Perrigos Revenues Rise Sharply

May 7, 2004
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GRAND RAPIDS — Perrigo Co. reported third quarter net sales of $230.7 million, an increase of 14 percent over net sales of $202.6 million in the third quarter of 2003.

Net income was $17.7 million, or 24 cents per share, compared with net income of $14.1 million, or 20 cents per share, for the prior year’s third quarter.

Perrigo Chairman, President and CEO David T. Gibbons attributed the revenue growth to new products launched earlier in the year, new products currently being shipped, and to revenue from Peter Black Pharmaceuticals, the United Kingdom-based nutritional business Perrigo acquired last December.

In the third quarter the company received final approval from the U.S. Food and Drug Administration for three new products granted through the FDA’s Abbreviated New Drug Application process.

During the just-passed quarter Perrigo also acquired an option to purchase the controlling interest in Philadelphia-based Lannett Co. Inc. for nearly $198 million.

Lannett manufactures and distributes generic prescription drugs throughout the United States and reported fiscal 2003 sales of $42.5 million.

The acquisition of Lannett would launch Perrigo immediately into the generic prescription drug business via Lannett’s present line of 23 generic drug products.

“This makes sense for us as it would accelerate our entry into the generic prescription drug business,” Gibbons said. “There are a couple of key issues here that we need to get comfortable with before deciding whether finally to exercise the option that we have to acquire the shares of the majority shareholders.”

Gibbons said Perrigo is looking at the Lannett acquisition very seriously, but when asked what the probability was that Perrigo would actually purchase Lannett, he said he couldn’t say.

He said he couldn’t say too much while in the due diligence stage, which he expects will take a couple more months.

“I think there are things with any potential acquisition that need to be proven or disproven during due diligence. We’re in that process and don’t have anything to talk about at this point in time.”

Perrigo committed $5 million to $7 million to additional research and development this year for the internal development of generic drugs.

The company also extended a $10 million loan to a contract R&D company for development of 10 to 12 generic prescription drugs over the next two years.

Gibbons noted that Perrigo would likely be a little slower in ramping up its internal R&D spending and in the development of its own generic R&D operation, until it moves forward further with Lannett.

“Before we go doing too much spending in building up a brand new generic R&D operation, we ought to take the next couple of months as we’re evaluating Lannett to decide for sure what we have there before we go spending on a new facility and bringing in too many new people.”           

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