* Mylan Q2 EPS ex items 60 cents vs 55-cent Street view
* Mylan backs 2012, 2013 profit targets
* Watson Q2 EPS $1.42 vs $1.38 Street view
* Mylan shares rise 3.2 pct, Watson up 0.8 pct
By Lewis Krauskopf
July 26 Mylan Inc posted second-quarter
profit well above Wall Street estimates, while rival Watson
Pharmaceuticals Inc raised its full-year forecast after
reporting quarterly results, and shares of the two generic
Mylan posted strong sales increases for its North American
generic drugs and its EpiPen product for severe allergic
reactions, while some analysts said Mylan's struggling European
business showed signs of improving. Shares of the drugmaker,
which also backed its 2012 and 2013 profit forecasts, were up
3.2 percent in mid-day trading.
U.S. sales of a generic version of a big-selling blood-clot
preventer helped drive Watson's profit, while some analysts also
cited operating cost controls as a benefit. The drugmaker plans
to close its acquisition of Actavis in the fourth quarter, which
will greatly expand its international presence. Watson shares
were 0.8 percent higher.
Mylan and Watson are two of the world's biggest generic
drugmakers, along with Teva Pharmaceutical Industries Ltd
and the Sandoz unit of Novartis AG.
Watson's shares have climbed 28 percent this year, as
investors get excited about the benefits of the Actavis deal and
other new products, while Mylan shares are up 4 percent over
"With Watson you leave the quarter with a lot more
visibility, a lot more comfort and the sense that the core
underlying business momentum on a standalone basis is
continuing," Canaccord Genuity analyst Randall Stanicky said.
"The Watson three-year story, which is what people want to
own the stock for, 2013 and beyond, is rock solid," Stanicky
Mylan's quarterly net income was $138.6 million, or 33 cents
per share, compared with $146.4 million, or 33 cents per share,
a year ago.
Excluding items, earnings of 60 cents were 5 cents ahead of
the average estimate of analysts, according to Thomson Reuters
Revenue at the Pittsburgh-based company rose 7.5 percent to
Sales for Mylan's generic drugs in North America rose 12.8
percent to $845.3 million, helped by sales of new products
including a generic version of Warner Chilcott's Doryx
Mylan's generic sales in the Europe, Middle East and Africa
region fell 13.7 percent to $326.6 million. Excluding currency
effects, the decline would have only been 3 percent.
JPMorgan analyst Chris Schott called the European results "a
marked improvement from the roughly 10 percent decline seen over
the past few quarters."
European economic weakness is pressuring drug sales in the
region. Mylan cited pricing pressure in a number of European
markets, mainly France and Germany.
Mylan Chief Executive Officer Heather Bresch told analysts
on a conference call the company was seeing "positive
indicators" about Europe, but was hesitant to call it a trend.
Mylan's specialty sales jumped more than 50 percent to
$198.6 million, driven by EpiPen.
Mylan backed its 2012 earnings forecast of a range of $2.45
to $2.55 per share. Analysts are looking for $2.47.
It is targeting 2013 earnings of $2.75 per share.
New Jersey-based Watson posted a second-quarter loss of
$62.2 million, or 49 cents per share. That compared with net
income of $52.7 million, or 42 cents per share, a year ago.
Results in the recent quarter were weighed down by charges
from its pending acquisition of Swiss-based Actavis.
Excluding special items, earnings of $1.42 per share were 4
cents ahead of analysts' average estimate.
Revenue jumped 25 percent to nearly $1.36 billion, about $10
million ahead of estimates.
Its generic drug revenue rose 26 percent to $995 million.
Watson forecast 2012 earnings in a range of $5.65 to $5.85
per share, up from its prior view of $5.55 to $5.80. Analysts
are looking for $5.76.
Compared to Mylan, Morningstar analyst Michael Waterhouse
said, "I think you have a lot more clarity on the earnings
potential for Watson going forward due to their fairly
attractive pipeline products."