Following a Series of Divestitures, Perrigo Emerges a Pure Play Consumer Self-Care Company

In recent years, Perrigo has shifted its strategy to a more simplified model focused on consumer healthcare products in the U.S. and Europe. The company’s sales in the U.S. are primarily composed of private label supply operations--the manufacturing and distribution of store-branded over-the-counter (OTC) drugs to mass merchandisers and drug store chains. While the retailer often wields more negotiation leverage due to the presence of competing manufacturers (and the store’s own branding being used on the products), we expect stable market share and inflationary growth on par to slightly below the overall OTC consumer healthcare product market. By contrast, in Europe, Perrigo’s sales largely come from its own branded product portfolio. These offerings fall under the traditional OTC generics category (in cough, cold, allergy, and pain), in addition to skincare and personal hygiene. The company has over 200 branded products in its portfolio, however, none of these brands stand out as category dominating names with any degree of pricing power, in our opinion. Perrigo’s upcoming acquisition of HRA Pharma in the first half of 2022 will expand upon the company’s branded portfolio in faster-growing category niches (scar & wound care and emergency contraceptives), however, we expect the company’s brands to continue to be price takers in their respective categories.