In a groundbreaking move, the U.S. Food and Drug Administration (FDA) has granted approval for Perrigo’s Opill, a daily oral contraceptive, to be prescribed over the counter (OTC).
This decision marks a significant milestone in women’s health, potentially revolutionizing access to contraception. While the news initially drove Perrigo’s stock price up, questions remain about the long-term impact on the company’s financials and market competition.
A Major Win for Perrigo
The approval of OTC Opill by the FDA was widely anticipated, given the unanimous backing it received from both the Nonprescription Drugs Advisory Committee and the Obstetrics, Reproductive, and Urologic Drugs Advisory Committee.
Furthermore, esteemed medical organizations such as the American College of Obstetricians and Gynecologists and the American Medical Association have strongly advocated for over-the-counter availability of oral contraception. Patrick Lockwood-Taylor, the CEO of Perrigo, enthusiastically expressed his belief that Opill has the power to revolutionize women’s contraceptive access.
Improving Access and Addressing Unintended Pregnancies
Opill’s approval as an OTC contraceptive has the potential to address the issue of unintended pregnancies in the United States. According to Perrigo, an estimated 45% of the 6 million pregnancies in the country each year are unintended.
Moreover, a 2011 study revealed that nearly one-third of adult women in the U.S. encountered difficulties obtaining prescription or refills for contraceptives. By making Opill accessible without a prescription, Perrigo aims to empower women to take control of their reproductive health.
Pricing Strategy and Implications for Perrigo’s Stock
While the price of the OTC version of Opill remains unknown, Perrigo’s global vice president for women’s health, Frederique Welgryn, assured that the company intends to make it both accessible and affordable. This commitment to pricing could play a crucial role in determining the widespread adoption of OTC Opill.
Despite the initial surge in Perrigo’s stock price following the FDA’s announcement, the long-term impact on the company’s financials is uncertain. Perrigo’s women’s health unit generated around $45 million in sales in 2022, a relatively small portion compared to the company’s total revenue of over $2.9 billion. Additionally, Perrigo may face competition from Cadence Health, which is also exploring the path to OTC approval for its birth control pill.
Valuation and Investor Considerations
Investors should take into account Perrigo’s valuation when assessing the stock’s potential. With shares trading at a forward earnings multiple of approximately 12.5, Perrigo appears relatively cheap compared to the S&P 500.
However, it is worth noting that other major generic-drug makers have even lower valuations, which may impact investor sentiment.
The Road Ahead
While the FDA’s approval for OTC Opill is undoubtedly a significant milestone for Perrigo, its long-term impact remains uncertain.
The availability of OTC Opill in the U.S. is expected in early 2024, allowing for a better evaluation of its market reception. Perrigo’s success in capturing market share and maintaining competitive pricing will be crucial factors to watch.
As the company navigates this new terrain, its ability to adapt to evolving consumer needs and market dynamics will shape its future in the women’s health sector.
Perrigo’s OTC Opill Holds Promise Amidst Uncertainties
The FDA’s approval of Perrigo’s Opill as an over-the-counter birth control pill represents a major advancement in women’s healthcare accessibility. While the news sparked initial excitement among investors, the long-term impact on Perrigo’s financials and market competition remains uncertain.
The company’s commitment to affordability and competition from potential rivals like Cadence Health will play pivotal roles in determining the success of OTC Opill. As women’s health continues to be prioritized, Perrigo’s ability to meet consumer demand and deliver value in this evolving landscape will shape its trajectory in the coming years.
