Loratadine Sales Keep Perrigo On Track To Meet Core Business Growth Goals
This article was originally published in The Tan Sheet
Executive Summary
Perrigo expects to meet its fiscal 2004 target for core business growth despite continued delays in the approval of its 10 mg loratadine tablets (Schering-Plough's Claritin)
|
Perrigo expects to meet its fiscal 2004 target for core business growth despite continued delays in the approval of its 10 mg loratadine tablets (Schering-Plough's Claritin ). "Our goal has been to grow our core business in the 3% to 5% range...and we feel that somewhere in that range is where we will end up this year," Perrigo CEO David Gibbons said during a Feb. 3 earnings call on the company's second quarter (ended Dec. 31). "We are going to hit our growth targets despite not having all of [our] loratadine products" approved or contributing to sales growth in fiscal 2004, Gibbons continued. Perrigo had "expected, by the end of the year, that there would be contribution coming from all five loratadine products" it has submitted for FDA approval. However, Gibbons noted that Perrigo would not record any sales volume from its 10 mg loratadine or D-12 formulations until at least the first half of fiscal 2005. He added the delay has been "very disappointing" since the 10 mg product constitutes about half of the allergy category (1 (Also see "Perrigo’s Generic Loratadine Offerings Could Boost Firm’s Cough/Cold Sales" - Pink Sheet, 24 Nov, 2003.), p. 17). Still, Perrigo will recognize revenues in fiscal 2004 from its generic versions of Claritin D-24 , RediTabs and Children's Claritin Syrup , which is slated to ship by the end of this month. The firm expects D-24 revenues, specifically, to help it reach its core business growth goals, Gibbons stated, adding that sales of the loratadine offering exceeded expectations in the quarter. D-24 loratadine sales helped drive Perrigo's cough/cold revenues up 29% for the 12-week period ended Dec. 28, the firm said, citing data from Information Resources, Inc. (Chicago). IRI numbers reflect retail sales in food, drug and mass channels, excluding Wal-Mart. By comparison, the overall cough/cold market and store brand sales both grew 21%. The robust cough/cold category performance helped boost Perrigo's U.S. Consumer Health Care segment sales 8.5% to $222.8 mil. in the quarter versus the prior-year period. Including the firm's other three business segments - UK Operations, Quifa (Mexico) and Pharmaceuticals - Perrigo sales totaled $245.1 mil. (up 7.7%) in the quarter. Addressing the effect that Claritin and other loratadine products have had on the overall OTC allergy market, Gibbons stated: "I think it is no real surprise there is some cannibalization." Although the over-the-counter allergy category has grown from approximately $600 mil. to about $1 bil. since OTC Claritin launched in late 2002, Gibbons explained that Claritin and loratadine products have "taken business away from some parts...of that segment." CFO Doug Schrank added: "One of the things that you see when you have a blockbuster brand enter the marketplace is that typically the products that get the worst are sort of the weakest national brands. The store brands are hurt less." Conversely, "what you see with Prilosec being launched is that the category has grown and everybody else has been hurt because it is a new brand and there are no new store brands out there," Gibbons said. "So the gastrointestinal category has grown, but basically everybody except Prilosec has taken a hit." Perrigo reported that gastrointestinal sales, which include both its antacid and laxative products, fell 7% due to "very competitive price pressures." The overall GI market and store brand sales rose 5% and 3%, respectively. Regarding its planned expansion into the generic prescription drug market, Perrigo said it plans to announce the hiring of a VP-research and development and VP-sales during the week of February 9 (2 (Also see "Perrigo Nets Former Pharmacia Counsel Kingma To Support New Strategy" - Pink Sheet, 8 Sep, 2003.), p. 4). "Our anticipation [for the Rx business] would be no revenues in 2004, very minimal revenues in 2005 and maybe even a little ramp up in spending...and then 2006 is where we really do expect to see some good revenue hits," Gibbons stated. |