Over-the-counter drugmaker Perrigo has acquired Minneapolis-based Paddock Labs for $540 million, adding $200 million per year in revenue to the bottom line of the world’s largest drug company.
The purchase expands Perrigo’s presence in the generic drug business. Paddock offers 80 products in its portfolio and has several more drugs awaiting U.S. Food and Drug Administration approval.
The deal should close in Perrigo’s fiscal fourth quarter pending a review by federal regulators.
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Analysts saw the acquisition as a sharp move by Perrigo and the company’s stock responded in kind, rising to an all-time high. Perrigo purchased Paddock for roughly twice its revenue — the final price is $445 million after certain tax benefits — even though Paddock is in a fast-growing, high-margin niche and had recent revenue growth of more than 20 percent, according to Morningstar.
The exit is also an impressive one for Paddock, a pharmaceutical company in a medical device town. It was founded in 1977 as a regional company selling specialty pharmaceuticals. Among the company’s key moments was a 1996 federal generic drug approval for Nystop, Nystatin Topical Powder which treats fungal infections. That single product has generated $175 million in sales for the company, according to Paddock’s Web site.