When the Medicine Cabinet Gathers Dust: Perrigo’s Six-Month Slide Reveals More Than Meets the Eye

Sometimes, it’s not the missing medicine—but the silence in the cabinet—that tells the story. In the past six months, Perrigo Company plc (NYSE: PRGO) has watched its stock plummet by an unsettling 49.6%, trailing the industry’s modest 5% gain and leaving even the most patient shareholders reaching for antacids. The numbers demand an explanation, but the prescription is far from simple.

Strategic Surgery: When Selling Off Isn’t a Cure

Perrigo’s recent moves resemble a surgeon wielding a scalpel: precise, but not without pain. On July 14, the company announced the sale of its Dermacosmetics business for up to $327 million—an operation designed to focus on “high-grow” brands. In November, a strategic review of its infant formula unit signaled deeper restructuring. But investors weren’t convinced: the day after the review announcement, PRGO shares hemorrhaged 25.2% in a single session.

These asset sales are not just balance-sheet theater. The infant formula business, under pressure from recalls and operational stumbles, now accounts for less than 10% of Perrigo’s net sales. Yet, that 10% has been a source of volatility, not growth. In Q2 2025, $11 million in scrapped inventory and ongoing remediation costs underscored the operational drag, while a voluntary recall in August 2024 over Vitamin D levels cast a shadow on consumer trust.

The Quiet Bleed: Revenue, Margins, and the Vanishing Growth Story

The numbers speak in whispers that grow louder with each quarter. Q4 2024 net sales dropped 1.6% year-on-year to $1.14 billion. Full-year 2024 sales fell 6.1% to $4.37 billion. Even adjusted EPS, at $2.57 for 2024, inched down from $2.58 the year before—hardly inspiring in a sector where cost-saving and scale are supposed to drive leverage. The result: a staggering 48.7% decline in the stock over the past year.

Margins have fared no better. Gross margin for the latest trailing twelve months sits at 35.5%, with the operating margin limping at 6.5%. Return on equity remains negative at -1.1%, while free cash flow to sales has shriveled to 6.3%. For a company aiming to reinvent itself as a leader in consumer self-care, these are not the growth metrics Wall Street prescribes.

Pills, Politics, and Price Wars: The Industry’s New Battlefields

The pain isn’t just homegrown. The entire OTC and generics sector is on a new battlefield—one where drug pricing reforms and geopolitical tremors set the rules. U.S. government interventions, from the Inflation Reduction Act to executive orders on generic approvals, have squeezed profitability and blurred the competitive map. Supply chain disruptions, amplified by conflicts in Ukraine and the South China Sea, have hiked input costs and forced Perrigo to rethink its production footprint—especially in Oral Care, where tariffs are expected to pinch in 2025.

While management insists these cost headwinds will be “manageable” through price increases and domestic sourcing, the market remains unconvinced. Global players like Johnson & Johnson and GlaxoSmithKline, wielding blockbuster brands and deep pockets, have shown more resilience. Smaller generics specialists, meanwhile, are pushing into biosimilars and complex formulations where Perrigo’s scale matters less. The result: a squeeze from both ends of the pharmacy shelf.

Project Energize: Can Cost-Cutting Spark a Revival?

Amid the malaise, Project Energize is supposed to be Perrigo’s adrenaline shot. Management touts $150–$200 million in operational savings, with annualized pre-tax savings of up to $170 million by 2026. But restructuring charges of $140–$160 million mean the near-term financials will remain under anesthesia. Even if the plan hits its targets, it only patches existing wounds—without guaranteeing new sources of growth.

For now, the company’s dividend yield has swollen to a tempting 9.05%—a siren song for income hunters, but often a red flag that the market expects further turbulence. Short interest at 7.36% of outstanding shares signals that skepticism runs deep.

The Shareholder’s Dilemma: Wait for the Remedy, or Seek a Second Opinion?

Perrigo’s story is not one of sudden collapse, but of a slow drift into uncertainty—a process that asset sales, cost cuts, and guidance reiterations have not (yet) reversed. The company’s own three-year return, a brutal -54.95% against the S&P 500’s +67.51%, is a reminder that sometimes the biggest risk is hoping for a turnaround that never comes.

For those still in the waiting room, the prescription is clear: watch the fundamentals, not just the yield. Until Perrigo can restore both growth and confidence, the medicine cabinet may remain uncomfortably quiet.