Perrigo Company plc PRGO announced that the FDA has approved store brand over-the-counter (“OTC”) equivalent of Johnson & Johnson JNJ owned Imodium Multi-Symptom Relief tablet. The drug is indicated for treating symptoms of diarrhea plus bloating, pressure and cramps.

The drug, which is a tablet formulation constituting of 2 mg loperamide hydrochloride and 125 mg simethicone, will be launched under store brands or retailer ‘own label’ brands in the fourth quarter of 2018.

Per the press release, Imodium recorded net sales of approximately $62 million in the last 12 months.

Perrigo’s shares have declined 13.1% against the industry’s rally of 15.7%.

Perrigo operates under three segments – Consumer Health Care Americas (“CHCA”), Consumer Health Care International (“CHCI”) and RX Segment. However, Perrigo’s sales were disappointing in the first half of 2018, down 1.2% to $2.4 billion.

In August, the company had announced a new growth strategy for the CHCA segment. The company is pursuing additional branded OTC opportunities in the United States through regulatory approvals. Approval for the OTC equivalent of Imodium is part of the company’s strategy to pursue additional branded OTC opportunities in the United States. Perrigo also signed an agreement with Merck MRK to gain exclusive rights to pursue regulatory approval of OTC Nasonex nasal spray last month.

Meanwhile, to better capitalize on its differentiated generic pharmaceutical products and to focus on expanding its leading consumer business, Perrigo announced the divestment of its RX segment, which is suffering sales decline since 2017 due to competitive pressure.

The company lowered its guidance for 2018 sales during its second-quarter earnings call anticipating significant reduction in pricing in the RX segment. Thus, new approvals to OTC drugs and divestment of the RX segment is expected to bode well for the company.

Zacks Rank & Stock to Consider

Perrigo currently carries a Zacks Rank #3 (Hold). Ligand Pharmaceuticals Incorporated LGND is a better-ranked stock from the pharma space, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand’s earnings per share estimates increased from $5.64 to $6.33 for 2018 and from $5.59 to $5.74 for 2019 in the last 30 days. The company delivered a positive earnings surprise in all the trailing four quarters, with an average beat of 59.54%. The company’s shares have rallied 85.9% year to date.

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