Perrigo Recalls 11 Million Bottles of Generic Acetaminophen

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Perrigo Recalls 11 Million Bottles of Acetaminophen [Reuters]

Summary: Generic drug manufacturer Perrigo Co. is recalling 11 million bottles of 500-mg. over-the-counter acetaminophen after metal fragments were discovered in some caplets. No one has been harmed by the contaminated pills. The bottles were distributed to various Wal-Mart, CVS and Safeway locations as well as dozens of other stores, although the FDA is not specifying a geographic concentration. Perrigo's shares dropped 6% on the news to $16.92. Acetaminophen is the active ingredient in Johnson & Johnson's Tylenol. The FDA and Perrigo are investigating the source of the fragments; both say there is no evidence as yet that it was an intentional contamination. The recall is expected to cost the company $2.9 million. Fiscal Q1 results will now include an after-tax charge of $667,000, or $0.01/share, because of the recall, reducing quarterly earnings to $0.18/share; but the company reiterated its fiscal 2007 full-year EPS forecast of $0.86-0.91.
Related links: Additional coverage: Wall Street Journal, Associated Press
Potentially impacted stocks: Perrigo Co. (PRGO), Wal-Mart (WMT), CVS (CVS), Safeway (SWY) • Competitors: Taro Pharmaceutical Industries (TARO), Teva Pharmaceutical Industries (TEVA)

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