Perrigo Co.â€™s (PRGO) announcement last week recalling around 11 million bottles of Acetaminophen 500 mg caplets affected over 130 retailers nationwide, however the generic drug maker wonâ€™t face a large hit on its earnings for the next quarter.
This is the third time that Acetaminophen product has been recalled in the last five years. The previous recall was this summer when the Michigan-based manufacturer voluntarily recalled an infant oral-drop product to due to an inaccurate measure of acetaminophen dosage.
The recall will cost approximately $2.9 million. The firm is the worldâ€™s largest generic over the counter drug maker, controlling 65 percent of that market. CEO Joseph C. Papa boasted in a conference call to analysts early last month that on average, every person in the U.S. takes one Perrigo-made tablet once every four days.
Since 2001 the company has issued over 20 recalls and for this year alone it exceeded more than 10 recalls with the latest involving its laxatives medication.
While the company has a dominant market share, consumers may have rarely heard about the firm. Perrigo produces the generic drugs which are then re-branded and sold under distributorsâ€™ names at stores such as Wal-Mart and CVS.
The firm reported that its first-quarter earnings ending September 30 were $17.55 million, or 19 cents a share a rise of 26 percent compared with $12.91 million or 14 cents a share a year ago. Revenue grew 6 percent to $340.87 million.
The recall was initiated voluntarily by the company on Nov 9 after it informed the Food and Drug Administration on Tuesday that after testing batches of product, it found one in 400,000 caplets may contain traces of a metal particulate substance.
The firm announced that it planned to take a charge of 1 cent per share for the fiscal first quarter for 2007, reducing its estimated earnings from 19 cents a share to 18 cents a share. It reaffirmed its 2007 forecast of adjusted earnings per share of 86 cents to 91 cents.
Perrigoâ€™s share price decreased 9 cents or 0.53 percent to close at $16.91 on Friday on the Nasdaq.