Perrigo Still in Preparation to Separate Rx Pharmaceutical Business

Perrigo, a pharmaceutical company of generic drugs and over-the-counter (OTC) products, specified in its second-quarter 2019 results that it has not set a specific date for its previously announced plan to separate its prescription pharmaceuticals (Rx) business, which consists primarily of generic drugs, to focus on its OTC business. Perrigo had first announced plans of the separation last August (August 2018).

“We have made significant progress related to the preparations for separation, which may include a possible sale, spin-off, merger or other form of separation,” said the company in its second-quarter 2019 filing with the US Securities and Exchange Commission (SEC). “While we remain committed to transforming to a consumer-focused business, we cannot commit to a specific date for the separation.” In connection with the proposed separation, the company said that it expects preparation costs, excluding restructuring expenses and transaction costs, in the range of $45 million to $80 million depending on the final structure of the transaction.

In its second-quarter earnings release, Perrigo reported sales of $239 million in its Rx pharmaceutical business, up 3.4% year over year, primarily to new product sales of $27 million, improved customer service levels, and moderating price pressure in the generics industry. “Although pricing pressure is beginning to moderate, we continue to experience a year-over-year reduction in pricing in our Rx segment due to competitive pressures,” said Perrigo in its second-quarter 2019 SEC filing. “Similar to the first quarter of 2019, we experienced a year-over-year decrease in pricing pressure in the second quarter and expect softness in pricing to continue to impact the segment for the foreseeable future.” Perrigo’s Rx pharmaceutical business accounted for approximately 21% of its second-quarter 2019 sales.

Perrigo’s Rx business develops, manufactures, and markets a portfolio of generics prescription drugs primarily in the US. The portfolio is defined by the company as predominantly “extended” topical as it encompasses a broad array of topical dosage forms such as creams, ointments, lotions, gels, shampoos, foams, suppositories, sprays, liquids, suspensions, solutions, and powders. The portfolio also includes select controlled substances, injectables, hormones, oral solid dosage forms, and oral liquid formulations

Its OTC or consumer selfcare business represented 79% of second-quarter 2019 sales with its Americas selfcare business accounting for $582 million and its international consumer selfcare business $328 million. Last month (July 2019), Perrigo acquired Ranir, a private-label oral self-care company, for $750 million and divested its animal health business to PetIQ for $185 million.

Source: Perrigo (Second Quarter 2010 Earnings Release), Perrigo (Second Quarter 2019 SEC filing)

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