Watson Pharmaceuticals' CEO Hosts 2012 Annual Shareholders' Meeting (Transcript)

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Watson Pharmaceuticals Inc. (WPI) 2012 Annual Shareholders' Meeting May 11, 2012 9:00 AM ET


Andrew L. Turner - Non Executive Chairman

Paul M. Bisaro - Chief Executive Officer, President and Director

George Frederick Wilkinson - Executive Vice President of Global Brands

Andrew L. Turner

Good morning, ladies and gentlemen. It's 9 a.m. local time. And at this time, I'd like to officially call the 2012 Annual Shareholders' Meeting for Watson Pharmaceuticals to order.

I am Andrew Turner, the Chairman of the Board, and I will be presiding over this meeting today. I'd like to begin by introducing you to the Watson's Board of Directors. Paul Bisaro was appointed President and Chief Executive Officer of Watson in September of 2007 and has been on our Board of Directors since that time. Prior to joining Watson, Mr. Bisaro was President and Chief Operating Officer of Barr Pharmaceuticals from 1999 to 2007.

Christopher Bodine. Mr. Bodine was appointed to our board in June of 2009. Mr. Bodine retired from CVS Caremark in January of 2009 after 24 years. Prior to his retirement, Mr. Bodine served as Special Advisor to the Chief Executive Officer of CVS Caremark Corporation and President of Caremark Pharmacy Services.

Michael Fedida. Mike has been on our board since 1995. He is a registered pharmacist and has served for the past 28 years as an officer and director of several retail pharmacies wholly or partially owned by him.

Michel Feldman has been on our Board of Directors since 1985. Mr. Feldman is a member of the law firm, Seyfarth Shaw LLP, where he has practiced since October of 2003.

Albert Hummel has been on our Board of Directors since March of 1986, except for a period from July of '91 to October of '91. Mr. Hummel has been President of Pentech Pharmaceuticals, a development stage pharmaceutical company since 1998. Mr. Hummel also serves as Chief Executive Officer of Obagi Medical Products, a specialty pharmaceutical company.

Catherine Klema has been on our Board of Directors since 2004. Ms. Klema is currently President of Nettleton Advisors, a consulting firm she established in 2001. Ms. Klema served as Managing Director, Healthcare Investment Banking at SG Cowen Securities from 1997 to 2001.

Jack Michelson has been on our board since 2002. Mr. Michelson served for 24 years as an Officer of G.D. Searle & Company, a pharmaceutical company, holding positions ranging from Vice President of Production and Engineering to Corporate Vice President and President of Technical Operations.

Anthony Tabatznik was appointed to our Board of Directors in December of 2009. Mr. Tabatznik was founder of the Arrow Group, an international group of generic pharmaceutical companies, and served as the Director of the parent company of the Arrow Group from 2003 through our acquisition of the Arrow Group in 2009.

Ronald Taylor has been on our board since 1994. Mr. Taylor has been President of Tamarack Bay, a private consulting firm, since 2001. He also serves on the Board of Directors of Red Lion Hotels Corporation, a hotel operating company; and ResMed, a medical device manufacturer.

Fred Weiss has been on our Board of Directors since 2000. Mr. Weiss is the Managing Director of FGW Associates, a consulting firm. Mr. Weiss is also the Independent Vice Chairman of the Board and Chairman of the Audit Committee of numerous BlackRock-sponsored mutual funds.

And as I mentioned, I am Andrew Turner. I have been on our Board of Directors since 1997 and Chairman since 2008.

Paul Bisaro, would you like to take this opportunity to introduce the number of officers and guests at the company, please?

Paul M. Bisaro

Thanks, Andy, I would. I'm going to save the introduction of the Executive Committee for my formal presentation. But I would like to introduce 2 members from PricewaterhouseCoopers, who are here today: Mark Bode and Alison Mount. Thank you for joining us today, and I'd also like to introduce our Vice President of Investor Relations, Lisa Defrancesco.

Andrew L. Turner

Thank you, Paul. On behalf of the board and the management of Watson, we thank you for your attendance today and for the strong return of proxies. The first order of business before us is the proof of mailing of the annual report, the proxy material and the notice of this meeting. Mr. Secretary, will you please submit the required proof and advise us whether the necessary quorum is present.

George Frederick Wilkinson

Thanks, Andy. I have an affidavit of distribution signed by Linda Guidagmon [ph], an employee of Broadridge Financial Solutions, stating that the notice of this meeting was given, Watson's proxy materials and Annual Report were mailed beginning March 30, 2012, to all stockholders of record as of the close of business on March 16, 2012.

We're informed that we have present by proxy, holders of more than 83% of the shares of Watson's outstanding stock entitled to vote at this meeting. Therefore, we have a quorum present for the conduct of business, and the meeting is duly constituted.

Andrew L. Turner

Thank you, Mr. Secretary. The meeting is now open for the purpose of transacting business properly before it. Since the minutes of last year's annual meeting are available for inspection, we will dispense with the reading of those minutes.

As provided in the company's bylaws, the board has appointed an Inspector of Elections. He is a representative of Broadridge Financial Solutions, and his name is James Ray [ph]. I now call on Mr. Ray [ph] to please stand so that you may be visible to our audience members.

We are now ready to proceed to the 4 items on the agenda that our stockholders will vote on this morning. In each case, we will introduce the item, and we'll take any stockholder questions dealing with that particular item. After taking care of any stockholder questions which pertain to an item, we will proceed to the next item and follow a similar procedure until all matters have been covered. I will then ask for a motion and a second covering the proposals collectively. We will then be ready for voting. After the polls are closed, Mr. Bisaro will present an update on Watson's business. At the conclusion of his remarks, we will answer any questions that you have regarding the company.

We are now ready to begin with the first item of business, the election of our 3 directors. The Board of Directors unanimously recommends the following individuals, who have been nominated in accordance with our articles and bylaws to serve as directors until the 2013 Annual Meeting. At this time, I will reintroduce you to each of the nominees. Would you please stand when I call your name? Jack Michelson, Ronald Taylor and myself, Andrew L. Turner. Are there any questions relating to the proposal?

The second item of business this morning is to take an advisory nonbinding vote to approve Named Executive Officer Compensation as such compensation is described in the company's 2012 proxy statement. Are there any questions regarding to this second proposal?

The third item of business this morning is to take a vote on the proposal for the approval of the Annual Incentive Plan as such plan is described in the company's 2012 proxy statement. Are there any questions relating to this third proposal?

The fourth and final item of business this morning is the ratification of the appointment of PricewaterhouseCoopers as our independent registered public accounting firm for 2012. PricewaterhouseCoopers has served as our independent registered public accounting firm in prior years and has been appointed by the board's Audit Committee to audit the accounts of the company for the current fiscal year. Although stockholder ratification is not required, the board has submitted the appointment of PricewaterhouseCoopers as our independent registered public accounting firm for 2012 to our stockholders for ratification as a matter of good corporate practice.

Therefore, I now ask for a motion to approve the foregoing 4 proposals as set forth in the company's 2012 proxy statement.

Unknown Shareholder


Andrew L. Turner

Thank you. Is there a second?

Unknown Shareholder

I second the motion.

Andrew L. Turner

Thank you. We are now ready to proceed to voting on the 4 agenda items. I now declare the polls open. Most of you have already voted by proxy, and your shares will be voted accordingly. You do not need to vote again at this time, unless you wish to change your vote. If anyone would like to vote in person, please raise your hand so we may provide you a ballot.

I now declare the polls closed. We will give the Inspector of Elections a few moments to tabulate the vote.

If the Inspector of Elections is now ready, I ask you to report the preliminary voting results.

Unknown Attendee

Thank you, Mr. Chairman. The preliminary voting results for the 3 directors to hold office until the company's 2013 Annual Meeting were as follows: Jack Michelson received 93,561,926 votes in favor. Ronald R. Taylor received 89,810,052 votes in favor. Andrew L. Turner received 92,386,144 votes in favor.

On item 2, the preliminary voting results on the proposal to approve the Named Executive Offer -- Officer Compensation as such compensation is described in the company's 2012 proxy statement on an advisory nonbinding basis was as follows: 88,842,060 votes for; 5,602,454 votes against; 323,621 abstain votes.

The preliminary voting results in the proposals take vote on the proposal for the approval of an Annual Incentive Plans, as such plan as described in the company's 2012 proxy statement was as follows: 91,691,440 votes for; 2,000,998 votes, 243 -- 2,998,243 votes against; 78,452 votes abstained.

On item 4, the preliminary voting results on the proposal for the ratification of the appointment of PricewaterhouseCoopers as Watson's independent registered public accounting firm for the 2012 fiscal year was as follows: 104,003 -- 104,365,686 votes for; 2,294,000 -- 2,294,276 votes against; and 153,201 votes abstained.

And that is all, Mr. Chairman.

Andrew L. Turner

Thank you. With the formal voting portion of our meeting now complete, I invite Paul Bisaro, our President and CEO, to provide an update on Watson's business. My colleagues and I will be glad to answer your questions about Watson and its operations following Paul's presentation.

Paul M. Bisaro

Thank you, Andy, and good morning, everyone. And welcome to 2012 Annual Meeting. It's a pleasure to be here today and talk to you all today about Watson's business, including all the folks that are watching us on the Web and our employees or -- hopefully, our new employees as well as our investors.

So with that, we'll get started with the obligatory forward-looking statement. But what I'd really like to do is tell you a little bit about who Watson is. And Watson is a specialty pharmaceutical company that operates really in 3 business segments. We have a very important generic pharmaceutical business we'll talk about. We have a growing specialized brand business focused on women's health and urology. And we're working very hard on becoming a leader in the biosimilar space. We'll talk a bit about that. And we also have a very unique asset called Anda, our Anda Distribution business. And we'll talk about how that adds value to Watson on a going-forward basis.

But in addition to that, I would like to just draw your attention to our, what we call, our winning behaviors at the bottom: the challenge, connect, commit. It's something that we've spent a lot of time talking about and working with our employees on. And I think it's resonated very well in our company. People understand that to be successful, we have to do these 3 things. And it's -- I want to salute our communications team for developing quite a great group, and our HR team for helping support our challenge, connect, commit actions here. And I think as I said, it's been well received around the organization.

So quickly about Watson, this tells you a little bit about 2011. We had an extraordinary year. We had -- we were a top 4 generics player. We did $4.6 billion in revenues. We are present today in over 20 countries. As you can see, we have 130 applications pending at the FDA, over 500 worldwide. Lots of launches in 2011, we'll talk about that. Our Global Brands business has 36 products, about 7 or 8 of which we actively detail and over 7,000 employees today.

And as I said, 2011 was really extraordinary by any measure. 39% increase year-over-year basis for non-GAAP EPS. It's going to be very hard to top that going forward, but we're going to do our best.

It was a great year. We had some extraordinary launches. We launched generic Concerta, and we launched, of course, generic Lipitor, which got a lot of attention around the world. And it was a fun day. We had a lot of fun with that product. But we also did some great things on our brand side. We launched 2 important products there, Generess Fe and 2 new strengths of Androderm patch we had. And then, as you can see, extraordinary number of launches around the world.

We didn't stop with the internal -- with just internal development. We also were acquisitive. We acquired Specifar in 2011, and we announced a major collaboration with Amgen on our biosimilar program. So a very busy year across all of our business segments.

The financial results, I think, for 2011 speak for themselves. As you can see, our revenues were roughly $5 billion. Earnings per share were $4.77. That's a 39%, as I mentioned, 39% increase. It's really the hard work of our team across the globe that drove these results. And the strong cash flow that comes from that, that's allowed us to be able to take advantage of opportunities as they present themselves. So again, congratulations to the entire team for 2011's results.

As I mentioned, I was going to take this opportunity to introduce our executive leadership team, our Executive Committee. Starting first with Siggi Olafsson. He's President of our Generics Global -- our Global Generics business, sorry. He's here, and in fact, all these folks are here to answer questions either later or after the meeting.

Fred Wilkinson, who is President of our Global Brands division and biosimilar effort as -- leads our biosimilar effort as well. Bob Stewart, who is President of our Global Operations team. He also is responsible for the Anda Distribution business. David Buchen, who is our Chief Legal Officer; Todd Joyce, who is our Chief Financial Officer; Charlie Mayr, who is our Chief Communications Officer; and Patrick Eagan, who is our Head of Human Relations -- or Human Resources, sorry. So quite a good group. We're real pleased to have everybody in this team, and this is the team that's going to lead the combined organization going forward. So a good group and we're ready for the new challenges.

So let's talk a bit about our Global Generics business. We started 2011 with some growth strategies and pretty specific growth strategies, and I think you'll see through the presentation that we were successful really on all of them. We looked to maximize the value of our generic R&D investments and drive our global growth. We wanted to enhance our competitive position in our x U.S. markets, and we wanted to expand into new markets.

Well, how did we do? As I mentioned on our product launches, we had 189 total launches. And you can see how those spread out across the world. We had 113 launches in the EU, 18 launches in the U.S., 10 in Canada. Some very important efforts that went underway or went to getting those launches done. But we didn't just stop with the launches. We also continued our R&D investment, and you can look at the number of product filings we had. We had a total of 313 product filings around the world: 30 in the U.S., 164 across the EU, preparing us for the growth for 2014, 2015. This is the kind of stuff that you need to do to be successful, not just next year but the years in the future.

One of the things that we've done a particularly good job at in the U.S. is improving our Paragraph IV Patent Challenge efforts. This year, the end of the year, we ended up probably in the strongest position Watson has ever been in. We had 32 first-to-file opportunities. A first-to-file opportunity is a Patent Challenge where we're the first company to have filed against that particular patent. That's important because if we're successful, we get 180 days of generic exclusivity. So we're the only company that can sell a generic product for 180 days if we're successful on -- in the litigation.

What's even more important is how many of those that we're actually exclusive on. Because there's this little oxymoron called shared exclusivity, but there is -- it is possible that multiple companies can share that exclusivity. But in this case, what you really want to look for is how many of the exclusives do you have? And as you can see, 20 of the 32 are exclusive. And if you look to the right-hand side of the slide, you can see that some of the important products. But overall, that represents $22 billion of possible revenue that is available to us because of these Paragraph IV challenges. And some of the important products are listed, like Lidoderm. Everybody knows that we're actively engaged in that issue, and we hope to find a resolution to that over the next few weeks, months and maybe years. And then Revlimid and OxyContin and a few other product opportunities that are listed, so very good product opportunities in our pipeline. But they're really led by this first-to-file effort in the U.S.

As I mentioned, we also have a strategic objective to expand our x U.S. presence and build and support our markets around the world. In 2011 in May, we acquired Specifar, a Greek company that had a local Greek operation, but it was also a third-party supplier of products. And why that was so important was that was able to give us dossiers and new products that we could move into our markets, reduce our cost of goods in those markets and drive our growth in our x U.S. markets. So the acquisition was extremely valuable to us. We've fully integrated Specifar very quickly. The operation is running well, and we're very pleased with that acquisition.

In January, right after the end of the year, we acquired Ascent Pharmaceuticals in Australia. That catapulted us to be #5 in the Australian market and also introduced new opportunities -- new market opportunities for us in Southeast Asia, like Singapore and Malaysia, Hong Kong, Vietnam and Thailand. One of the other things it does is it allowed us to maximize the assets that we had in the region. We have a very strong portfolio of products available to us in Australia and New Zealand. And with the addition of Ascent and the commercial team of Ascent, we're able to maximize that value. So we're expecting big things from our Southeast Asian operation led by the new team at Ascent. The integration is ongoing. We expect to have it fully integrated by the end of the year just as we get ready for the next transaction that we'll just talk about.

About 2 weeks ago, we announced what is really a transformative acquisition for us, the acquisition of the Actavis Group. It will result in a new company, will be the third largest Global Generics company and with over $8 billion of revenue projected on a combined basis for 2012. Not just getting bigger, but what it does do is it helps us accelerate our growth. The combined entity will have, we predict, a 30% increase on our growth potential, our EPS growth potential for 2013 and then even higher for 2014. So very excited about the combination of the 2 organizations. We think it will be a very powerful group. We've got a lot of work to do, but we think it will certainly result in a very powerful group.

The other thing it does is because of the cash flow generated, we believe we'll be able to rapidly pay down the debt that we're taking on to acquire this organization. In fact, we've set some targets for ourselves. We expect to be at about 3x debt to EBITDA by the end of 2013, and we expect to be at 2x debt to EBITDA by the end of 2014. So pretty aggressive paydown objectives, but I think we're easily manageable with the combined organization. And we've also set some pretty aggressive targets for synergies. We expect to achieve about a $300 million synergy number by the end of year 3. That will take a lot of work and a lot of effort, but I know the team is up for it.

The transaction terms, we will pay EUR 4.25 billion at close of this transaction. And in addition, we have agreed that if the Actavis Group continues to perform well on its current plan and exceed its earnings for 2011, they would achieve, potentially achieve an additional earnout of 5.5 million Watson shares, which is roughly equivalent to EUR 250 million of additional value. Now why is that important? It's important to us because we want the business to be growing. We want it to continue to grow. And we want to make sure that when we take on the asset, it is as strong as it is the day we looked at it. And we think this earnout certainly supports that. So it's in our -- everyone's interest that they are successful at achieving that. And we look forward to actually paying the earnout. So -- and I think the team over there, certainly the folks we've met, are prepared to do that and are well positioned to be -- have a very successful 2012.

This just gives you a quick overview of what the industry ranking was for the generic industry globally in 2011 prior to the announced -- or the combination. As you can -- and this, by the way, is just generic sales. So we've stripped out brand sales from all of these companies, and hopefully, we've got it on an apples-to-apples basis. But what happens post the transaction, as you can see, they'll become -- we become #3. And it's not necessarily whether we're 3, 4 or 2, what matters is you see the stratification of the industry really starting to play itself out. And it shows you that Watson will be in the top tier of the generic companies around the world. And that's important for so many reasons, as our customers consolidate, as pricing pressure around the world is becoming more acute, as governments try to reduce their costs for healthcare, being a big powerful company that allows you to leverage your products across multiple markets, drive down your cost of goods, you're able to better and more effectively compete in all of the markets that you're in. So I think this positions us extraordinarily well to be a major player for a long time in the generic industry.

Well, this is what the new organization will look like, and this is -- these are the markets we will be in. The colors are as follows. The blue are the areas where Watson has the -- really has the only major commercial operation as part of the -- as pre, the pre-organization or pre-integration. So Canada and Brazil and South Africa are really Watson territories. The orange are the territories that Actavis is currently active in, and we're not active in. And you can see they bring us a large chunk of Central and Eastern Europe, Russia and also Northern Africa and the Middle East. And then the combined green is the combined entities where we have combined operations that will lead, I think, to even stronger commercial operations in those markets.

And as we look at this map, we look to where we think our growth will come from on the generics side. Well, it's clearly going to continue to be driven by North America. Our Canadian and U.S. businesses, I think, are very strong. And I think we'll see growth on a year-over-year basis into '13 and '14. But the other markets we'll be looking to, to continue to drive our growth will be our Southeast Asian market where they bring us additional power in that region. It's a very fast-growing market. There's, I believe, 600 million lives in that region. That's an area where many companies have looked to accelerate growth. And with the acquisition of Ascent and now Actavis, I think we've really solidified our position as one of the top players in that region.

The other markets that they bring us that we didn't have before are obviously the Central and Eastern European and Russian markets. Russia is a fast-growing pharmaceutical market, one that we needed to be present in to be a major player. We are now in that market, and I think we'll see growth from that market as well. And there's been a lot of talk about Europe and how things are so bad in Europe. Well, it's really not quite so bad as people think. I think it's about making sure we have the right cost of goods, understanding how the market operates, being disciplined in dealing with commercial trends in those markets. And I think we've demonstrated our ability to be disciplined, and I think we'll continue to find that those markets don't provide the downside that other people have been worried about. And we'll be able to maintain our business, and hopefully, grow it in those Western European markets as well.

Just a bit about the U.S. business, the combined U.S. business. 250 products will be marketed by the combined entity. We'll have about 10%, a little over 10% market share in the U.S. and over 180 ANDAs filed. And I want to point you to the 2 points at the bottom, the 45 first-to-files and 30 exclusive first-to-files. Remember on the slide before, I talked about having 32 and 20. Well, I told you how important those were. They bring to us an additional 10 opportunities on the exclusive first-to-file, and obviously, additional products on the total first-to-file number of 45. So there's a great synergy there of having additional opportunities to have these Paragraph IV challenges in the U.S. That again, as I said, will help us grow our U.S. business.

This just graphically demonstrates for you where we sort of stand against the bigger players in the U.S. Total applications are at the bottom. So you'll see we actually have more applications pending at the FDA than anyone else now after the acquisition. We'll have a little over 180 and that box on the first-to-files is the 45. So very well positioned for the U.S. market growth for, as I said, for '12, '13, '14 and beyond.

But it's not just the U.S. market, it's strong markets around the world. We'll become and continue to be with the acquisition, #2 in the U.K. With an expanding product line, the combination will create even a stronger organization in the U.K. We'll be #1 in the Nordic regions with Norway, Sweden and Iceland. And you can see with Denmark and Finland, we're going to work hard to move that up to the #1 position. Solid markets, good portfolios, we get a continued good cash flow from those markets, so pretty excited about that.

Down in Australia, we'll be #5, about 14% market share down there and look for continuing growth in our Southeast Asian business centered around the Australian operation.

And then #11 in Russia and fast growing. The market share there is moving nicely. As we bring the Watson assets to the Actavis Group in Russia, I think, will see us move beyond 11 and up into the top 10 very, very quickly. So it's just some quick highlights of some of the markets that we're going to be hitting.

Now this just gives you a quick picture of what the combined entity would have looked like for 2011 by section or segment. As you can see on the far right-hand side, it diversifies our revenue stream with about 50% of our revenue coming from generics in the U.S. But x U.S. we're now moving from about a 10% revenue generation on a stand-alone basis to something like 27% to 30% of x U.S. generic revenue. Again, diversifying our portfolio, diversifying our revenue stream, which I think is extremely important in this global environment.

Our distribution business will continue to grow nicely. Our third-party business, the combination of Specifar and Actavis' third-party business called MEDIS will make a very strong third-party entity and a big player in the third-party business, so very excited that -- to have that and, of course, we'll look for our brand business to go from that 6% number to something substantially higher. So we've got our challenges laid out in front of us, but I do -- as I said, this diversification, I think, helps us be prepared for any changes across the global environment.

Well, the next steps for the transaction is we have to apply to the Federal Trade Commission as well as other entities around the world to get competition approvals. We don't expect to have any major issues there, but it will take some time to get that done. We will be securing our permanent financing for the transaction. We currently have a bridge financing in place, but we do expect to do that permanent financing over the next few quarters. We're going to complete our integration planning and prepare to implement that integration plan upon close very rigorously. And we do expect the transaction to close in the fourth quarter of 2012.

Well, we are going to be focused on integration and we've already made some very critical moves to kick start the operation. We've named our Global business presidents, as I said. Yesterday, we also announced the creation of an integration management office. We were able to recruit Dr. Marc Lehnen from McKinsey to run that for us, and the process is definitely underway to get our integration team moving. Marc brings an extraordinary amount of experience. He was a partner at McKinsey, did a number of engagements and knows both Actavis and Watson very, very well. So very pleased to have him onboard, and we're looking forward to kicking that off right now, as a matter of fact. And then also I think our shared service groups are really prepared now for an organization -- a move of this magnitude. We sort of learned and cut our teeth on the Arrow acquisition back in 2009, but we're a completely different company today than we are -- than we were back in 2009. And I think certainly ready to handle the challenges that this new acquisition presents.

As we look at the integration process, we're going to implement the best practices. We're going to focus on value creation, of course. We're going to prepare, and then we're going to execute. And that has been our mantra from the very beginning about everything we do. Execution is key, and we think we can do it as well as anyone can, and we'll be focused on execution.

And one of the things we'll also do is overcommunicate. We've told both our Watson employees as well as the Actavis employees that we will communicate to them on a regular basis about what decisions have been made and what we -- where we expect to take the company, so people are not surprised in any way as we move through the process of integration.

Well, on the focus on our Global Generics business for the remainder of 2012 as a stand-alone company, we'll continue to drive solid performance across our markets. We'll continue to focus on new filings and, of course, prepare for the Actavis closing.

Now turning quickly to our brand division for 2011. Again, we started with a series of growth strategies. We're going to continue to enhance our base business in Women's Health and Urology. We wanted to expand our brand footprint to new markets in North and South America. And we wanted to achieve a position as a major player in the biosimilar arena.

Well, we did expand our portfolio. As I said, we launched 2 important products, Generess Fe and Androderm, 2 milligram and 4 milligram. And we continue to grow our key detailed products: RAPAFLO, Gelnique, Andoderm and CRINONE. So a very strong year for the brand division sales team, exciting year for 2 major launches. Unusual to have that many launches on a brand division, but we like to keep our brand team busy. And I think we were very successful with both launches, and they're moving forward quite nicely. As you see, the TRx numbers for both products are going very well.

And we didn't stop there. In April, on April 26, it kind of got lost a little bit in the acquisition of Arrow, we did launch a new version of Gelnique, Gelnique 3%. It is a metered pump dispenser, so it's more convenient for daily dosing. And the team has already kicked off that launch, and we do expect it to be a contributor for '12 growth and '13 growth as well.

But I also said we wanted to focus on expanding across our regional markets. We did kick off a sales team in Canada. We launched 3 products in Canada with our sales team in January, and we expect to launch Androderm in July, so a quick start to the Canadian operation. And we're looking to accelerate the filing of Esmya in our Canadian operation, and we'll talk about Esmya in just a second, filing Generess Fe up in Canada and then looking to expand those opportunities into Brazil and Mexico with the filing starting in 2012. So as you can see, we're starting a more regional approach on our brand division, but it's a market-by-market approach as we go forward to build a worldwide brand franchise. So a good start to 2012, and again, looking forward to putting more assets into the Canadian markets as well as the South American markets.

There is some opportunity though for our brand division with the acquisition of Actavis. Actavis does have a brand product in development and it's actually has a PDUFA date of July 25 of this year. So hopefully, they'll get approval. And we'll be able to add to our portfolio a new morphine Oxycodone combination product, immediate-release product. And it will be a nice addition to our team.

As you know, we're focused on Urology and Women's Health and in that -- those categories, they do, do procedures, and procedures often are followed by some period of discomfort. This product will certainly help be able -- or we'll be able to identify those doctors who do a lot of procedures, and this will be a great product for us to present to them as an option to make -- to handle that pain post-operative -- that post-operative pain. So nice little addition to the brand division that comes from the Actavis Group. But it also supports our expanding biosimilar portfolio.

Actavis had done a deal with a company called Bioton in Poland to develop insulin for worldwide markets. We will be adding, of course, that to our biosimilar effort, and we're very excited about that. It's an insulin in 2 insulin analogues. Hopefully, with -- if we're successful, we should be marketing insulin in some markets as early as 2015.

And if you add insulin to our FSH program and our biosimilar collaboration with Amgen, I think you're looking at one of the companies that has the largest biosimilar development portfolio of anyone today. And I think we're well positioned to be a major player in biosimilars in 2015, 2016 and 2017, which is when we think these opportunities will actually hit.

Just like in the generic side, it's all about the pipeline, and this slide gives you a sense for our pipeline. I think we've got a very strong pipeline. We continue to look for opportunities to add to this pipeline. Some very interesting products in here. Probably the most intriguing is Esmya for uterine fibroids. It's an unmet medical need in the OB/GYN community. We'll be filing that product in Canada this year, and we just began a Phase III study in the United States this year. And we expect to file the results of that study with the U.S. in 2013, and hopefully, launch late '13, early '14 in the U.S. So very nice product opportunities there. And again, we'll look to continue to build out this pipeline for, not just the U.S. market, but the Canadian market and the South American markets as well.

So for the remainder of 2012, solid performance on our brand portfolio, continue to drive those sales, grow our x U.S. markets, take -- provide support to the Canadian effort and deliver the progress on the R&D side with the branded pipeline and, of course, drive our biosimilar development activities with Amgen, FSH and now the insulin product.

Turning quickly to Anda. Anda Distribution, the overview is they had a very strong year, all things considered, the $775 million in revenue in 2011. And remember, we only report, as a revenue number, products that are third-party developed. So products like Lipitor, where we launched, or Concerta that were Watson launched, and while they sold them, didn't get credit for them. So obviously, the revenue was substantially higher than $770 million. They're the fourth largest generic distributor in the U.S. They basically ship to every pharmacy in America, which gives us some interesting touch points across those markets, and it's quite unique. We're the only company that has its own distribution capability like this. And they specialize in generics, but they also have a broad brand portfolio now, broadening brand portfolio from J&J, Merck and others. So becoming stronger and stronger, and we look for Anda to continue to provide a lot of value to us.

One of the things Anda did was decided that it needed to move its distribution facility, one of its distribution facilities, from Ohio to closer to actually Memphis, Tennessee where the FedEx distribution site is. And we ended up in Olive Branch, Mississippi, which is very -- obviously, very close to Memphis. You can see the investment was about $24 million. We expect to employ about 100 employees in that facility. The build out is scheduled to be completed this quarter, and the facility will be up and running by the end of the quarter. And again, the closer proximity to FedEx allows Anda to ship even later in the day and still get products to customers the next day. So a very smart, strategic move, well executed, haven't missed a beat and expect to be up and running, as I said, by the end of this quarter. So well done to the Anda team for getting that taken care of.

In addition, this is Anda's 25th year and did a little bit of a rebranding on the franchise. Have a new logo for Anda, as you can see. And Anda sort of renamed some of its divisions. We still have the Anda Distribution division, but the physician distribution business is now called PRACTRx. And a new specialty division's being created, where we'll be able to distribute biologic products has -- and other kinds of special-handling product needs, Anda Specialty will be jumping in, and that's called Intellogics. So 3 new divisions for Anda, and as it prepares its new growth on a going forward basis.

Well, for the remainder of 2012, we'll continue to maximize the value of the Watson launches as well as providing services to third parties and -- like Teva and Mylan and others who use Anda quite a bit and continue to build our position in specialty distribution.

Just to wrap up, I thought we'd just spend a second talking about Q1 results and our full year forecast for 2012. 2012 was off to a very fast start. We had $1.5 billion in revenue. By the way, we announced these on April 30, the results of the first quarter. As you can see, the growth across the divisions was great and strong cash flow from operations. That strong cash flow helps us be able to do the things we talked about, the acquisitions, the investment in R&D, and so we continue to focus on that. Well done again to the team for 2000 -- for Q1.

And we updated our forecast for all of 2012. We now expect, on a stand-alone basis, to do about $5.5 billion in revenue. You can see the distribution of the revenue by division. We did take the Anda revenue projections up to between $950 million to $1 billion for the year. And you can seen our non-GAAP EPS projections are now $1.55 to -- I'm sorry, $5.55 to $5.80, which represents about a 15% to 20% growth rate over 2011. And that will continue to be -- what you hear from Watson is that we will continue to focus on driving our earnings per share growth on a double-digit basis, not just for 2012, but 2013, '14 and beyond.

We'll continue to stay true to our strategy. We think we have a very strong well-balanced growth strategy. We know how we're going to build our Generics business. We're very focused on brands and biosimilars and our Anda Distribution team. It is supported by the leading global supply chain, and I think one of the, probably the strongest in the industry. We have an extraordinary team. And everybody contributes, whether it's purchasing R&D, manufacturing, the employees of Watson have been extraordinary. And it's their execution that's made us all very successful, and I want to thank them for their effort certainly for 2011. I know they'll have a big challenge in 2012, but I know they're up to the challenge. We'll continue to grow internally with investments in R&D and continue to invest in the people and the resources we need to support our markets.

And finally, we'll have that financial strength I talked about to be able to, not just pay down our debt, but be ready to take advantage of new opportunities as they present themselves. And if we do all of those things and we execute, like I said, we'll continue to drive shareholder value.

So Andy, with that, I'll turn it back to you for questions.

Andrew L. Turner

Does anyone have questions for management or the board? No? All right. Well, thank you, Paul. This concludes our 2012 Annual Shareholder Meeting. I'll now entertain a motion to adjourn the meeting.

Unknown Shareholder


Unknown Shareholder


Andrew L. Turner

The motion to adjourn has been moved and seconded. That motion is carried. Meeting stands adjourned. Thank you for coming today and for your continued support of the company.

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