Perrigo Co PLC PRGO

Perrigo’s Path to Recovery Unclear Amid Category Weakness, New Leader, and Infant Formula Pressure

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. It is now a pure-play consumer healthcare player and is the largest private-label over-the-counter consumer healthcare manufacturer in the US, supplying over half 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 of reliability, large-volume manufacturing capacity, and expertise in shelf space management. We expect Perrigo’s private-label business to grow by low single digits over the next five years from both price actions and modest volume growth.