Private label giant Perrigo is readying generic competitors to Reckitt Benckiser’s Mucinex and Takeda Pharmaceuticals’ Prevacid, CEO Joseph Papa says.

Papa did not disclose the launch dates for the generic guaifenesin and lansoprazole but said the firm is excited about the launches.

Further down the road, Perrigo is poised to take advantage of a potential OTC switch of Pfizer’s Lipitor (atorvastatin).

Perrigo Plans Store Brands Of:

Delsym (dextromethorphan)
Mucinex (guaifenesin)
Zantac 150 (ranitidine)
Zegerid (omeprazole)
Rogaine Foam (minoxidil)
Prevacid (lansoprazole)

Source: Collins Stewart research note

Lipitor is a “phenomenal opportunity” that eventually will switch, Papa maintained Aug. 16 during the firm’s fiscal 2011 fourth quarter earnings call.

There is now more data available on the risk factors for high cholesterol, for which Lipitor is indicated, Papa said, and this new information may be enough to sway FDA to approve a switch. The agency has denied three previous switch applications for other statins because it is difficult for people to tell whether they should take the medicine and whether it is working.

Although Pfizer “has a very good case” for taking the drug OTC, such a move likely will take “several years,” he said.

A switch “could be a very significant opportunity for Perrigo,” and the private labeler has investigated switching atorvastatin, he said.

Pfizer “has a very good case” for switching Lipitor, but such a move likely will take “several years.” – Perrigo CEO Papa

But, he cautioned, “we’re not building that into our guidance.” Perrigo has a $10 billion portfolio of potential switches, Papa said, but does not count Lipitor among them.

The 45 definite new product launches, including some Rx drugs, Perrigo expects in its fiscal 2012 should add about $190 million in sales, UBS analysts said in a same-day research note.

OTCs Still A Bright Spot

Sales in the firm’s consumer health care segment were up 9% to $434 million for the quarter ended June 25, Perrigo reported in a same-day release. The increase included $18 million from new product sales, $12 million from increased sales volume and $5 million from favorable currency exchange.

New product launches included generics of Allegra (fexofenadine) and Rogaine (minoxidil) (Also see "Perrigo Takes Two Steps Forward: Generic Allegra Launch, Manufacturing Compliance" - Pink Sheet, 18 April, 2011. and Also see "Perrigo Rogaine Foam ANDA May Help Extend Record Growth" - Pink Sheet, 9 May, 2011.).

OTC Ranitidine 150 (Zantac) will launch in early fiscal 2012, the firm added (Also see "Perrigo's Zantac 150 Generic Marks First Approval From Remediated Plant" - Pink Sheet, 23 May, 2011.).

“Strong acceptance of store brands” and “fairly stable pricing” across categories – except some pricing pressure in proton pump inhibitors – increased sales in every major consumer healthcare product category in the quarter, Executive VP and Chief Financial Officer Judy Brown said during the earnings call.

For the firm’s fiscal 2011, net sales increased 7% to $1.68 billion. The $111 million increase included $51 million from higher sales volume, primarily analgesics and cough/cold remedies; $54 million in new product sales; $22 million from the acquisition of Orion and $7 million in favorable currency exchange. The gains were offset by a $22 million loss in contract manufacturing and gastrointestinal product sales.

Perrigo is optimistic for the future of the consumer health care segment, predicting 12% to 14% growth year-over-year, Brown said.

She added the range “assumes that the competitive dynamics created by challenges faced by a large branded competitor continue through” Perrigo’s fiscal 2012 fiscal second quarter, which ends in December.

Johnson & Johnson’s OTC recalls aided the growth of store brands, and it reported its products’ return to market is taking longer than expected and likely will not be complete until mid-2012 (Also see "J&J Consumer Recaptures Growth, Plans To Restore Most OTCs By Mid-2012" - Pink Sheet, 25 July, 2011.).

Formula Props Up Nutritionals

The picture in Perrigo’s nutritionals unit was not as rosy.

Fourth-quarter sales were up 47% to $123 million and were up 94% to $503 million for fiscal 21011, but the firm attributed the growth to its 2010 acquisition of formula and baby food maker PBM Holdings (Also see "Perrigo Grows Into Adjacent Infant Formula Category With PBM Acquisition" - Pink Sheet, 29 March, 2010.).

UBS analysts estimated formula contributed $81 million in the quarter.

While Perrigo exceeded the fiscal 2011 goal of $300 million in sales it set for the PBM business, Papa pointed out a branded competitor’s recall boosted sales.

Abbott Laboratories recalled Similac powdered formula last fall (Also see "Abbott's Similac Recall Triggers Overflow Demand For Answers" - Pink Sheet, 27 September, 2010.).

Potential OTC Switches In Perrigo’s Private Label Future:

Eisai’s Aciphex (rabeprazole), indicated for heartburn and acid reflux
Merck’s Clarinex (desloratadine), antihistamine
Pfizer ’s Lipitor, for high cholesterol
Astra-Zeneca’s Nexium (esomeprazole), for heartburn
Pfizer ’s Protonix (pantoprazole), for excess stomach acid
topical NSAIDs, anti-inflammatories or steroid creams

Source: Collins Stewart research note

Perrigo expects continued growth of the formula outside the U.S. and likely will seek a partnership in China to increase distribution there, Papa said.

“We believe that ‘made in the USA’ is an important quality advantage versus some of the concerns that have occurred in Asia with other infant formula,” he added (“FDA warns on China formula,” “The Tan Sheet” Sept. 15, 2008, In Brief).

Perrigo said new product sales in the vitamin, mineral and supplements category added $8 million to the nurtitionals business for the year, but the business also lost $46 million in net sales due primarily to stock-keeping rationalization, the firm said in a release.

Brown said the smaller number of nutritionals SKUs from Perrigo is “rebalancing this category towards those products where we feel we can offer our customers a high-quality value proposition while still improving overall margins.”

By Carolyn B. Phenicie

Perrigo To Launch Private Label Mucinex, Prevacid, With An Eye On Lipitor

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