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· Perrigo Company (PRGO), a longtime leader in OTC generics, had faced pressure over the past few years from industry-wide price erosion, challenges in its animal health business, and a reduction in FDA approvals.
· But the company's prospects now appear to be changing. Pricing within the generic drug industry appears to have stabilized; management has divested the animal health business for $185 million in cash; and the company has received approval for, relaunched, and acquired the rights for several key products over the past few months.
· The company recently acquired Ranir Global Holdings LLC, the largest private label oral care company globally. It has also acquired the U.S. rights for Prevacid, a heartburn treatment, from GlaxoSmithKline. In addition, Perrigo sold its Animal Health business for $185 million.
· Given our expectation that the company will begin to show initial results from its consumer-focused transition later in the year, PRGO shares appear attractively valued at 13.1-times our 2019 EPS estimate, toward the low end of the company's five-year historical range.
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