Watson chief has big brand plans for $6B war chest

Paul Bisaro has made no secret of his branded ambitions for Watson Pharmaceuticals ($WPI). The drugmaker, which now focuses mostly on generics, is looking to remake itself as a brand-and-generics hybrid as the pace of patent losses for blockbuster drugs winds down. And Bisaro, who's been Watson's CEO since 2007, now has $6 billion in hand for a "transformational" branded-drug deal.

A few years ago, as branded drugmakers girded for the patent cliff, several Big Pharmas chose to build up their generics businesses as a way to keep collecting from off-patent products. Whether by selling generic versions in their home markets alongside other copycat drugmakers, or by capitalizing on their corporate name in emerging markets, pharma companies figured diversifying into off-brand products would be a hedge against external generic competition. Generics makers, with their less-risky R&D and preferential treatment from government types, seemed to have the advantage in a post-patent cliff world. That they would choose to make similar moves, but in reverse, didn't seem all that likely.

That's all changed now, as Bisaro attests. The patent cliff is affecting generics makers, too; how can they follow up on that bolus of growth they'll enjoy during these patent-cliff years? "It's a real blurring of the lines," Gabelli & Co.'s Jeff Jonas told Bloomberg. In a few years, he said, big generics players like Watson and Teva Pharmaceutical Industries ($TEVA), which has made its own recent moves into branded territory, may look "a lot more like a brand than a generic."

Bisaro figures Watson has what it takes to be a branded drugmaker: "Everything we need ... except for the sales force," he told Bloomberg. "And we can create that." He's also aware that generics business strategies won't work in the branded arena. "With brands, you have to pass on those things that, even though you like the idea, if it's not in your wheelhouse and you don't have the sales force, you probably ought not to spend the money on it." Which things will he pass on and which will he choose? Bisaro likes urology and women's health, as well as cancers affecting women.

- read the Bloomberg story