* Mylan non-GAAP EPS $0.33, vs. forecast of $0.28
* Watson non-GAAP EPS $0.58 vs. forecast of $0.49
* Mylan shares fall 5.3 pct; Watson rises 1.4 pct (Adds analyst comments, byline, updates shares)
By Lewis Krauskopf and Ransdell Pierson
NEW YORK, April 30 (Reuters) - U.S. generic drugmakers Mylan Inc and Watson Pharmaceuticals Inc WPI.N posted better-than-expected first-quarter earnings on Thursday and raised their full-year forecasts.
But Mylan (MYL.O) shares fell after a strong rally this year, as some investors hoped for even better results from the world's No. 3 generic drugmaker.
Shares of makers of low-cost generic drugs have been one of the rare health-care sectors to benefit this year as U.S. lawmakers gear up for potential reform measures that would rein in costs.
Mylan reported net income of $71.3 million, or 23 cents per share, compared with a net loss of $446.6 million, or $1.47 per share, a year ago when the company recorded large charges.
Excluding special items, earnings of 33 cents were 5 cents ahead of the average estimate of analysts, according to Reuters Estimates.
Pittsburgh-based Mylan projected full-year earnings of $1 to $1.10 per share. It previously forecast a range of 90 cents to $1.10.
Revenue rose almost 13 percent to $1.21 billion, matching the Reuters Estimates forecast.
Despite beating profit expectations, Mylan shares fell 5.3 percent to $13.77 in morning trading on the New York Stock Exchange.
"The stock has had a good run and a beat in the quarter was widely expected," said Natixis Bleichroeder analyst Corey Davis. "So it's not surprising the stock's a bit weak, even with the beat and the raised guidance."
Mylan's shares, even with Thursday's decline, are still up 42 percent for the year to date.
JP Morgan analyst Chris Schott said Mylan's better-than-expected showing was due to strong sales in North America of $586 million, along with good cost management.
Schott said Mylan's North America sales topped his forecast by $71 million, due in part to strong demand for the company's generic forms of epilepsy drug Depakote ER and depression treatment Paxil CR.
Watson, one of the largest U.S. generic drugmakers, said its net income slipped to $49.1 million, or 43 cents per share, from $50.6 million, or 45 cents per share, a year earlier.
Excluding special items, earnings were 58 cents per share, 9 cents ahead of analysts' average forecast, according to Reuters Estimates.
"All business lines and especially gross margins had a positive part" in Watson's strong results, Natixis' Davis said. He also noted that Watson was helped because a rival drugmaker stopped selling a potassium supplement because of manufacturing issues.
Revenue rose 6.5 percent to $667 million, well above the Reuters Estimates forecast of $637 million.
Watson, which is based in Corona, California, lifted its full-year profit forecast, excluding items, to between $2.40 and $2.52 per share. It previously forecast $2.18 to $2.28.
Watson shares rose 1.4 percent to $31.57 on the NYSE. (Reporting by Lewis Krauskopf and Ransdell Pierson, editing by Dave Zimmerman and Maureen Bavdek)