Perrigo Divests MS Drug Royalty Stream for Up to $2.85 BillionBy
Perrigo has completed the previously announced divestiture of its rights to the royalty stream from global net sales of Biogen’s top-selling multiple sclerosis (MS) drug Tysabri (natalizumab) to RPI Finance Trust, an affiliate of Royalty Pharma, in a deal worth $2.85 billion. This move is the latest in a series of actions taken by Perrigo since the failed takeover of the company by Mylan in 2015.
In April 2016, Perrigo changed it chief executive officer (CEO) and lowered its financial expectations, following the unsuccessful takeover by Mylan the previous year. Joseph Papa, the CEO at that time, resigned and was succeeded by John Hendrickson, who had previously served as president of Perrigo before becoming its new CEO. As part of the executive changes, Perrigo’s board of directors separated the roles of CEO and chairman of the board and elected an independent director, Laurie Brias, to the role of chairman of the board.
Since then, Perrigo has made a series of moves to raise cash and cut costs. The latest move to raise cash, the Tysabri royalty stream divestiture, comprises a total consideration of $2.2 billion in cash and up to $650 million in royalties earned if global net sales of Tysabri meet specific thresholds in 2018 and 2020. Under the agreement, which was announced in February 2017, RPI gains all of Perrigo’s rights to receive Tysabri royalty payments from and after January 1, 2017, which Perrigo held under an agreement with Biogen. Perrigo gained these rights through its 2013 $9.5-billion acquisition of Elan Corporation, which marketed the drug in partnership with Biogen. In February 2013, Elan sold its half of the rights to the drug to Biogen for $3.25 billion in cash plus royalties. Tysabri is among Biogen’s top-selling drugs with 2016 sales of $1.96 billion and is a top-selling drug in the company’s MS franchise, which had 2016 sales of $8.82 billion.
In addition, Perrigo agreed to sell its entire shareholding in Perrigo API India to Strides Shasun, a Bangalore, India-based pharmaceutical company, for Indian rupee 1000 million ($15.5 million) in December 2016. The transaction includes an active pharmaceutical ingredient manufacturing plant with a potential capacity of 600 tons per year in Ambernath, Maharashtra. The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2017.
As part of its cost-cutting measures, Perrigo is reducing its global workforce by 750 employees, or 14% of the company’s global workforce, which the company announced in a company filing with the US Securities and Exchange Commission in February 2017. Prior to that, the company restructured its Branded Consumer Healthcare’s Omega Pharma Belgium business in December 2016, which includes Omega Pharma Belgium NV, Etixx NV, and Biover NV, located in Nazareth, Belgium to improve the financial profile of the Belgium business and enhance the focus of the business on branded consumer over-the-counter (OTC) products. Perrigo’s Branded Consumer Healthcare segment consists of the former Omega Pharma, which Perrigo acquired in 2015 for EUR 3.8 billion ($4.03 billion). The segment develops, manufactures, markets, and distributes OTC brands in the natural health and vitamins, minerals, and supplements markets in Europe.
During the fourth quarter of 2016, Perrigo changed it reporting structure to five core segments: Consumer Healthcare Americas, Consumer Healthcare International, Prescription Pharmaceuticals, Specialty Sciences, and Other.