Perrigo manufacturing expansion on track in Allegan
Perrigo Co. is forging ahead with a manufacturing expansion in Allegan, while two other projects, announced last summer with the promise of 400 jobs over five years, are still in the planning stages.
The $25 million, 62,000-square-foot expansion of Perrigo’s tablet-manufacturing space is underway, said company spokesman Arthur Shannon. General contractor is Dan Vos Construction of Ada.
“Construction began in the spring, when the frost died down, and is going well,” Shannon said. “We’re on target for fall to have it up and running.”
He said the addition is expected to increase the company’s capacity to produce 35 billion tablets annually by 10 percent. Whether additional jobs will come with the increase in manufacturing capacity is uncertain, he added.
The public company said last July that it would invest $10.5 million into 30,000 square feet of new conference rooms, offices and a wellness center at its headquarters and a 20,000-square-foot employee training center. The company expects to add a total of 400 employees over the next four years, thanks to those expansions.
In exchange, the Michigan Economic Growth Authority approved tax breaks for $8.4 million over 12 years and the city of Allegan OK’d $1.4 million worth of real and personal property tax abatements.
About 2,800 of Perrigo’s 6,000 employees worldwide are located in Michigan.
The company already has 1.8 million square feet in Allegan, mostly for manufacturing and distribution, as well as offices.
Last fall, Perrigo purchased the 375-employee contract manufacturer JB Laboratories in Holland for $44 million. Shannon reported that the merger has gone well.
“It’s a great facility. We’ve been very happy with the deal,” Shannon said. “We’ve known them for a long time. We didn’t expect any issues, and we didn’t have any issues.”
He said that most of the employees have kept their jobs, although some “back-office” functions were absorbed into Perrigo’s existing operations. He said those JB employees were offered jobs in Allegan, but he didn’t know how many workers were affected or how many may have transferred.
Perrigo is pleased to be an oasis of growth in the state’s desolate economy, Shannon said.
“It’s been a difficult economy for a lot of folks,” he said. “Fortunately, we’ve been in the right business at the right time. Thank God the economy has not impacted us adversely so far.”
The recession has been good to Perrigo Co.’s main business, making over-the-counter store-brand medicine. Shannon said the recession has prompted consumers to take another look at the value of store brand medications as they try to pinch pennies.
With the fiscal year about to close at the end of June, at the end of the third quarter the company reported net sales of nearly $1.5 billion for the first nine months, up from $1.25 billion for the first nine months of fiscal 2008.
Perrigo’s Consumer Healthcare segment — its biggest — saw revenue increase by $46 million, or 12 percent, over the same period last year. Chairman & CEO Joseph C. Papa compared that growth to the industry overall, which shrank.
“In this quarter, the over-the-counter category fell 3 percent versus third quarter last year, and the national brand category fell more than 7 percent, while Perrigo Consumer Healthcare grew 12 percent,” Papa commented in a statement on the third quarter report. “More consumers than ever are realizing the value that store brands have to offer.”
In the meantime, Perrigo is selling its cosmetics and toiletries manufacturer in Israel, Careline. Reuters recently reported that, according to an Israeli newspaper, L’Oreal and Unilever had expressed interest in the operation. Perrigo hired Poalim Capital Markets and William Blair & Co. to assist in selling the Israel operation.
Perrigo inherited Careline through its 2005 acquisition of Agis Industries Ltd., an Israeli manufacturer that also makes generic prescription drugs and active pharmaceutical ingredients.
In a bit of a shopping spree, Perrigo spent around $118 million to purchase three companies during the first half of the current fiscal year. In addition to JB Laboratories, which is expected to add $70 million to sales, Perrigo paid cash for a Florida firm and a company in Mexico, which is one of its primary markets.
Last year, Perrigo became owner of Unico Holdings, based in Fort Worth, Fla., for $49 million in cash. The company makes pediatric electrolytes, enemas and feminine hygiene products.
In October, Perrigo bought Mexican manufacturer Laboratorios Diba S.A. in Guadalajara for $25 million in cash.