The generic drug business at Watson Pharmaceuticals (NYSE:WPI) is still going strong; it's the branded products that are causing trouble. Watson shares are down 14% to $27.83 today, after the drug maker cut its second-quarter sales and earnings forecast due to lower-than-expected sales of oral contraceptives, weak product pricing, and a product launch delay.

Excluding charges related to a debt repurchase and a milestone payment totaling $0.08 per share, the company now expects to earn $0.39 to $0.41 per share, rather than the $0.50 to $0.52 estimate given in April. Watson also expects to report quarterly sales of about $400 million rather than $410 million. This is despite the fact that sales of generic products have been greater than expected.

For the full year, excluding charges, the company forecasted earnings of $1.85 to $1.90 per share on $1.6 billion in sales, vs. its previous earnings guidance of $2.10 to $2.20 per share and $1.7 billion in revenues.

It wasn't too long ago that we were talking about Watson's hot generic business and its approvals of generic versions of drugs from Pfizer (NYSE:PFE), Endo Pharmaceuticals (NASDAQ:ENDP), and Bristol-Myers Squibb (NYSE:BMY). Back then, the stock was in the $40s. Well, that business is still hot, and the company is working to focus on its strengths.

In a separate release, Watson also announced an extensive restructuring to do just that. It will now refocus its business on urology and nephrology, as well as the aforementioned generics. One casualty is Ventiv Health (NASDAQ:VTIV), with which Watson had a sales force agreement in the primary-care market, where Watson has struggled.

Watson expects to save $80 million to $90 million annually following the restructuring, beginning in the third quarter.

Despite the recent troubles, the bottom line is that Watson's generic business is strong. The stock has been beaten down, and its saving grace is that it trades at less than 15 times this year's revised earnings -- if you believe them. If the stock continues its free fall, it might be worthy of further consideration for a buy.

Fool contributor Jeff Hwang owns none of the companies mentioned in the story above.