Research Update: Perrigo Co. PLC 'BBB-' ICR Affirmed Following Delay In Planned Divestiture Of Prescription Drug Business, Outlook Stable

Leading over-the-counter (OTC) drugmaker Perrigo Co. PLC recently indicated that it doesn't expect to divest its prescription pharmaceutical business in the near term. That business accounts for about one-quarter of its profit. While we are revising our base-case forecast and eliminating the expected deleveraging (from about 3.5x to about 2.5x) to incorporate that change, we view the company's higher leverage as offset by the larger scale and greater business diversity afforded by the retention of the generic business. The company's first-quarter earnings were strong and supported by consumer stockpiling at the onset of the coronavirus pandemic as well as its launch of generic ProAir (albuterol). We expect the company's demand to soften somewhat over the coming months given that consumers

...- Leading over-the-counter (OTC) drugmaker Perrigo Co. PLC recently indicated that it doesn't expect to divest its prescription pharmaceutical business in the near term. That business accounts for about one-quarter of its profit. - While we are revising our base-case forecast and eliminating the expected deleveraging (from about 3.5x to about 2.5x) to incorporate that change, we view the company's higher leverage as offset by the larger scale and greater business diversity afforded by the retention of the generic business. - The company's first-quarter earnings were strong and supported by consumer stockpiling at the onset of the coronavirus pandemic as well as its launch of generic ProAir (albuterol). We expect the company's demand to soften somewhat over the coming months given that consumers are now well stocked. - We are affirming our '###-' long-term issuer credit rating on Perrigo. - The stable outlook reflects our expectation that Perrigo will maintain its leadership position in...

Research Update