Teva's Former Israeli-Traded Pharma Giant Perrigo Collapses After Delisting, Sparing Local Investors Heavy Losses
Perrigo, once a leading pharmaceutical company traded on both the Tel Aviv and New York stock exchanges, has seen a dramatic collapse since its delisting from the Tel Aviv Stock Exchange in 2022. The American firm, which acquired the Israeli company Agis in 2005, was valued at $26 billion in 2015 and was a significant holding for Israeli institutional investors. However, after delisting, its stock plummeted over 70%, with its current market capitalization in New York around $1.4 billion, representing a nearly 95% drop from its 2015 peak and the lowest valuation in almost two decades.
Earlier this month, Perrigo ousted its CEO due to "behavior inconsistent with company values," adding to the company's ongoing instability. Jonathan Kreisman, head of healthcare at Psagot and founder of Valore Finance, explained that Perrigo's growth was historically driven by acquisitions and dominance in private-label pharmaceuticals, especially during the 2008 financial crisis. However, aggressive price hikes in niche generic topical drugs proved unsustainable, leading to a market correction and a downward spiral.
Perrigo's expansion into unrelated sectors such as baby food formulas and branded medical products in Europe lacked synergy, further complicating its business. The company resisted a $26 billion acquisition bid from competitor Mylan at its peak, but subsequent management changes failed to revive its fortunes. Operational challenges, including a costly tax dispute after relocating its headquarters from the U.S. to Ireland and IT system issues, also hindered performance.
Following years of divestments, including selling off Israeli operations acquired with Agis, Perrigo's delisting from the Tel Aviv exchange in 2022 removed it from the TA-35 index, where it once held a 4.7% weight. Kreisman noted that this move partially protected Israeli institutional investors from an additional 80% loss. While Perrigo's bonds trade at a significant discount, reflecting concerns about its ability to stabilize and service debt, investment experts like CNBC's Jim Cramer have labeled the stock a "value trap" with no growth prospects.
Despite the company's long decline and uncertain outlook, the delisting has been seen as a relief for local investors who avoided further steep losses. The future for Perrigo remains uncertain amid ongoing management and operational challenges.
