Perrigo’s business model
Perrigo (PRGO) is a company with a leading portfolio in areas such as consumer healthcare (or CHC) products, branded consumer healthcare (or BHC) products, prescription pharmaceuticals (or Rx pharmaceuticals), specialty sciences, and active pharmaceutical ingredients (or API).
Post-completion of its March 2015 acquisition of Omega, one of the largest healthcare companies in Europe, Perrigo changed its operating segments to better align with its organizational structure. Unlike its peers such as Amgen (AMGN), Gilead Sciences (GILD), and Celgene (CELG), which report financial figures based on the calendar year, Perrigo reports its financial statements based on the fiscal year.
Perrigo is the largest manufacturer of over-the-counter (or OTC) products in the world and is a top five global OTC consumer goods and pharmaceutical company. Its key business segment, Consumer Healthcare, accounts for about 60% of its total revenues.
This segment is focused on offering over-the-counter (or OTC) store brand products including cough, cold, and allergy products, gastrointestinal products, animal health products, infant formula and foods, analgesics, vitamins, minerals, and supplements (or VMS), and diagnostic products.
The company is also a leading provider of branded OTC products in areas such as natural health, VMS, cough, cold, allergy, personal care, dermatological products, lifestyle and anti-parasite products. The branded consumer healthcare segment accounts for about 9% of Perrigo’s total revenues.
Perrigo also has a substantial presence in both the generic and specialty prescription pharmaceutical markets across the US and UK markets. Additionally, the company earns royalty revenues from Biogen for its multiple sclerosis drug Tysabri.
Perrigo also manufactures API products in India and Israel. These products are then supplied to generic and branded pharmaceutical companies across the world.
Investors can get diversified exposure to Perrigo’s strong business model while avoiding excessive company-specific risks by investing in the Health Care Select Sector SPDR ETF (XLV). Perrigo accounts for 0.90% of XLV’s total holdings.