Watson Pharmaceuticals Inc. ( WPI ) recently announced that it has reached a settlement with Janssen Pharmaceuticals, Inc., a subsidiary of Johnson & Johnson ( JNJ ), on a patent litigation related to Watson Pharma's generic version of Janssen's birth control pill, Ortho Tri-Cyclen Lo.

According to the settlement agreement, Janssen will manufacture and supply an authorized generic version of Ortho Tri-Cyclen Lo to Watson Pharma, which will in turn market and distribute the authorized generic from December 31, 2015 onwards or earlier under certain circumstances.

We note that Janssen had filed its lawsuit against Watson Pharma in October 2008 in the United States District Court for the District of New Jersey, when Watson Pharma had filed an abbreviated new drug application (ANDA) with the US Food and Drug Administration (FDA), seeking approval to market its generic version of Ortho Tri-Cyclen Lo.

This is the second agreement entered into by Watson Pharma in less than a month. Late last month, Watson Pharma had entered into an agreement with Mallinckrodt Inc. regarding a patent litigation related to Watson Pharma's generic version of Mallinckrodt's pain drug, Exalgo.

According to the settlement agreement, Watson Pharma can launch its bioequivalent version of Exalgo on November 15, 2013. Mallinckrodt also granted Watson Pharma a royalty-free license to the US patents of the drug.

We note that Mallinckrodt had filed its lawsuit against Watson Pharma in December 2010, in the United States District Court for the District of New Jersey, when Watson Pharma had filed an ANDA with the FDA seeking approval to market its generic version of Exalgo in the 8 mg, 12 mg and 16 mg formulations.

Watson Pharma believes that it may be the first to file an ANDA for the generic version of Exalgo, and if its application is approved, it will be entitled to 180 days of generic market exclusivity.

We expect new generic product launches over regular intervals to help drive the company's Global Generic segment's sales. Watson Pharma posted 2011 preliminary Generic sales of $3.36 billion, driven by generic launches of Pfizer 's ( PFE ) cholesterol drug, Lipitor, and Johnson & Johnson's attention-deficit hyperactivity disorder (ADHD) drug, Concerta.