Perrigo's Formula for Disaster: Stock Plummets, Lawsuits Mount

NEW YORK, NY – December 19, 2025 – Perrigo Company plc (NYSE: PRGO), a global provider of over-the-counter health products, is now facing a wave of class action lawsuits from disgruntled investors after a dramatic collapse in its stock price. The legal challenges allege the company concealed critical problems within its infant formula business, a venture that has now been deemed "less strategic" after costing shareholders dearly.

The turmoil reached a boiling point on November 5, 2025, when the company's shares plunged by more than 25% in a single day. The catastrophic drop followed an announcement that Perrigo was slashing its financial outlook and initiating a "strategic review" of the very infant formula business it had invested hundreds of millions in, signaling a stunning and costly reversal.

Shareholder Rights and Corporate Accountability

In the wake of the stock's collapse, multiple law firms, including Robbins LLP and Glancy Prongay & Murray LLP, have filed class action lawsuits on behalf of investors who purchased Perrigo securities between February 27, 2024, and November 4, 2025. The suits, consolidated in the U.S. District Court for the Southern District of New York, accuse Perrigo and its executives of misleading the market by failing to disclose severe underlying issues with its infant formula operations.

According to the complaints, Perrigo did not inform investors that the infant formula business acquired from Nestlé suffered from "significant underinvestment in maintenance, operational improvements, and repairs." The filings further allege that the company's manufacturing facilities had "significant deficiencies" that would require substantial capital expenditures far exceeding what the company had publicly estimated. As a result, the lawsuits claim Perrigo's financial results, including its earnings and cash flow, were materially overstated throughout the class period, painting a deceptively optimistic picture of the division's health.

Shareholders who wish to serve as a lead plaintiff in the litigation, representing the class of affected investors, have until January 16, 2026, to file with the court. The legal actions seek to recover damages for investors who saw the value of their holdings evaporate, highlighting the critical role of shareholder litigation in enforcing corporate transparency and accountability.

A Sour Acquisition: A Cautionary M&A Tale

Perrigo's current troubles trace back to its November 2022 acquisition of Nestlé's Gateway infant formula plant in Wisconsin, along with the U.S. and Canadian rights to the Good Start® brand. The deal was part of a $170 million strategic investment, with an additional $60 million pledged to expand the plant's production capacity. At the time, the move was hailed as a way to strengthen Perrigo's manufacturing supply and increase the availability of high-quality, lower-priced formula for American families.

However, the optimism surrounding the acquisition began to curdle long before the November 2025 stock crash. The first major red flag appeared on February 27, 2024, when Perrigo disclosed it would need to spend an additional $35 million to $45 million on "remediations" to address production and facility issues within the newly acquired business. That same day, the company reported a staggering 50% year-over-year decline in earnings per share, which it directly attributed to the infant formula remediation efforts. Despite these setbacks, executives assured investors that they expected the business to stabilize and return to growth later in the year.

The subsequent lawsuit alleges that these assurances were misleading, masking the true depth of the operational and financial rot. The November 5, 2025, announcement that the company was now reassessing its entire $240 million investment and considering a sale of the business confirmed investors' worst fears, transforming the once-promising acquisition into a case study on the perils of inadequate due diligence in mergers and acquisitions.

The Market's Brutal Verdict

The market's reaction to Perrigo's third-quarter 2025 update was swift and unforgiving. On November 5, the company's stock fell $5.09 per share, a 25.2% drop, to close at a multi-year low of $15.10 on exceptionally heavy trading volume. The sell-off wiped out hundreds of millions in market capitalization and punctuated a year in which the stock had already fallen over 40%.

Perrigo's report revealed that net sales had declined 4.1% year-over-year to $1.04 billion, missing analyst estimates. The company slashed its full-year 2025 outlook, blaming "infant formula industry dynamics" and soft consumer trends. In a statement, CEO Patrick Lockwood-Taylor noted that while operations had stabilized, the "external environment has quickly changed, making a fit with our consumer health OTC businesses less strategic."

Wall Street analysts immediately soured on the company's prospects. JPMorgan downgraded Perrigo from "Overweight" to "Neutral," with an analyst noting that the company might "not be the best owner of this asset." Canaccord Genuity, while maintaining a "Buy" rating, cut its price target in half from $40 to $20, citing weaker sales and the uncertainty surrounding the nutrition business. The consensus among analysts shifted sharply toward a "Reduce" rating, reflecting deep skepticism about the company's ability to navigate its current crisis.

Navigating a Volatile Industry

Perrigo's internal missteps occurred against the backdrop of a notoriously challenging and highly regulated infant formula market. The industry, while projected to grow to over $150 billion globally by 2030, is fraught with risk. The nationwide formula shortage in 2022, triggered by a contamination-related shutdown at an Abbott Laboratories plant, exposed the fragility of the U.S. supply chain and prompted intense scrutiny from regulators.

In response, the FDA has rolled out national strategies aimed at preventing future shortages by improving facility safety and encouraging new manufacturers to enter the market. This heightened regulatory environment places immense pressure on producers to maintain pristine manufacturing standards, where any lapse can lead to costly recalls and shutdowns. Furthermore, the market is intensely competitive, with consumer preferences rapidly shifting toward organic, plant-based, and specialized formulas that require significant research and development investment.

The "industry dynamics" Perrigo cited as a reason for its struggles are a clear reference to this high-pressure environment. While the company's problems appear to stem largely from its own alleged failures in due diligence and operational management, the unforgiving nature of the infant formula sector left no room for error. The legal battle now underway will determine whether Perrigo's leadership failed to disclose known risks or was simply overwhelmed by the complexities of a business it was ill-equipped to manage.