Watson Pharmaceuticals Reports Fourth Quarter and Full Year 2007 Results; Provides 20...(l succinate extended-release tablets and...)

Generic segment gross margin increased from 30 percent in 2006 to 39 percent in 2007, due to the increase in other revenue, improved product mix and enhanced operational efficiencies.

During 2007, Watson submitted 21 ANDAs with the U.S. Food and Drug Administration (FDA). Watson currently has approximately 60 ANDAs on file with the FDA.

Brand Segment Information

Three Months Ended Twelve Months Ended

December 31, December 31,

(Unaudited; $ in thousands) 2007 2006 2007 2006

Brand Segment Contribution

Product sales $94,106 $97,239 $375,202 $354,070

Other revenue 15,232 9,743 53,520 15,402

Net revenue 109,338 106,982 428,722 369,472

Cost of sales 25,814 27,595 99,913 92,184

Gross profit 83,524 79,387 328,809 277,288

Gross margin 76.4% 74.2% 76.7% 75.0%

Research and development 10,435 14,021 42,367 47,472

Selling and marketing 28,664 27,071 108,061 112,258

Segment contribution $44,425 $38,295 $178,381 $117,558

Segment margin 40.6% 35.8% 41.6% 31.8%

Brand product sales for the fourth quarter of 2007 decreased 3 percent or $3.1 million to $94.1 million, primarily due to lower sales of INFeD(R) and Ferrlecit(R). Other revenue increased $5.5 million to $15.2 million, due to increased revenue from the co-promotion of AndroGel(R) and other promoted products.

Gross margin for the Brand segment increased from 74 percent in the fourth quarter 2006 to 76 percent in
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