Elan deal hits Perrigo profits

US drugmaker Perrigo has incurred once-off costs of nearly $285m (€205m) through its takeover of Irish biotech firm, Elan, dragging its current year profits down by nearly 80% so far.

The New York-listed company — the leading maker of generic over-the-counter drugs in the US — yesterday reported third quarter net profits of $48.1m for the three months to the end of March, down by 57% on a year-on-year basis.

For the first nine months of its financial year (which runs to the end of June), the company posted a net profit of $73.4m, down by 77.3% on the same period last year.

A big hit to Perrigo’s bottom line growth came via the one-off costs related to its near $9.5bn purchase of Dublin-based Elan at the end of last year.

The acquisition-related costs included administration expenses of nearly $109m, $10m in interest payments and almost $166m lost on extinguishing Elan’s debt.

The US firm also paid cash consideration of $16.1m to Elan’s stock option and share award holders for the unvested portion of their awards in the second quarter of its current financial year.

The company incurred Elan takeover-related costs of $1.2m for the three months to the end of March. The $285m cost covers the first nine months of its current fiscal year.

Last year, Perrigo said that the company could benefit from around $150m in annual tax savings from acquiring Elan.

In yesterday’s earnings update, Perrigo said that ‘fiscal 2015’ should see it have a lower annual effective tax rate because of the deal.

Perrigo’s third quarter net sales amounted to just over $1bn, up from just under $920m last year, while its revenues for the nine months to the end of March rose by 3.4% year-on-year, to almost $2.92bn.

Basic earnings per share — for the nine months — jumped from 93.8c to 108.9c; with third quarter earnings going from 94c to 109.4c.

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