Cantillon: Curtain comes down on Elan

Perrigo completes acquisition of Irish drugs firm in $8.6bn deal

Perrigo chief executive Joe Papa.

Perrigo chief executive Joe Papa.

Thu, Dec 19, 2013, 08:39

The curtain came down last night on Elan’s existence as an independent company. The acquisition of the business founded in 1969 by Don Panoz to commercialise his research into the use of transdermal patches – particularly as a nicotine patch for smokers – was completed as shares in the company (the first Irish firm to list in the United States ) were delisted from the US stock market at the close of business.

In a neat piece of symmetry for what was Ireland’s largest indigenous pharmaceuticals business, US-based generics group Perrigo, the company that has now paid $8.6 billion in a stock and cash deal for Elan, is the same group that took the original nicotine patch off Elan’s hands in 1999.

Perrigo may be coming a little late to the game of international expansion but that does not mean the chief executive Joe Papa and his team have been waiting idly at its Allegan, Michigan, base.

The Elan deal is the 17th in the past seven years for Papa as he drives organic revenue growth of between 5 and 10 per cent per year alongside a similar figure from acquisitions.

Papa is betting that what he calls the “three big megatrends” – the rising appeal to customers of store brands on cost grounds; increased numbers of products moving off prescription to over-the-counter status, where Perrigo is a noted “first follower”; and development of new products in underserved areas such as pet and eyecare – will prove as resonant in Europe as they are in the US.

With the ongoing pressure on health budgets and the generally lacklustre state of the economy across the Continent, Perrigo certainly seems to be a in strong position.

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