Perrigo Company (Nasdaq:PRGO; TASE:PRGO) may be a beneficiary of a recall in the US of several over-the-counter drugs, including Excedrin, NoDoz, Bufferin, and Gas-X, by Novartis AG (NYSE:NVS; LSE: NOV; SWX: NOVZ), due to production problems.
In an announcement yesterday, Novartis said "Novartis is taking this action as a precautionary measure, because the products may contain stray tablets, capsules or caplets from other Novartis products, or contain broken or chipped pills." The company has also indefinitely suspended operations at and shipments from its Lincoln, Nebraska, facility, after an internal review and assessment of complaints identifying "issues such as broken gelcaps, chipped tablets and inconsistent bottle packaging."
Perrigo is a generic drug company that focuses on non-prescription medications. Harel Finance analyst Steven Tepper said that Novartis's recall would have a positive effect on Perrigo, albeit not as great as last year's recall by Johnson & Johnson (NYSE: JNJ), which reported boosted Perrigo's quarterly sales by several tens of millions of dollars.
Tepper said that Perrigo has versions of three of the four drugs in Novartis's recall - Excedrin, which has $200-300 million in annual US sales; Bufferin, for which Perrigo has a private lable; and Gas X. Perrigo does not have a version of NoDoz.
Perrigo's share price rose 0.4% in early trading on Nasdaq today to $96.42, giving a market cap of $9 billion, after rising 0.6% on the TASE to NIS 307.50.
Published by Globes [online], Israel business news - www.globes-online.com - on January 9, 2012
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