Moody's ups Watson to positive

Moody's Investors Service said it revised the outlook on Watson Pharmaceuticals, Inc. to positive from stable and affirmed Watson's existing Baa3 $500 million senior unsecured revolving credit facility due 2011, $450 million of senior notes due 2014 and $400 million of senior notes due 2019.

The change in outlook to positive is prompted by the continuation of Watson's strong operating results, expected to benefit in 2011 from the company's pending launches of generic versions of blockbuster products, Concerta and Lipitor, Moody's said.

Moody's said that Watson's EBITDA and cash flow will also improve due to growth in branded products, launches of other generic drugs, an improving global reach and ongoing cost reductions.

The ratings on Watson reflect the company's solid position in the generic pharmaceuticals industry, solid cash flow, a strong track record of deleveraging following acquisitions and modest diversity provided by the branded business, the Anda distribution business and non-U.S. operations, the agency said.

The ratings consider heavy competition in the industry, pricing pressures and the potential for significant debt-financed business development, the agency added.

Watson's debt-to-EBITDA ratio stood at 1.5 times as of Dec. 31.

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