Perrigo to Separate Prescription Pharmaceuticals
Perrigo has announced that its board of directors has approved a plan to separate its prescription pharmaceuticals (Rx) business, following a strategic portfolio review. Generic drugmakers such as the Netherlands-domiciled company have suffered in recent years as falling prices have hit their bottom lines.
Speaking to Reuters news agency, RBC Capital Markets analyst Randall Stanicky said: “The company [Perrigo] has been actively discussing this potential separation for some time and the lack of a buyer thus far to us suggests this won’t be easy. We do not think it is understood how dilutive this is likely to be.”
Perrigo’s board said it believes a separation of the Rx business will better enable the asset to capitalize on its platform of differentiated generic pharmaceutical products and allow the company to focus on expanding its leading consumer business. It will look at all options, including a possible tax-efficient separation to shareholders, a sale or merger.
The Rx portfolio includes topical generic medicines in a variety of dosage forms, including creams, foams, mousses, gels, liquids and inhalable products.
Commenting on the plans, chairman of the board, Rolf Classon, said: “Perrigo’s consumer and Rx platforms are both well positioned, but they are also navigating divergent industry dynamics with unique strategic, financial and operational opportunities and requirements.”
Perrigo has been subject to certain limitations to efficiently separate its businesses since it acquired Ireland-based Elan Corp. in December 2013. Those limitations are due to expire in December 2018 and the separation is expected to be completed during the second half of 2019.
The announcement comes a day after larger rival Mylan said it had started a strategic review to evaluate a wide range of alternatives to unlock value.
Last December, Israeli generics maker Teva announced a wide-sweeping two-year restructuring plan in a bid to cut $3 billion per year from its cost base and improve its performance. Berkshire Hathaway, the investment vehicle of US billionaire Warren Buffett, took a stake in Teva earlier this year.
