Watson Pharmaceuticals Inc. (WPI) Chief Executive Officer Paul Bisaro said the company is interested in buying either a generic or brand-name drugmaker. 

“Our appetite for a larger transaction, it’s there,” Bisaro said today at the J.P. Morgan Healthcare Conference in San Francisco.

Watson, the maker of the authorized copy of Pfizer Inc.’s cholesterol pill Lipitor, is looking to expand its international reach as well as the company’s portfolio of brand-name drugs. Acquisitions and partnerships, including one with biotechnology drugmakerAmgen Inc. (AMGN), have helped the diversification efforts. Watson and Israel’s Teva Pharmaceutical Industries Ltd. are moving away from being solely copycat-drug makers, said Michael Faerm, an analyst with Credit Suisse Group AG.

“We’re seeing more of a trend toward generic companies diversifying away from pure generics and oral solids,” said Faerm, who covers the generic-drug industry. “Watson is further behind Teva in that progression,” Faerm said in a telephone interview.

“Deals are going to be an important way for them to grow that mix of the branded business,” Faerm said.

Watson had $172.5 million in cash and short-term investments in the third quarter of 2010. Bisaro said the Parsippany, New Jersey-based company had paid down debt and would report a “strong” fourth quarter. Watson had $3.57 billion in 2010 revenue, and a market capitalization today of about $8 billion.

“It’s a strong financial position to be able to take advantage of potential business development opportunities on the generic or the brand side,” Bisaro said.

Watson fell 3 percent to $62.63 at the close of trading. The company’s shares gained 19 percent in the past 12 months.

To contact the reporter on this story: Drew Armstrong in New York atdarmstrong17@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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