Watson Pharmaceuticals Reports Fourth Quarter and Full Year 2007 Results; Provides 20...(20710 10731 79073 10731 Gr...)

Gross margin 14.4% 11.6% 14.0% 11.6%

Selling and marketing 12,777 8,409 52,023 8,409

Segment contribution $7,933 $2,322 $27,050 $2,322

Segment margin 5.5% 2.5% 4.8% 2.5%

* Represents two months of operations in 2006 following the acquisition

of Andrx.

Distribution segment net revenue for the fourth quarter of 2007 was $144.1 million, an increase of 11 percent from $129.9 million reported in the third quarter 2007. The increase was due primarily to the distribution of new products launched by generic companies, including the launch of a generic version of Wyeth's Protonix(R).

Gross margin for the Distribution segment increased from 13 percent in the third quarter 2007 to 14 percent in the fourth quarter 2007, reflecting an improved product mix.

For the full year 2007, Distribution segment net revenue was $566.1 million and segment gross margin for the full year was 14 percent.

2008 Financial Outlook

Watson's estimates are based on the Company's actual results for 2007, and management's current belief about prescription trends, pricing levels, inventory levels and the anticipated timing of future product launches and events.

Watson estimates total net revenue for the full year of 2008 at approximately $2.5 billion.

Net Revenue Estimates by Segment

For the Twelve Months Ending December 31, 2008

Generic Segment $1.45 - $1.55 Billion

Brand Segment $420 - $440 Million

Distribution Segment $580 - $610 Million

Research and development investment for 2008 is expected to be $160 to $170 million. Selling, general and administrative expenses for 2008 are expected to be $420 to
'/>"/>