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Perrigo Annual Report 2012 Contents 3 Financial Highlights 12 Business Segment Review 22 Financial Reconciliation 4 Shareholder Letter 14 2012 in Review Insert 125 Years of Perrigo 10 Key Events 20 Shareholder Information Corporate Profile 2 From its beginnings as a packager of generic home remedies in 1887, Allegan, Michigan-based Perrigo Company has grown to become a leading global provider of quality, affordable healthcare products. Perrigo develops, manufactures and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, dietary supplements and active pharmaceutical ingredients (API). Perrigo is the world’s largest manufacturer of OTC pharmaceutical products for the store brand market. The Company’s primary markets and locations of logistics operations have evolved over the years to include the United States, Israel, Mexico, the United Kingdom, India, China and Australia. Perrigo Annual Report 2012 Financial Highlights Year Ended Financial Results – June 25, June 30, % Reported (GAAP) (1) 2011 (2) 2 012 (2) Change In millions, except shares Net Sales $ 2,755.0 $ 3,173.2 15 and per share amounts Operating Income $ 490.2 $ 569.2 16 Income from Continuing Operations $ 340.6 $ 393.0 15 Diluted Earnings Per Share from Continuing Operations $ 3.64 $ 4.18 15 Average Diluted Shares Outstanding (000s) 93,529 94,052 Year Ended Financial Results – June 25, June 30, % Adjusted (Non-GAAP) (1) 2011 (3) 2 012 (3) Change 3 In millions, except shares Net Sales $ 2,755.0 $ 3,173.2 15 and per share amounts Operating Income $ 541.3 $ 686.6 27 (unaudited) Income from Continuing Operations $ 375.4 $ 469.4 25 Diluted Earnings Per Share from Continuing Operations $ 4.01 $ 4.99 24 Average Diluted Shares Outstanding (000s) 93,529 94,052 4.99 3,173.2 4.01 2,755.0 686.6 541.3 469.4 375.4 2011 2012 2011 2012 2011 2012 2011 2012 Net Sales Operating Income Income From Diluted Earnings ($ in millions) ($ in millions) Continuing Operations Per Share ($ in millions) (in dollars) (1) All information based on continuing (3) See reconciliation of non-GAAP financial measures on page 22. We have operations. excluded certain items when monitoring and evaluating Perrigo’s ongoing financial results, because we believe this provides important insight into (2) See Item 7 in the Form 10-K report for a Perrigo’s ongoing core business operations on a normalized basis. discussion of results of operations. Perrigo Annual Report 2012 Fellow Shareholders, As I reflect on a successful fiscal year 2012, I can’t help but look back to the very beginnings of the Perrigo Company, 125 years ago. What Luther Perrigo started as a general store and apple drying business near Allegan, Michigan in 1887, has grown to become the $3 billion global healthcare products corporation it is today. More than anything, I am struck by how Perrigo’s long commitment to its core values has guided it throughout its 125-year history, and will continue to do so going forward. A section later in this report reflects on Perrigo’s first 125 years. Fiscal 2012’s results are a testament of how our commitment to a singular mission enables us to deliver value to our shareholders, our customers and consumers. 4 Our past is the foundation of our future. 12 5 years 1,000 products Perrigo remains focused on its mission Perrigo manufactures and packages more than 1,000 products, of providing quality, affordable healthcare including many of the leading over-the-counter, pharmaceutical, for the next 125 years! dietary supplement and nutritional products that are offered in the U.S. market today. 5 million sq. ft. With over 5 million sq. ft. of manufacturing, research and development, and logistics facilities, Perrigo has the necessary economies of scale to be a leader in the global healthcare market. The facilities, if combined, would fill two Empire State Buildings! Perrigo Annual Report 2012 For shareholders, we delivered record sales and earnings, dividend growth, and the market rewarded us with record share prices. For customers, we continued to lead our industry in introducing innovative products and providing superior service in support of their profit goals. And for consumers, we estimate that we delivered $5 billion in healthcare savings in fiscal 2012. These record results were achieved through the dedication and commitment of nearly 9,000 Perrigo team members worldwide. They drove growth in all areas of our core business, brought important new products to market, and helped us identify and complete strategic acquisitions that extended our geographic reach and provided us entry into important new over-the counter (OTC) and prescription (Rx) pharmaceutical categories. 5 Our past is the foundation of our future. Perrigo Annual Report 2012 Five Pillars Drive Our Strategy and Support Our Mission Perrigo’s record performance in fiscal 2012 was the result of our commitment to the key framework of our business strategy: High Quality, Customer Service, Innovation, Cost Management, and People. Ensuring Sustainable High Quality To achieve sustainable quality, Delivering Superior Customer Service We know that our neighbors and we invest heavily in it. We hire At Perrigo, customer service is much families count on the quality of our highly qualified people, continuously more than someone answering the products, just as our retail customers train them, incorporate best-in-class phone when a customer calls, or and value-conscious consumers do. quality control systems, and invest attending to a problem when one We never forget that or lose focus in state-of-the-art equipment. develops. Our customer relationships on the importance of quality in represent true partnerships. In the case For example, nearly 8 percent of our value equation. of our store brand OTC products, the cost of producing a bottle of it’s the customer’s name on the 6 aspirin is attributable to quality package, not ours. And in the case control and maintenance. Perrigo vs. S&P, DJIA, and NASDAQ Price $400 Performance PERRIGO $350 S&P DJIA $300 NASDAQ $250 $200 $150 $100 $50 | | | | | June 08 June 09 June 10 June 11 June 12 Perrigo Annual Report 2012 of our Rx products, it’s the customer’s formulations, and more efficient Perrigo People: Our Strongest Pillar reputation for providing their patients production and packaging solutions. With nearly 9,000 employees with the highest quality available worldwide, it is sometimes easy to Executing Effective Cost Management that’s at stake. Our partnerships lose sight of the critically important Anyone can cut costs, but at what are based on a high level of trust role that each team member price? When you are as committed because our customers place their plays in Perrigo’s overall success. to providing quality, affordable own brands in our hands. Yet, each individual’s dedication and healthcare products as we are, commitment to our core values and Pursuing Industry Leading Innovation you rely on your core values to adherence to our Five Pillars enables To us, “innovation” means being first determine the criteria you use us to consistently deliver quality, to bring new healthcare products in analyzing costs. Then, you make affordable healthcare products and to market, and continuously looking decisions on how to effectively superior financial results. We invest for new ways to leverage our manage those cost factors in a significant resources in attracting, expertise in mass customization to way that enhances the quality training and keeping top talent in deliver healthcare value. As the and affordability of your products. every functional area, wherever global leader in producing high- That’s why “quality” comes first in we operate worldwide. quality store brand and generic our value equation, and first in pharmaceuticals, we continuously our list of strategic pillars. pursue new, industry-leading 7 Remembering Rafi Lebel 1957 - 2012 Perrigo Israel president Rafi Lebel died unexpectedly on March 11, 2012 during a business trip to the U.S. Rafi joined the business when Perrigo acquired Agis Industries in 2005, and had served as president of Perrigo Israel for the past five years. It was Rafi’s endearing friendship, among other things, that helped us work together to combine two companies from two distinctly different parts of the world and, ultimately, paved the way for our success. Most of all, regardless of the topic or whether we agreed or not, Rafi always made sure that we ended each day as friends. And eventually, as friends, we were all able to accomplish much more than simply as colleagues. During his many years at Perrigo, Rafi led amazing achievements, and his numerous contributions made Perrigo a better company. Rafi’s energy, determination, abilities and compassion will be greatly missed. Perrigo Annual Report 2012 Key Events Fiscal year 2012 was an active year in terms of new product launches, which, along with strategic acquisitions, is a key component of our growth strategy and a significant driver behind our results for the year. Paddock Acquisition Epinastine HCl Launch Guaifenesin Extended-Release Early in fiscal 2012, we completed our In November 2011, we were excited Tablets, 600 mg acquisition of Paddock Laboratories, Inc., to launch epinastine HCl ophthalmic In December 2011, we received FDA a privately-held, Minneapolis- solution, 0.05%, a generic version approval for guaifenesin extended- ® based manufacturer of generic Rx of Elestat , after our partner, release tablets, 600 mg, a generic pharmaceuticals, for approximately PharmaForce/Luitpold Pharmaceuticals, version of Mucinex® 600 mg tablets. $540 million in cash. This acquisition received final regulatory approval. Then, in January 2012, we was another important step forward Elestat® is a sterile ophthalmic solution announced that the United States in executing our strategy to expand containing epinastine that is used District Court for the Western District 10 our specialty portfolio of generic R to help prevent itching of the eye x of Michigan granted summary products.