Building a larger presence in women's health care, Watson Pharmaceuticals Inc. said Tuesday it will acquire U.S. patents to three oral contraceptives from G. D. Searle Co. for $120 million.

Financial analysts estimate that the contraceptives -- Tri-Norinyl, Norinyl, and Brevicon -- will add between $35 million and $50 million to Watson's annual sales. Last year the company had revenue of $338.3 million.

The proposed purchase is expected to be completed during the fourth quarter through a Watson subsidiary, Watson Laboratories Inc. Searle is a subsidiary of Monsanto Co.

"The acquisition of these branded products exemplifies our strategy of providing valuable products, services and support within the women's health care market," Watson chief executive Allen Chao said in a statement. He could not be reached Tuesday for further comment.

Watson said the proposed transaction is subject to conditions that include the approval of each company's board and clearance by regulators.

Elliot Wilbur, an analyst at CIBC Oppenheimer Corp, said that Tri-Norinyl is one of the 20 best-selling oral contraceptives in the U.S market. The package of new drugs, he said, represents "a nice broadening of (Watson's) oral contraceptive portfolio."

In September of 1997 Watson acquired from Searle three other contraceptives and a fourth that was pending approval from the U.S. Food and Drug Administration. As part of that transaction, Wilbur said, Watson also obtained an option to negotiate the purchase of more Searle products in the future.

Moreover, Wilbur said, in May the company obtained cash available for product acquisitions through the sale of $150 million in senior debt.

Wilbur said he anticipates that the contraceptives will be much more aggressively marketed by Watson than by Searle, for whom the drugs represent a much smaller part of total sales. He said the products will benefit from Watson's plans to increase the marketing staff for its women's health products division from 45 sales representatives to 70 by the end of the year.

Joseph Riccardo, an analyst at Bear, Stearns Co., said Chao "has done a wonderful job" of developing the company's strength in the therapeutic areas of women's health, primary care, dermatology and neurology/psychiatry.

Following news of the proposed acquisition, the price of Watson's stock rose on the New York Stock Exchange by $1.56 on a volume of 339,000 shares to close at $49.25.

Published 9/23/1998