Perrigo's regulatory green light to market the first OTC generic of Men's Rogaine Foam further extends the pipeline that has kept the firm on a streak of record earnings.

The private labeler received FDA approval of its abbreviated new drug application for minoxidil foam May 2. Perrigo plans to launch the hair-regrowth product no later than March 1, 2012, with a 180-day exclusivity period.

Meanwhile, the Allegan, Mich. firm posted another period of record revenue and earnings with third quarter results announced May 3.

The firm's adjusted net income grew 33% to $100 million, according to Perrigo's earnings statement for its 2011 third quarter, ended March 26. Net sales were up 28.6% from the year-ago quarter to a record $691.6 million.

The results prompted the firm to raise its fiscal 2011 earnings per share guidance to a range of $3.90-$4 from $3.75-$3.90, according to the firm.

Consumer, Nutritionals Sales Take The Lead

Perrigo said its Consumer Healthcare business sales grew 12.8% to $425 million, with sales of existing products of $36 million a key driver. OTC revenues also came from new products ($9 million) and from products gained in Perrigo's year-ago acquisition of Australia and New Zealand private labeler Orion Labs ($7 million).

Perrigo On The Record

Adjusted net income grew 33% to $100 mil.
Total net sales grew 28.6% to a record $691.6 mil.
Consumer Healthcare business revenues grew 12.8% to $425 mil., including existing product sales of $36 mil.
Nutritionals sales jump 111% to $124 mil., with $81 mil. coming from the acquisition of infant formula firm PBM Holdings.

However, the segment's net income dropped 4% to $72 million due in part to increased spending on manufacturing quality control after an FDA warning letter temporarily shut down production at the firm's Michigan facility.

Perrigo reported a 111% jump in nutritionals sales to $124 million, with $81 million coming from its acquisition of infant formula firm PBM Holdings.

With new product sales of $23 million, the firm’s Rx business grew 66% to $84 million. Sales for Perrigo's active pharmaceutical ingredient business increased 26% from the year-ago period to $41 million.

The firm reported adjusted diluted earnings per share of $1.07, up 32.1%.

In The Pipeline

Private label minoxidil foam will join Perrigo's constantly flowing pipeline of OTC drugs.

Perrigo has yet to post the impact of the launch of its equivalent to Sanofi-Aventis' recently switched antihistamine Allegra, which occurred after the quarter closed. The firm, licensed by Teva Pharmaceutical Industries to market the generic Allegra OTC, launched 60 mg and 180 mg private versions in April, after its third quarter ended.

Following a May 5 Bloomberg report of possible interruptions at Teva’s manufacturing plant in Jerusalem due to an FDA warning about quality control, a Perrigo spokesman said the firm received a full launch inventory of generic Allegra but anticipates a “slight lag” in receiving the follow-up shipment from Teva.

While the firm’s share price slipped following the Teva manufacturing news, Collins Stewart market described it “as a buying opportunity” for the stock. In a research note, the analysts said they do not expect any market disruption “since there is sufficient supply of the product in the market while Teva catches up with re-orders.”

Perrigo plans to launch versions of Allegra D12 and Bayer's Aleve Liquid Gels later this year.

Meanwhile, the firm said its launch of generic Mucinex (extended release guaifenesin) would not be before 2012 as patent infringement litigation with Reckitt Benckiser remains unsettled.

Hair Regrowth Category Recedes

In February, Perrigo settled a patent infringement suit brought by Rogaine originator Stiefel Research Australia, a GlaxoSmithKline subsidiary. Johnson & Johnson markets the Rogaine line in the U.S. (Also see "In Brief" - Pink Sheet, 14 February, 2011., In Brief).

According to market research firm SymphonyIRI Group’s data, U.S. sales for Men's Rogaine Foam and other products in the line during the 52 weeks ending April 17 were $50.5 million, a 3.1% increase from the previous year-long period.

Total U.S. sales for hair growth products in the period were $75.6 million, down 3.3%, according to SymphonyIRI data, which includes supermarkets, drugstores and mass market retailers excluding Wal-Mart, club stores, gas stations and convenience stores.

Private label hair growth products, which do not include a minoxidil foam product, were second in sales during the 52 weeks at $24.7 million, well ahead of Alphapharma USPD Inc.'s Barre products at No. 3 with nearly $158,000 in sales.

For the latest 12-week cycle, Rogaine sales were down 5.1% from the year-ago period to $11.13 million and private label sales were down 2.2% to $5.7 million, SymphonyIRI data show. Universal Product Marketing's Hairsil products were third during the cycle at slightly more than $142,500.

While the settlement with Stiefel allows Perrigo to launch private-label minoxidil foam earlier under certain circumstances, a spokesman said the firm expects the launch to be March 2012. In the event Perrigo launches the product earlier, it still would have 180-day exclusivity.

Collins Stewart analysts predicted generic Men's Rogaine Foam sales will add 1 cent to 2 cents to the firm’s earnings per share. Being first to file a minoxidil foam ANDA, with no others filed yet, bodes well for the firm. Collins Stewart analysts said the product "could be a long-tailed opportunity" for Perrigo.

Competition in OTC men’s hair regrowth might come eventually from biotechnology firm Divine Skin's DS Labs business, which markets minoxidil-containing Spectral.DNC outside the U.S. DS Labs' product information inserts say Spectral.DNC also contains aminexil, which the firm touts as "the only other compound clinically proven to re-grow hair." The firm would need an approved ANDA to offer the product in the U.S. (Also see "Divine Skin Launches Consumer Health Division" - Pink Sheet, 12 July, 2010.).

Expanding The Formula Business

In addition to future OTC generics and growth in its Rx business, PBM’s international expansion – notably in Asia – represents a key growth driver for Perrigo.

"It is an enormous opportunity," said Chairman and CEO Joseph Papa in a same-day earnings call.

Papa added Perrigo is talking with potential partners for formula sales in China. "There is a high interest in putting together some type of a joint venture," he said.

"The market opportunity is very significant, certainly based on the absolute number of births and rising number of births that are being seen not only in China but across Asia. We are working very hard in that."

By Malcolm Spicer

Perrigo Rogaine Foam ANDA May Help Extend Record Growth

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