Perrigo Americas Segment Struggles with Nutrition Issues, but International Business Remains Strong

Once a company with presence in various industries, including generic pharmaceuticals and animal health, Perrigo spent the last few years divesting noncore businesses to simplify its operation and fully focus on consumer healthcare products. Perrigo is now a pure-play consumer healthcare player and is the largest private-label over-the-counter, or OTC, consumer healthcare manufacturer in the U.S., supplying over 50% of the market on a volume basis. While we believe the retailer often wields more negotiation leverage in a fragmented OTC market due to a number of manufacturers competing for the same set of retailers, we expect Perrigo’s market share to be stable thanks to the company’s long-standing record for reliability, large-volume manufacturing capacity, and expertise in shelf space management. We expect Perrigo’s private label business to grow low single digits over the next five years from both price actions and modest volume growth.