Perrigo rejects Mylan deal in favor of organic growth
DUBLIN — Perrigo late Tuesday afternoon unanimously rejected the unsolicited proposal from Mylan, disclosed April 8, to acquire all of the outstanding shares of Perrigo for $205 per share in a deal valued at $29 billion. Following a thorough review, advised by its financial and legal advisers, Perrigo's board unanimously concluded that the proposal substantially undervalues the company and its future growth prospects and is not in the best interests of Perrigo's shareholders.
In the wake of Perrigo's rejection, Mylan shareholders have another deal to consider: Teva Pharmaceutical Industries earlier in the day submitted an unsolicited proposal to acquire Mylan in a deal valued at $40 billion. "Even though Perrigo rejected Mylan’s initial offer, Teva faces hurdles in its effort to acquire Mylan," The New York Times reported Tuesday. "Mylan is unlikely to simply walk away from its pursuit of Perrigo. But analysts think it will have to secure an agreement if it wishes to remain a stand-alone company."
"The board believes the proposal substantially undervalues Perrigo and its growth prospects and that continued execution by the management team against our global growth strategy will deliver superior shareholder value," stated Joseph Papa, Perrigo president and CEO. "Perrigo has a long history of driving above market shareholder value through consistent growth with a focus on profitability and operational excellence, which is reflected in our organic net sales CAGR goal of 5% to 10% for the next three years. With the acquisition of Omega Pharma, we are a top five global OTC company with a diversified portfolio, a leading market position in key franchises and a strong and established global distribution platform. We will continue to capitalize on our durable competitive position by expanding our international platform organically and through future synergistic deals. These actions will advance our leadership in the global OTC marketplace."
Perrigo on Tuesday separately announced results for the third quarter of fiscal 2015 ended March 28, and has provided guidance for calendar year 2015 in connection with its upcoming move to a calendar fiscal year. In the quarter, Perrigo generated record revenue, adjusted net income and operating cash flow, the company reported. In addition, Perrigo's three-year organic net sales CAGR goal from 2014 to 2017 is 5% to 10%.
Perrigo advised shareholders to take no action in relation to the Mylan proposal. "There can be no certainty that any firm offer will be made, nor any certainty as to the terms on which any firm offer might be made by Mylan," the company stated.
Morgan Stanley is acting as financial adviser and Wachtell, Lipton, Rosen & Katz and A&L Goodbody are acting as legal advisers to Perrigo.
AAHP underscores homeopathic safety profile before FDA
SILVER SPRING, Md. — The American Association of Homeopathic Pharmacists on Tuesday told the Food and Drug Administration that the agency’s regulatory policy for homeopathic medicines has worked effectively for the last 25 years to protect the public health and provide consumer access to safe homeopathic medicines. AAHP, the industry’s trade association, was joined by other industry leaders, practitioners and consumers of homeopathic medicines to engage in discussions with the regulator of homeopathic medicines.
“We are confident that the majority of homeopathic drug products in the market are manufactured and labeled in substantial compliance with the Compliance Policy Guide and the Food, Drug and Cosmetic Act, ensuring consumers have access to safe and clearly identified homeopathic products to choose from for their healthcare needs,” stated Mark Land, AAHP president.
The FDA called a two-day hearing to gather input on the appropriate regulatory policy for homeopathic medicines. Representing 90% of the homeopathic market in the United States, AAHP presented the following key facts:
- Collectively the associations’ member reported industry’s sales near $800 million, which aligns with market intelligence source Mintel’s 2013 estimate of $1 billion;
- Growth of the category closely follows that of non-prescription drugs in general and is projected at under 5% per year;
- In the past 10 years, only nine monographs for new active homeopathic ingredients have been approved by the Homeopathic Pharmacopoeia Convention of the United States, instead of the 500 reported in the Federal Register notice of the FDA meeting; and
- Safety is a hallmark characteristic of homeopathic medicines. As reported by the American Association of Poison Control Centers, the number of exposures to homeopathic medicines in any given year is less than 1% of all pharmaceutical reports to AAPCC, which is proportionally below the rate of the market share for homeopathic medicines.
The FDA’s current policy has a 25-year record of successfully providing FDA with broad enforcement authority while appropriately guiding the industry. Under the authority of CPG, FDA has taken swift and comprehensive action to address manufacturing and labeling issue in the marketplace.
As an industry, AAHP welcomes this opportunity to open a dialog with FDA and recommends that the agency engages homeopathic medical and pharmacy experts in this area. Land added, “These discussions contribute to the FDA’s and industry’s public health mission and recognize consumers’ desire for more natural health care options.”
Reimbursement pressures, product innovation threatens blood-glucose meter market
MOUNTAIN VIEW, Calif. — The market for self-monitoring blood glucose meters continues to be promising in the short term, Frost & Sullivan announced Tuesday, with $4.2 billion in revenue projected for 2016 from a 2014 base of $4 billion. However, several challenges limit the revenue potential for this market, including changes in reimbursement and the potential for developing technology to eliminate the need for blood glucose meters. In addition, availability of inexpensive generic test strips has intensified competition and strained participants' profit margins.
"Generic test strip market coupled with slash in Medicare reimbursement and national mail order program will affect the market until 2016," said Frost & Sullivan Life Sciences senior industry analyst Divyaa Ravishankar. "Other threats to the market include innovations in continuous monitoring and noninvasive methods of testing being pursued by IT companies like Google."
Together, the reimbursement cut and continuous monitoring will have many consequences, including the exit of independent retail pharmacy communities from the program, Ravishankar suggested. Medicare's national mail-order program inhibits retail pharmacies from delivering test supplies to homebound patients on the same day. Additionally Medicare patients will not have access to diabetes supplies from independent pharmacies. The overall result is a reduced accessibility for patients and a drop in the sales of bloo glucose meters.
Given the reimbursement reductions and sequestration cuts in the United States, non-invasive methods might replace the SMBG market in the long-run. As alternative markers at the point of care — glycated albumin tests, for example — can ease reimbursement issues associated with the market and provide meaningful care in type 2 diabetic patients, these products could also eat into SMBG's market share, Ravishankar said.
Spot monitoring provides a snapshot of blood glucose activity, research has shown that trend data is more useful in determining the long-term treatment regimen for diabetes. Several large companies are investing in continuous monitoring technologies that are proving more useful in determining long-term treatment regimens for diabetes.
"Finger-stick tests currently complement continuous devices and these invasive meters losing share to continuous devices is a long term possibility," said Ravishankar. "Non-invasive methods are becoming popular and may replace the SMBG market in the long run, given the reimbursement reductions and sequestration cuts in the United States. Alternative markers at the point of care for instance the glycated albumin tests can ease the reimbursement issues associated with the market and also provide a meaningful care in Type 2 diabetic patients."
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