Perrigo growth continues its steady advances
While businesses of all kinds were squeezed last year by a combination of the financial crisis, the weak economy, spiking fuel prices and sagging sales, Perrigo Co. of Allegan continued a strong growth clip throughout 2008, making it a finalist for the Newsmaker award.
Perrigo began the year with the acquisition of Galpharm Healthcare Ltd. for $86 million in cash. The privately held Galpharm, based in Barnsley, Yorkshire, U.K., is a leading supplier of over-the-counter store brand pharmaceutical products sold by U.K. supermarkets, drug stores and pharmacies. The acquisition expanded Perrigo’s global presence and added more than $55 million in annual sales, which was accretive to earnings in the first year.
In July, Perrigo announced plans to invest $10.5 million to expand its Allegan headquarters and add 400 jobs over the next five years, as well as new operations and training space to set the stage for future growth.
“In these tough economic times, Perrigo continues to help the consumer by providing quality, affordable health care products,” said Joseph C. Papa, Perrigo’s president, chairman and CEO, at the time of the announcement. “We see many new opportunities to further reduce consumer health care costs. Many brand products’ exclusivity rights will expire soon, and this will allow us to develop additional high-quality, store-brand versions at an affordable price.”
In September, the company purchased privately held, Holland-based JB Laboratories for $44 million. All of JB’s 375 employees at its two Holland facilities became part of the Perrigo family. JB Labs is expected to add more than $70 million to Perrigo’s annual sales.
JB Labs manufactures vitamins, pharmaceuticals and nutritional supplements. It has been manufacturing products for Perrigo for 25 years, noted Perrigo spokesman Art Shannon. He said JB Labs was attractive to Perrigo because it’s a high-quality, FDA-approved manufacturer with a good history, and it’s already Current Good Manufacturing Processes Compliant, so it will hit the ground running. JB Labs also brings to Perrigo’s table additional capacity and contract manufacturing.
In October, Perrigo acquired Guadalajara, Mexico-based Laboratorios Diba, S.A., for $25 million in cash. Perrigo has been in the Mexican market for more than 65 years and still reigns as the leading supplier of prescription and OTC products there. The purchase of Laboratorios Diba enabled Perrigo to market an additional 150 formulas and 50 trademarks in Mexico’s expanding store brand market and will add nearly $15 million in annual sales. Perrigo also announced a $25 million expansion of its manufacturing and production facilities in Allegan.
In mid-November, the company purchased privately held Unico Holdings of Florida for approximately $49 million in cash. Unico is the leading manufacturer of store brand pediatric electrolytes, enemas and feminine hygiene products for retail customers in the United States. The acquisition is expected to add nearly $50 million to annual sales, which will be accretive to earnings in the first 12 months.
As Perrigo management sees it, Perrigo products have become one defense in the increasing struggle among both public and private entities to achieve cost containment while health care benefits continue near double-digit increases. Papa said the company believes generic drugs are an important part of the solution to the rising cost of health care.
“In the prescription world today, when a product goes generic, its price will drop almost 90 percent,” Papa noted.