S&P: Watson Pharmaceuticals unaffected

Standard & Poor's said that Watson Pharmaceuticals Inc.'s recent warning that its 2007 results would likely fall short of expectations does not affect the BBB- ratings and negative outlook.

Watson's margins continue to be squeezed as the company's sales mix shifts more toward its lower margin generics business, S&P said. While Watson's generic drug sales have been strong in the past year, driven by new products such as fentanyl lozenges and generic Pravachol, the company's higher margin specialty drug franchise continued to struggle, the agency said.

Still, Watson continues to maintain a solid financial profile. S&P said it is encouraged by the company's cost-saving initiatives and growing number of new generic drug launches and prospects in its generic drug pipeline.

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