watson pharmaceuticals - uvacollab€¦ · watson pharmaceuticals, inc. is a developer, producer,...
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WATSON PHARMACEUTICALS
Ticker Symbol: WPI
Exchange: NYSE
Market Price: $50.47
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Mission Statement
Watson pursues a balanced strategy of generating revenue through a long-established off-patent business, joint venture income from Somerset, and revenue from a newly formed Somerset, and revenue from a newly formed branded pharmaceutical business. We will continue to seek and evaluate opportunities to acquire businesses, technologies and products to strengthen our presence in today's fast-changing pharmaceutical industry.
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Company Overview
Watson Pharmaceuticals, Inc. is a developer, producer, marketer and distributer of both branded and off-patent pharmaceutical products.branded and off-patent pharmaceutical products.
Highly diversified with branded as well as generic products
Increased competitive advantage through joint ventures with potential competitors
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Branded Products
Four specialty areas: Dermatology, Women’s Health Neurology/Psychology and Primary Care.
In January 1999, completed acquisition of In January 1999, completed acquisition of TheraTech, Inc.
In the Women’s Health specialty, Watson markets oral contraceptive and female hormone replacement products
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Branded Products (continued)
In the Neurology/Psychology product line, Watson markets directly to physicians.
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Off-Patent Pharmaceuticals
Watson markets over 90 off-patent prescription products in capsule or tablet form
Products include therapeutic and preventative Products include therapeutic and preventative agents generally sold by prescription or over-the-counter
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Joint Ventures
Watson owns 50% stake in Somerset Pharmaceuticals, Inc.
Also owns a 50% interest in ANCIRCAlso owns a 50% interest in ANCIRC
Substantial investments in joint ventures with other pharmaceutical companies such as Mylan and Andryx
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Industry
Solid unit-volume growth in medicines and a relatively favorable pricing environment
Generic drugs account for a larger percentage of Generic drugs account for a larger percentage of prescriptions than last year.
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Competitors
Watson’s competitors include brand name manufacturers of pharmaceuticals
Although competitors have higher market Although competitors have higher market capitalization, Watson has more potential for growth due to its recent acquisitions and joint ventures.
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Financial Highlights
For the fiscal year ended 12/31/00, total revenues rose 15% to $811.5 million.
Net income fell 7% to $170.7 million.
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Financial Ratios
Profit Margin 21.0%
Price/Book 3.44
Price/Earnings 28.77Price/Earnings 28.77
Price/Sales 6.23
Return on Assets 8.34
Return on Equity 12.42
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Financial Ratios (continued…)
Current Ratio 2.96
Quick Ratio 1.15
Total Debt to Equity 0.35Total Debt to Equity 0.35
Interest Coverage 0.34
Total Cash 237.6M
Beta 0.51
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Stock Price History
Watson’s stock price has been increased steadily over the past five years and is likely to continue growing.
Year Stock Price
Price History
60
70
80
Year Stock Price
1996 24.75
1997 34.13
1998 63
1999 62.94
2000 71.5
0
10
20
30
40
50
60
1996 1997 1998 1999 2000
Year
Stock Price
Year
Stock Price
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Risks
Low prices can work against generic-drug makers
Competition against Watson's older products could also hurt revenue. could also hurt revenue.
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Rewards
The recent approval of its generic version of Bristol-Myers' BuSpar has not been priced into the stockthe stock
Bristol-Myers Squibb reported 1999 sales of BuSpar were $568 million.
Sales of the drug will have a more significant impact on the June quarter's earnings
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Management
Allen Chao is a co-founder of Watson
and has been the CEO since 1985.
Ph.D. in Industrial and Physical Ph.D. in Industrial and Physical
Pharmacy from Purdue University in
1973.
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Management (continued)
Michael E. Boxer has been the Senior
Vice President and Chief Financial
Officer since June 1999. Officer since June 1999.
Mr. Boxer received a M.B.A. from the
University of Chicago in 1991
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Why buy Watson?
Strong Financial position
Competitive advantage in bio-pharmaceutical industry
Aggressive product development, while targeting Aggressive product development, while targeting difficult-to-product niche pharmaceutical products
Acquisitions and joint-ventures have helped Watson reach a strategic advantage that allows it to compete effectively in current healthcare environment
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