Forest Seeds a Growth Plan

Forest Laboratories(FRX Quote) is facing a mid-cap version of a Big Pharma headache as it seeks new drugs to replace those that will lose U.S. patent protection early in the next decade.

This year is pivotal because Forest has two products that now account for 80% of revenue. By the end of this month, or early June, Forest will unveil late-stage clinical trial results for two drugs: a treatment for fibromyalgia and a stroke-preventer, which has been genetically engineered from the saliva of a vampire bat.

By year-end, it expects to hear from the Food and Drug Administration about a blood-pressure drug licensed from Mylan Laboratories. Also by year-end, it should have the results of a mid-stage clinical trial for a schizophrenia drug. And Forest has more activity in mind.

"The most important focus today and over the next several years is to license, co-promote or acquire products or companies that collectively will ... more than replace earnings" from current drugs, Lawrence Olanoff, the company's president and chief operating officer, said at an April 24 meeting with analysts. "We have taken a fairly aggressive attitude."

Forest's sense of urgency is based on the fact that the antidepressant Lexapro provided $2.1 billion, or 61% of revenue, and the Alzheimer's drug Namenda accounted for $660 million, or 19%, for the fiscal year ended March 31.