Watson Pharmaceuticals Inc. (WPI) has filed suit against the U.S. Food and Drug Administration challenging the agency's refusal to grant shared exclusivity for Watson's generic version of the diabetes drug Actos.

Actos is a prescription medication to improve glucose control in adults with type two diabetes, a condition in which the body doesn't use insulin normally and therefore can't control the amount of sugar in the blood.

Watson had planned to launch its generic version of Actos Friday, after reaching a settlement agreement in March with Takeda Pharmaceutical Co. (TKPYY, 4502.TO). The pharmaceuticals company said it is entitled to share in the 180-day period of generic marketing exclusivity. For the year ended May 31, Actos had total U.S. sales of about $2.7 billion.

"FDA has refused to grant shared exclusivity, and seeks to unnecessarily delay the launch of Watson's generic Actos product, with potential harm to consumers who may face constraints on supply as a result of this action," Chief Executive Paul Bisaro said.

A representative of the FDA said the agency doesn't comment on ongoing litigation.

The specialty pharmaceutical company maintains that the agency improperly denied Watson's shared exclusivity despite the company "directly following" directions received from the FDA. It said as a result of the FDA's decision, its abbreviated new drug application could be delayed for up to six months.

Watson noted that even if the FDA fails to approve its abbreviated new drug application for Actos in time, it remains confident that it can achieve its full year forecast due to a recent favorable update from the FDA related to another product and improved market conditions for certain products within the U.S. generics business.

Watson has seen its sales surge over the past year with the launch of new generic drugs and increased demand as health-care companies and consumers try to reduce spending on health-related products and services. The company is also trying to expand its brand-name drug business. But the U.S. Food and Drug Administration in February rejected Watson's new drug application for Prochieve, a progesterone vaginal gel to reduce the risk of premature births, saying it didn't meet the statistical significance level for approval.

In July, the U.S. Federal Trade Commission requested additional information about Watson's proposed $5.94 billion acquisition of Swiss rival Actavis. The deal, announced in April, would more than double Watson's international access and boost its global ranking to the No. 3 generic drug maker.

Also in July, Watson reported it had swung to a second-quarter loss as acquisition-related charges masked the drug maker's stronger-than-expected revenue growth.

Shares of Watson were down 0.2% to $79.99 in recent trading. The stock is up 33% so far this year.

Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com

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