WPI Actavis, Inc.

Watson Pharmaceuticals, Inc. (WPI) recently announced that it is seeking FDA approval for its generic version of Millennium Pharma’s Velcade (bortezomib). Millennium Pharma is a wholly-owned subsidiary of Takeda Pharma (TKPYY). The abbreviated new drug application (ANDA) was filed by Actavis, Inc. Actavis was acquired by Watson Pharma in October 2012.

Velcade is approved for the treatment of multiple myeloma as well as mantle cell lymphoma in patients who have received at least one prior treatment. As per IMS Health, US sales of Velcade for the 12 months ending October 31, 2012, were $740 million.

Millennium Pharma filed a patent infringement lawsuit against Actavis on December 21, 2012. This means that final FDA approval cannot be granted for up to 30 months from the date on which Millennium Pharma received notice regarding the ANDA filing or until final resolution of the matter before the court, whichever happens first.

We currently have a Neutral recommendation on Watson Pharma, which carries a Zacks #3 Rank (Hold). We are positive on the Actavis acquisition, which will be immediately accretive to earnings. With the Actavis acquisition, Watson Pharma has become the third largest generic pharmaceutical company in the world. The company expects to generate annual cost (SG&A, R&D, corporate, purchasing and raw material supply) synergy savings of $300 million within three years.

Watson Pharma also announced its intention to adopt a new global name Actavis from 2013. The company will start trading under a new symbol on the New York Stock Exchange in 2013.

Pharma companies that currently carry a Zacks #1 Rank (Strong Buy) include Valeant Pharma (VRX) and Astellas Pharma (ALPMY).
 

 
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