California-based Watson Pharmaceuticals, Inc. (NYSE: WPI) posted good 1Q 2007 numbers overall. For the quarter, net revenue was $671.6 million, with net income of $31.6 million and diluted EPS of $0.29. Factoring in some of the costs of acquiring Andrx Corporation, legal costs, and debt repurchase costs, adjusted net income was $37.3 million, $0.34 diluted EPS.

Watson Pharmaceuticals includes both generic and branded divisions, both of which reported double digit revenue increases. Generic division revenue was $424.6 million, up 32% or $102.5 million. This increase was driven by the sales of Andrx products as well as the sale of oxycodone HCI controlled-release tablets, the sale of which has been halted. Also sales of oral contraceptives products increased $9.6 million to $85.6 million. The much smaller branded division boosted net revenue for the quarter by 19% to $101.5 million, an increase of $16.4 million.

These positive numbers allowed the company to make $150 million worth of debt repayments in 1Q 2007. CEO Allen Chao states that the company is well placed to expand the number of generic and proprietary products it brings to market, while at the same time controlling operating costs and seeking out additional partners. Watson Pharmaceuticals is facing a number of additional costs related to its acquisition of Andrx Corporation, including over $23 million in additional administrative costs, and several million dollars worth of inventory charges for Andrx products. Pharmaceutical companies generally will face increased costs for clinical trials.

If the company is correct in its assessment of prescriptions trends, prescription prices, and the introduction of new products, then it forecasts FY 2007 net revenue between $2.5 and $2.6 billion.