Watson Pharmaceuticals on Thursday reported second-quarter net income of $103 million, up 22 percent from the same period a year earlier.
The company attributed the report to strong growth of generic drug sales and global expansion driven by an acquisition late last year.
The per share earnings of 83 cents beat the expectations of Wall Street analysts by 2 cents and at the end of trading Thursday the company's stock closed up 3 cents at $4.36.
Watson's reported revenues grew to $879 million for the second quarter ended June 30, a 29 percent jump from the second quarter of 2009.
"We continue to emphasize growing our business through product development and market expansion," Paul Bisaro, president and CEO, said in a statement.
Ronny Gal, an analyst for Sanford Bernstein, concluded that Watson did "moderately well" in the second quarter. He said Watson beat analysts' projections by selling several small drugs to other pharmaceutical companies. Part of the second quarter growth reflects Watson's acquisition in December of Arrow Group, a pharmaceutical firm based in the United Kingdom with operations in about 20 countries, said Watson spokesman Charlie Mayr.
Watson also benefited from its strong domestic business and the launching of new drugs to the U.S. market, particularly two new strengths of Metoprolol, a drug to treat hypertension.
Revenue growth was strong for generic drugs, showing a 42 percent increase to $571 million, up from $401 million in the second quarter of 2009. However, second quarter brand drug revenues declined to $103 million from $115 million a year earlier, a setback that Mayr said was expected because of the expiration of Watson's license to distribute Ferrlecit, a drug used to treat iron deficiency in kidney patients.
During a conference with analysts, Watson officials said that generic revenues were strong in the United States in the second quarter but revenue from international generic sales remained flat despite growth in the volume of drugs sold because of price constraints and an unfavorable foreign exchange rate.
Bisaro told analysts that despite these problems he was pleased with Watson's decision to increase its global presence. "Outside of the U.S., we continue to focus on enhancing our management structure, the profitability of our country operations and expanding our presence in all of our markets including Finland, Poland and Turkey," he said in a prepared statement.
Looking to the future, Bisaro noted that Watson this year launched a challenge of the legality of U.S. patents on 12 brand drugs in hope of being allowed to release generic versions of those drugs before the patents expire.
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