NEW YORK - Watson Pharmaceuticals Inc will continue to sell the Ferrlecit iron deficiency treatment in the United States for the rest of the year following an arbitrator's ruling, the company said on Monday, giving Watson a victory for its closely watched product.

Sanofi-Aventis had maintained the supply agreement ended in February 2009, according to Watson.

The Swiss Chambers of Commerce Court of Arbitration ruled the Ferrlecit supply and distribution agreements between Watson and Sanofi-Aventis will expire on Dec 31.

We are very pleased with the panel's decision which affirms our right to market Ferrlecit, Watson Chief Executive Paul Bisaro said in a statement.

Ferrlecit is one of the major brand-name products for Watson, which predominantly sells generic drugs.

Watson's 2008 revenue from Ferrlecit was about $145 million, with higher profit margins than for its generics, according to Wachovia analyst Michael Tong. The company reported $2.54 billion in total revenue for last year.

This removes one overhang on (Watson) shares, Tong said in a research note. On the other hand, we are looking for additional visibility into Watson's strategy of 'weaning' itself off of Ferrlecit beyond 2009.

In its brand division, Watson recently launched Rapaflo for symptoms related to an enlarged prostate and Gelnique, a topical gel for overactive bladder.

Watson shares were up 42 cents, or 1.4 percent, at $30.42 in morning trading on the New York Stock Exchange.

(Reporting by Lewis Krauskopf, editing by Dave Zimmerman)