Forest Seeds a Growth Plan

"They're going to have to spend a lot of money to replace those two drugs," said Brian Laegeler, of the independent research firm Morningstar. Right now, experimental compounds "are not enough" to replace the big sellers, added Laegeler, who doesn't own shares and whose firm doesn't have a financial relationship with Forest.

Lexapro's U.S. patent expires in March 2012, while Namenda's expires in April 2010. Company executives expect to receive an extra three years of exclusivity for Namenda if the FDA approves a once-a-day version of the twice-a-day pill.

Three to six years might seem like a long time before a generic-drug attack, but given the uncertainties of clinical trials, patent law and regulatory standards, Forest must move quickly on many fronts. "More shots on goal" to provide "greater insurance" is the way Olanoff describes Forest's strategy.

Olanoff's comments sounded more aggressive than Forest's has been in the past to David Steinberg of Deutsche Bank Securities. "If correct, this signals a departure, as Forest has made just this one relatively small acquisition in the past decade," says Steinberg in an April 24 research report. He is referring to the recent $494 million purchase of the antibiotic-maker Cerexa.

But Cerexa won't provide any commercial products for three or four years, and Wall Street is mindful of past Forest setbacks in clinical trials for an antibiotic and an Alzheimer's drug, as well as in a regulatory review for another Alzheimer's drug.