker’s stock has gained 15% this year.

The company raised its forecast for full-year profit, excluding acquisition costs and other one-time expenses, to a range of $1.30 to $1.33 a share. The company said Aug. 2 that adjusted earnings would be $1.25 to $1.30 a share.