Watson shares jump as firm signs deal with Johnson & Johnson for authorized ADHD drug Concerta generic

Watson Pharmaceuticals (NYSE: WPI) saw its shares rise 5% to $48.76 in moring trading yesterday, after it announced that it had entered into a deal with Johnson & Johnson (NYSE: JNJ) subsidiary Ortho-McNeil-Janssen Pharmaceuticals to market the authorized generic version of Concerta (methylphenidate hydrochloride extended-release tablets). Watson will launch its authorized generic of Concerta, indicated for the treatment of attention deficit hyperactivity disorder (ADHD), on May 1, 2011.

J&J and Watson had been in a patent dispute over the drug. In April, an appeals court affirmed that a disputed patent on the drug was invalid. That ruling upheld a prior decision saying Watson's plans to make a generic version of the drug did not infringe on J&J's patent.

Under the terms of the pay-to-delay deal, Ortho-McNeil will manufacture and exclusively supply Watson with all dosage strengths of the authorized generic product. Watson will market and distribute the product in the USA. Ortho-McNeil will receive a share of the net sales from Watson's sales of the product. The agreement runs until the end of 2014.