Watson Pharmaceuticals Inc. ( ) recently announced the launch of an authorized generic version of Sunovion Pharmaceuticals Inc.’s Xopenex (levalbuterol HCl) inhalation solution. Xopenex is used for the treatment or prevention of bronchospasm in adults, adolescents and children of 6 years and above who are diagnosed with reversible obstructive airway disease.

Watson Pharma launched its generic version of Xopenex, as part of an agreement with Sunovion Pharmaceuticals.

According to IMS Health data, Xopenex sales in the US amounted to $474 million in the twelve months ended June 30, 2012.

Earlier this month, Watson Pharma had announced that the US Food and Drug Administration (FDA) has approved the Abbreviated New Drug Application (ANDA) for its generic version of AstraZeneca's ( AZN - Analyst Report ) Pulmicort Respules (budesonide inhalation suspension 0.25mg/2mL and 0.5mg/2mL).

Pulmicort Respules is approved for controlling and preventing asthma symptoms in children aged 12 months to 8 years.

We note that Watson Pharma is currently engaged in a patent litigation with AstraZeneca and it intends to launch the product in 2012 subject to the outcome of the pending litigation.

As per IMS Health data, Pulmicort Respules sales were $1.1 billion in the US for the twelve months ending May 31, 2012.

Our View

We currently have a Neutral recommendation on Watson Pharma. The stock carries a Zacks #3 Rank (Buy rating) in the short run.

We expect new generic product launches over regular intervals to help drive the company’s Global Generic segment sales, which climbed 26% during the second quarter 2012 to $995 million, driven by the generic launch of Pfizer Inc.’s ( PFE - Analyst Report ) Lipitor and Sanofi’s ( SNY - Analyst Report ) Lovonex.