Perrigo Banks On New Products To Continue Market Share Growth
This article was originally published in The Tan Sheet
Executive Summary
Perrigo got a sales boost in its latest quarter due to Leiner's absence from the U.S. OTC market, but the Allegan, Mich.-based firm looks to new product launches to continue its sales growth as its chief private-label competitor gears up to reenter the market
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Perrigo got a sales boost in its latest quarter due to Leiner's absence from the U.S. OTC market, but the Allegan, Mich.-based firm looks to new product launches to continue its sales growth as its chief private-label competitor gears up to reenter the market. Perrigo continues to "rescue our customers from a competitor's quality problem," President and CEO Joseph Papa said during an Aug. 23 earnings call. During Perrigo's fiscal 2007 fourth quarter, the firm "experienced incremental demand with additional sales of more than $10 million to satisfy our customers," Papa said. He added Perrigo's 65 percent increase in OTC private-label market share as a result of Leiner's vacancy is expected to generate "approximately $90 to $100 million" annually. Perrigo declined to predict how long it expects Leiner to remain out of the U.S. OTC market. However, Papa said the firm is committed to keeping the customers it gained from Leiner's absence and to making those contracts as "sticky as possible." Perrigo will make adjustments as it obtains more information regarding Leiner's return to the U.S. OTC market, he said. Carson, Calif.-based Leiner recently began meeting with FDA to gain the agency's confidence in its plan to resume the manufacturing and distribution operations it voluntarily shut down due to quality concerns (1 (Also see "Leiner Asks FDA About Restarting U.S. OTC Operations, Posts $27.5 Mil. Loss" - Pink Sheet, 20 Aug, 2007.), p. 5). Leiner halted operations at its production plant in Fort Mill, S.C., in March following an inspection by FDA (2 (Also see "Leiner Suspends U.S. OTC Operations, Expects Perrigo To Meet Demand" - Pink Sheet, 9 Apr, 2007.), page 5). Perrigo's Consumer Healthcare segment sales of $257 million in the quarter were down $1 million from its 2006 April-June results, according to the firm's earnings statement. However, full-year results for the segment were up $43.1 million to $1.03 billion, the firm says. Perrigo says its sales in Mexico and the U.K. also have been positively impacted by Leiner's absence. During the fourth quarter Perrigo increased its market share in the smoking cessation category and won final FDA approval to market Coated Fruit Nicotine Gum. In addition, its nicotine gum and nicotine lozenge smoking cessation products drove new product sales of $69 million for the year, Perrigo says. Like previous years, Perrigo expects new product sales to be a key growth driver in its fiscal 2008, projecting more than $50 million in sales from product introductions. The firm says it expects "continued growth" in the smoking cessation category with the introduction of a fruit-flavored coated nicotine gum, in the bone, joint and multivitamin categories and in pediculicide products due to its July 2 acquisition of Qualis (3 'The Tan Sheet' July 16, 2007, In Brief). Perrigo also plans to begin shipping Famotidine Complete and Ciclopirox Topical Solution late in its fiscal 2008. The firm got clearance to market the famotidine/antacid combination products when a U.S. District Court ruling in June invalidated a key patent for Johnson & Johnson/Merck's Pepcid Complete (4 (Also see "Patent Case Ruling Allows For Launch Of Generic Pepcid Complete" - Pink Sheet, 11 Jun, 2007.), p. 5). Meanwhile, Perrigo said it will be ready with store brand OTC versions of Pfizer's Zyrtec (cetirizine) upon patent expiry in late December and plans to be in the first wave to market (5 (Also see "Perrigo Hopes To Retain Lead From Leiner Woes, Eyes Private Label Zyrtec" - Pink Sheet, 14 May, 2007.), p. 16). Perrigo said a trial is set to begin in November regarding the effort by its partner, Dexcel Pharm Technologies, to enter the Prilosec (omeprazole) market with OTC 20 mg tablets. The 30-month stay on FDA's approval of the generic omeprazole, which was triggered by AstraZeneca's patent infringement lawsuit, ends in November 2008 (6 'The Tan Sheet' June 25, 2007, In Brief). Perrigo recently notified Adams Respiratory Therapeutics of its ANDA for a generic dosage of Mucinex (guaifenesin) extended-relief tablets 600 milligram, a $100 million plus name brand product (see 7 (Also see "Adams Faces Another Mucinex Challenge, Prepares For Product Launches" - Pink Sheet, 27 Aug, 2007.) ). - Robert W. Mitchell ([email protected]) |