Watson announces acquisition of Ascent Pharmahealth

Watson Pharmaceuticals, Inc. (NYSE: WPI) announced that it has acquired Ascent Pharmahealth Ltd, the Australia and Southeast Asia generic pharmaceutical business of Strides Arcolab Ltd, for AU$375 million in cash. As a result of the acquisition, Watson becomes the fifth largest generic pharmaceutical company in Australia based on revenue, and the combined company will be the second largest in terms of total molecules.  Watson also becomes the largest generics company in Singapore and gains an established commercial base in Malaysia, Hong Kong, Vietnam and Thailand. Watson expects the transaction to be immediately accretive to 2012 non-GAAP earnings.

Ascent markets a broad portfolio of generics, brands, branded-generic and over-the-counter (OTC) and dermatology and skin care products in Australia with approximately 14 percent market share. In the Southeast Asia market, Ascent markets branded-generics and OTC products, and is supported by a sales force of approximately 45 representatives.  The company employs approximately 300 employees in Australia and Southeast Asia.  Ascent's businesses in Australia and Southeast Asia had total sales of approximately AU$150 million in 2011.

"We are committed to expanding our international commercial operations into geographies where we can capitalize on our existing assets and participate in growing and emerging markets," said Paul Bisaro, Watson's President and CEO.  "This acquisition immediately establishes Watson among the leaders in the AU$12 billion Australian pharmaceutical market, where the generic market is growing at approximately 8 percent.  This acquisition complements our existing generic development and marketing capabilities in the important Australia market, and catapults us to a top five position that would have taken considerable time and investment to build organically.  It also provides us with a leadership position in Southeast Asia, a region with more than 600 million consumers and overall annual generic sales of approximately AU$4 billion a year, which is projected to grow at more than 8 percent annually."

"The acquisition of Ascent provides Watson with a successful commercial structure in both Australia and Southeast Asia; we will retain the proven sales and marketing teams that have driven Ascent's growth; we will have a larger portfolio of products, and gain a broader pipeline of products to support continued growth," Bisaro added.  "We anticipate a seamless and rapid integration of the Ascent businesses."

"The sale of Ascent is a value-enhancing and forward-looking initiative for Strides," said Arun Kumar, Executive Vice Chairman and Group CEO of Strides Arcolab.  "We have been clear about our intention to focus on our highly attractive steriles segment, which we expect to be our growth engine going forward.  The transaction further facilitates the execution of this strategy and unlocks significant value for the Group.  Furthermore, the proceeds from the transaction considerably strengthen our balance sheet. We believe that Ascent and its employees in Australia, Singapore and all of its other markets will benefit from the continued development under its new owners."

Watson currently operates in the Australian marketplace through its subsidiary, Spirit Pharmaceuticals, which supplies products to third parties and has a successful development track record and robust pipeline of products, including significant patent challenges.  Watson also operates through its Willow Pharmaceuticals subsidiary, which develops, sources and markets products with an emphasis on injectables.  During 2010, the Company established the Watson Pharma Company to consolidate its position in Australia and support growth in the marketplace.  The Company expects this entity to manage the Ascent assets.