Good news flowed in at Perrigo Company ( PRGO - Analyst Report ) when the U.S. Food and Drug Administration (FDA) cleared its generic version of KV Pharmaceutical Company’s vaginal cream Gynazole·1. Final approval was granted by the U.S. regulatory body for the local treatment of vulvovaginal candidiasis.

Apart from gaining FDA approval to sell its generic version of the product, Perrigo also enjoys a six month marketing exclusivity period regarding Gynazole·1 since it was the first company to file an abbreviated new drug application (ANDA) with a para IV certification for the drug. We remind investors that Perrigo filed its ANDA with the FDA in 2010, seeking to sell its generic version of the vaginal cream.

We note that KV Pharma stopped manufacturing the vaginal cream in January 2009 owing to manufacturing issues. Following the FDA approval, Perrigo is working with KV Pharma towards making the generic version of Gynazole·1 available in the U.S. by year-end.

We note that this is the second piece of good news for Perrigo from the FDA in a short span of time. Last week, the U.S. regulatory body had cleared Perrigo’s generic version of Novartis’ ( NVS - Snapshot Report ) heart burn drug Prevacid. Approval was granted to treat patients suffering from frequent heartburn (two or more days in a week). Perrigo launched the drug in the U.S. following the receipt of final approval from the FDA.

We note that the approval of the generic versions of Prevacid and Gynazole·1 would be easy on the pockets of U.S. patients as generic drugs are much cheaper than their branded counterparts.

Our Recommendation

We currently have a Neutral recommendation on Perrigo. The stock carries a Zacks #3 Rank (short-term Hold rating).

We believe Perrigo has a sustainable and diversified product portfolio. The company’s strong position in the brand over-the-counter pharmaceutical market and growing generics and active pharmaceuticals ingredient (API) businesses are expected to drive growth in the coming quarters. We are also impressed by Perrigo’s strong pipeline.