In 2005, then owners Andrx Corp received Official Action Indicated (OAI) notification after an FDA inspection of the plant uncovered several Form 483 deviations from good manufacturing practice (cGMP) standards.
The ruling, which remained in place after Watson's acquisition of Andrx in 2006, meant that only products that were already FDA approved could be made at the facility.
As a consequence, Watson has amassed a considerable backlog of pending Abbreviated New Drug Applications (ANDA) for compounds that it hoped to manufacture at the plant.
The firm said that as a result of today's decision it intends to work closely with the FDA to gain clearance for the outstanding products.
Speaking at Watson's quarterly results press call, chief executive officer Paul Bisaro said that resolution of the OAI provides the firm " with important new product opportunities and allow[s] us to transfer new products to the site as part of our ongoing Global Supply Chain Initiative. "
In a related statement, Bisaro said that Watson is on track to complete the closure of its manufacturing facilities in Carmel, New York, by the end of 2010.
He added that the transfer of the products previously made at the US plant to the firm's facility in Goa, India, is running ahead of schedule.
Bisaro went on to say that Watson's clinical research organisation in Mumbai is up and running and is capable of conducting between 20 and 30 studies a year.
He added that the site: " will figure prominently in our future as it provides us with the enhanced flexibility and lower costs ."
Branded division grows but generics slide For the first quarter 2008, Watson reported operating income of $82m (€53m), up 25.6 per cent on that recorded in the comparable period in 2007.
Operating costs fell 11.4 per cent to $164m, largely due to the absence of charges related to the 2006 purchase of India's Sekhsaria Chemicals and Andrx that affected Watson's first quarter last year.
The Corona-headquartered company's revenue grew nearly 14 per cent to $115m, despite a reduced contribution from the sale of generic products.
The firm's chief financial officer, Mark Durand, explained that the non-branded division had been negatively impacted by the loss of its oxycodone ER distribution agreement with Purdue Pharma.
On a more positive note, revenue from Watson's branded pharmaceutical operations was up 14 per cent to $ 115m.
Product sales increased 9 per cent due to an improved contribution from Ferrlecit (sodium ferric gluconate) and Trelstar (triptorelin palmoate).
Watson also reported that the benign prostatic hyperplasia treatment silodosin, which it licensed from Japan's Kissei Pharmaceuticals in 2004, has been accepted for FDA review.
The firm raised its 2008 full year earnings forecast to between $1.70 and $1.80 per share, on total net revenue of $2.6bn.
Analysts forecast that the firm will earn around $1.95 per share.