Watson nabs authorized-generic deal with J&J

J&J will let Watson launch a generic version of the blockbuster ADHD drug next May.

Watson Pharmaceuticals ($WPI) and Johnson & Johnson ($JNJ) have come to an accord on Concerta. J&J will let Watson launch a generic version of the blockbuster ADHD drug next May, as long as Watson allows J&J to supply the drug through 2014. The deal gives J&J a share of the revenues from generic Concerta, which will help ease the pain of sales lost to generic competition.

Unfortunately for J&J, the supply deal won't ease all the pain, analysts said. J.P. Morgan's Michael Weinstein told Dow Jones that the patent settlement cuts his sales forecast for J&J by some $185 million and his earnings forecast by two cents per share. Most industry observers hadn't expected Concerta competition to hit next year.

J&J's sales force will also suffer on the deal; spokeswoman Kara Russell told the news service that the Concerta sales staff will be cut by about 220 as a direct result. The company will keep a "limited" Concerta sales force on hand, she said.