Perrigo makes its name by making sure you never see it. One of the world's largest manufacturers of generic and private-label over-the-counter (OTC) pharmaceuticals and supplements, the company makes products that use similar packaging and discount pricing to compete with leading national brands. It makes more than 2,200 products, including pain relievers, cough and cold remedies, dietary supplements, infant nutrition, and smoking cessation products -- some of which are sold under its own Good Sense brand. It also makes about 400 generic prescription products. Its API (active pharmaceutical ingredients) division manufactures the raw materials used by generic and branded pharmaceutical companies worldwide.
Change in Company Type
In 2013 Perrigo announced a large acquisition that the company expects to further its international expansion efforts: Perrigo will purchase Ireland-based drugmaker Elan for some $8.6 billion. The purchase will add a number of development-stage drugs for neurological conditions including Alzheimer's and bipolar disorder, as well as royalty rights on multiple sclerosis drug Tysabri (marketed by Biogen Idec). To complete the deal, Perrigo will form a new holding company in Ireland; following the merger, the combined company will be based in Ireland (a bonus for Perrigo, as the country has a lower corporate tax rate).
About a fifth of Perrigo's sales originate overseas. Beyond the US, the company primary markets and manufacturing plants are in is active in Australia, Israel, Mexico, and the UK. Perrigo also has joint ventures in China and India.
Perrigo manufactures consumer healthcare products in the US and internationally through subsidiaries Quimica y Farmacia (Mexico) and Wrafton (UK), which offer OTC and store-brand pharmaceutical and nutritional products. Perrigo manufactures generic prescription drugs at facilities in the US and Israel through its Perrigo Rx division, and subsidiary Chemagis makes APIs in Israel and India. Combined prescription drugs and APIs account for about a quarter of the company's sales. Consumer healthcare and nutritional products account for most of the rest.
Perrigo's fiscal 2012 (ends June) sales topped $3 billion, a 15% increase vs. the prior year. Net income grew by more than 18% over the same period. The firm has seen steady increases in sales, net income, and cash flow from operations over the last several years. Indeed, sales have risen nearly 75% over the past four years. The latest annual uptick in sales was driven primarily by acquisitions (including Paddock and CanAm Care) and new products launched by newly-acquired Paddock.
Perrigo's US-based customers include such megaretailers as Wal-Mart, CVS, Costco, and Walgreen and wholesalers such as McKesson. Wal-Mart is its largest customer, accounting for 20% of Perrigo's 2012 sales (down from 23% in fiscal 2010). The company's consumer health care and nutritionals segments have their own sales forces to work with its largest customers.
Perrigo has grown its business through acquisitions of product lines it either didn't have or that would complement its existing businesses. Along with snapping up other companies' products, Perrigo has its own in-house research and development team that whips up generic formulations of name brand products and also responds to changes in existing national brand products by reformulating its own products.
Mergers and Acquisitions
In 2012 it expanded its diabetic product offering through the $36 million purchase of CanAm Care, a privately-held distributor of diabetes care products. (CanAm Care was merged into Perrigo Diabetes Care.) Previously, in 2011 the company acquired private generic drugmaker Paddock Laboratories for approximately $540 million; Paddock Labs was later integrated into the Perrigo Rx division. The purchase encompassed substantially all the assets of Paddock, including about 35 generic pharmaceutical medications and strong pipeline of drug development candidates. The acquisition boosted Perrigo's position in the niche market of generic prescription topical medications and added US manufacturing facilities.
In a departure from all things pharmaceutical, in 2012 Perrigo expanded into pet care by acquiring the assets of privately held Sergeant's Pet Care Products in a cash deal valued at about $285 million. Then in 2013 it further expanded in the companion animal health market through the $160 million purchase of private US pet health products company Velcera.
An earlier diversification move occurred in 2010 when Perrigo purchased PBM Holdings, a US-based private manufacturer and marketer of store-brand infant formulas and baby foods.