During an investor meeting held today in New York, NY, Watson Pharmaceuticals, Inc. (NYSE: WPI) provided an update on its Global businesses, including a detailed overview of its commercial operations and pipeline developments within its Global Generics and Global Brands businesses, and an update of achievements within its Global Operations. In conjunction with the meeting, the Company provided its preliminary 2011 financial and long term growth forecasts.
Watson management predicted continued growth in its Global Generics and Global Brand businesses, with 2011 revenues expected to reach approximately $4.2 billion, and adjusted cash earnings per share of between $3.85 and $4.15 for 2011.
"2010 was an extremely successful year within our global integrated pharmaceutical company," said Paul Bisaro, Watson's President and CEO. "Total net revenues increased more than 25 percent, adjusted cash earnings per share increased approximately 12 percent, and cash flow from operations was in excess of $570 million. We also reduced debt by over $450 million."
"In addition to delivering continued strong results, we fully integrated our commercial generic operations in key global markets and further expanded into high growth emerging markets. We successfully expanded our Global Generics and Global Brands product pipelines and initiated our first biologic development project. We recorded significant accomplishments in maximizing the value of our Active Pharmaceutical Ingredient (API) and clinical research capabilities. We also continued to integrate and align our global supply chain to reduce costs, improve inventory, and ensure our ability to respond to changing market conditions."
"During 2011, we are poised to further capitalize on our position in extended-release and oral contraceptive products, and we are ready to capitalize on the launches of our high-value generic Concerta® and Atorvastatin opportunities in May and November, respectively. We remain in a strong position to deliver sustainable adjusted EBITDA and adjusted cash earnings per share growth in 2011 and beyond by leveraging our strengths as an integrated global pharmaceutical company."
Global Generics Business Poised for Continued Growth
"We continue to focus on expanding our generic product portfolios and commercial presence across the globe, emphasizing growth in current key markets and expanding into high growth emerging markets where increases in generic utilization are anticipated," said Sigurdur Olafsson, Executive Vice President, Global Generics. "With a number of high value, new product launch opportunities in our U.S. Generics business in 2011, as well as increased new product launches in France, Canada, the UK and other key countries, we are focused on achieving double digit growth in our Global Generics business and on strengthening our position to be in a top 5 position in key markets longer term."
During 2010, Watson filed 34 Abbreviated New Drug Applications (ANDAs) with the U.S. Food and Drug Administration (FDA), and a total of 146 applications globally. Watson currently has more than 120 ANDAs on file in the U.S., with 29 potential first-to-file or shared exclusivity products.
2010 Global Generics revenue is expected to be $2.35 billion and the Company forecasts 2011 Global Generics segment revenue of between $2.8 and $3.0 billion.
Global Brands Expands Position in Womens Health; Initial Biologics Project Underway
Growth in existing key brand products, the 2010 launch of three new products, and milestone developments in the global brand pipeline were among the highlights noted by Fred Wilkinson, Executive Vice President, Global Brands, during the Company's Investor Day presentation. "We saw continued growth in our RAPAFLO® treatment for benign prostatic hyperplasia (BPH), GELNIQUE® treatment for overactive bladder (OAB), and ANDRODERM® and AndroGel® testosterone replacement therapies," said Wilkinson. "We expanded our Womens Health franchise with the approval of ella®, our emergency contraceptive, the acquisition of Crinone® for the treatment of infertility, and the end-of-year approval of our novel oral contraceptive. We also added a new product for the treatment of uterine fibroids to our development pipeline, and licensed and began development of our first biologic product."
"The most exciting milestone achieved during 2010 was the completion of the Phase III PREGNANT study of Prochieve® for the prevention of preterm birth," Wilkinson noted. "Preterm birth represents a significant unmet medical need, and the clinical study data demonstrates a significant reduction in preterm birth at multiple time frames. Results also indicated an improvement in infant outcomes. We are preparing for the publication of the full clinical trials in the first quarter of 2011, and anticipate filing our New Drug Application (NDA) in the second quarter of 2011. It is our goal to establish Prochieve® as the recommended treatment of choice for pregnant women with a short cervix."
"We enter 2011 with an expanding womens health portfolio, a strong pipeline of products in the U.S., and we are implementing a strategy to expand our business into Canada, Latin America and Europe."
2010 Global Brands revenue is expected to be $400 million, and the Company expects 2011 Global Brands segment revenue of between $470 and $490 million, reflecting continued growth of its current promoted products, as well as the launch of new brand products into the U.S. market during the year.
Robert Stewart, Watson's Executive Vice President, Global Operations told analysts, "In 2010 we made tremendous strides in further consolidating our manufacturing network, expanding capacity at key sites, maximizing our API and clinical research capabilities, and optimizing our global R&D footprint. We also realized ongoing efficiencies from our Global Operational Excellence Initiative, achieving superior customer service levels while simultaneously reducing inventory and achieving a reduction in our cost of goods."
"Among our goals for 2011 and beyond, our Global Operations team will focus on expanding our manufacturing capacity at key sites (including Salt Lake City, Utah; Goa, India, and Malta), increasing the number of products we manufacture internally while simultaneously seeking to lower external costs, increasing the speed and globalizing our new product launch capabilities, in addition to maximizing all assets across the company, including our API capabilities."
2010 Anda distribution revenue is expected to be approximately $830 million, and the Company expects 2011 distribution revenue of $820 to $840 million.
2011 Financial Outlook
Watson estimates total net revenue for 2011 will be approximately $4.2 billion.
- Total Global Generics segment revenue of between $2.8 and $3.0 billion.
- Total Global Brands segment revenue of between $470 and $490 million.
- Total Anda Distribution segment revenue of between $820 and $840 million.
Adjusted cash earnings for 2011 is expected to be between $3.85 and $4.15 per diluted share and adjusted EBITDA is expected to be between $925 million and $1.0 billion.
2012-2013 Financial Outlook
Watson estimates 2012 adjusted cash earnings per share to increase 20 to 25 percent year-over-year, and in 2013, the Company estimates adjusted cash earnings per share to increase 15 to 20 percent year-over-year.
Watson Pharmaceuticals, Inc.