EXECUTIVE OVERVIEW

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements included in this Form 10-Q and our Form 10-K for the year ended December 31, 2019 (the "2019 Form 10-K"). These historical financial statements may not be indicative of our future performance. This discussion contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks referred to under "Risk Factors" in Item 1A of our 2019 Form 10-K and Part II. Item 1A of this Form 10-Q.

Perrigo Company plc was incorporated under the laws of Ireland on June 28, 2013 and became the successor registrant of Perrigo Company, a Michigan corporation, on December 18, 2013 in connection with the acquisition of Elan Corporation, plc ("Elan"). Unless the context requires otherwise, the terms "Perrigo," the "Company," "we," "our," "us," and similar pronouns used herein refer to Perrigo Company plc, its subsidiaries, and all predecessors of Perrigo Company plc and its subsidiaries.

We are dedicated to making lives better by bringing quality, affordable self-care products that consumers trust everywhere they are sold. We are a leading provider of over-the-counter ("OTC") health and wellness solutions that enhance individual well-being by empowering consumers to proactively prevent or treat conditions that can be self-managed. We are also a leading producer of generic prescription pharmaceutical topical products such as creams, lotions, and gels as well as nasal sprays and inhalers.

Our Segments

Our reporting and operating segments are as follows:



•      Consumer Self-Care Americas ("CSCA") comprises our consumer self-care
       business (OTC, contract manufacturing, infant formula, and oral self-care
       categories and our divested animal health category) in the U.S., Mexico
       and Canada.


•      Consumer Self-Care International ("CSCI") comprises our branded consumer
       self-care business primarily in Europe, our consumer self-care businesses
       in the United Kingdom and Australia, and our divested liquid licensed
       products business in the United Kingdom.


•      Prescription Pharmaceuticals ("RX") comprises our prescription
       pharmaceuticals business in the U.S., predominantly generics, and our
       pharmaceuticals and diagnostic businesses in Israel.



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                                                              Executive Overview



Our segments reflect the way in which our management makes operating decisions, allocates resources, and manages the growth and profitability of the Company. Financial information related to our business segments and geographic locations can be found in Item 1. Note 2 and Note 16 . For results by segment, see "Segment Results" below.

Highlights



•      Effective July 29, 2020, our board of directors appointed Katherine C.
       Doyle to serve as a director of the Company and a member of its Audit
       Committee.



•      On June 19, 2020, Perrigo Finance Unlimited Company ("Perrigo Finance")
       issued $750.0 million in aggregate principal amount of 3.150% Senior Notes
       due 2030 (the "2020 Notes") and received net proceeds of $737.1 million
       after fees and market discount. Interest on the 2020 Notes is payable
       semi-annually in arrears on June 15 and December 15 of each year,
       beginning on December 15, 2020. The 2020 Notes will mature on June 15,
       2030. The 2020 Notes are governed by the 2020 Indenture. The 2020 Notes
       are fully and unconditionally guaranteed on a senior unsecured basis by
       Perrigo and, no other subsidiary of Perrigo guarantees the 2020 Notes.
       There are no restrictions under the 2020 Notes on Perrigo's ability to
       obtain funds from its subsidiaries. Perrigo Finance may redeem the 2020
       Notes in whole or in part at any time for cash at the make-whole
       redemption prices described in the 2020 Indenture. On July 6, 2020, the
       net proceeds of the 2020 Notes were used to fund the redemption of Perrigo
       Finance's $280.4 million of 3.500% Senior Notes due March 15, 2021 and
       $309.6 million of 3.500% Senior Notes due December 15, 2021. The balance
       will be used for general corporate purposes which may include the
       repayment or redemption of additional indebtedness. In connection with the
       redemption, we incurred early redemption costs of $19.0 million, which
       will be included in Loss on extinguishment of debt on the Condensed
       Consolidated Statements of Operations in the third quarter of 2020.



•      We previously announced a plan to separate our RX business, which, if
       completed, would enable us to focus solely on our consumer-focused
       businesses. A separation of the RX business could include a possible sale,
       spin-off, merger or other form. We have incurred significant preparation
       costs due to the announced plan to separate, and if completed we could
       incur total costs in the range of $45.0 million to $80.0 million,
       excluding restructuring expenses and transaction costs, depending on
       timing and structure of a transaction. We have not committed to a time
       frame for a separation.


Impact of COVID-19 Pandemic

We have been impacted by the novel coronavirus (COVID-19) global pandemic and the responses by government entities to combat the virus. We currently continue to operate in all our jurisdictions and are complying with the rules and guidelines prescribed in each jurisdiction. We are closely monitoring the impact of COVID-19 on all aspects of our business and geographies. Our first priority has been, and will continue to be, the safety of our employees who continue to come to work and are dedicated to keeping our essential products flowing into the market. We have taken extra precautions at our facilities to help ensure the health and safety of our employees that are in line with guidance from global health authorities and local authorities. Among other precautions implemented, we have restricted access to our facilities worldwide to essential employees only, implemented a multi-step pre-screening access process before an employee can enter a facility, communicated regularly with employees and provided education and implemented controls related to physical distancing and hygiene measures, prioritized production to essential products, implemented remote work arrangements where appropriate, and restricted business travel. To date, these arrangements have not materially affected our ability to maintain our business operations, including the operation of financial reporting systems, internal control over financial reporting, and disclosure controls and procedures.

During the first half of 2020, we experienced a change in product sales mix across all our Segments, which we attribute to consumer and customer behavior surrounding the COVID-19 pandemic. In March and April of 2020, we experienced a surge in demand for certain of our essential health-care and self-care products, followed by a slow-down in demand for some of these products in May and June, which we attribute primarily to consumer pantry de-load. Further, during the second quarter, we saw lower consumer demand for certain other self-care products in our CSCI segment and in our RX segment a lower volume of U.S. dermatology prescriptions, both of which we



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                                                              Executive Overview


attribute to consumer behavior, travel bans, and country lock-downs resulting from COVID-19. We estimate that the net positive impact on net sales attributed to consumer and customer behavior surrounding the COVID-19 pandemic during the first half of 2020 is between $50.0 million to $70.0 million. At this time, we cannot be certain if these trends will continue, however, it is possible that lower demand may continue and could depend on the duration and severity of the COVID-19 pandemic and related illnesses. Alternatively, it is possible that we could experience another surge in demand if a concentrated second wave of COVID-19 occurs. During the six months ended June 27, 2020, we had incremental operating costs of approximately $8.0 million related to COVID-19 and estimate that full year incremental operating costs will be between $20.0 million to $25.0 million. These costs are primarily related to the precautions implemented to keep our employees safe and properly rewarded during the pandemic as well as increased material costs.

Both the outbreak of the disease and the actions to slow its spread have had an adverse impact on our operations by, among other things, increasing absenteeism, affecting the supply of raw materials and third party supplied finished goods, and preventing many of our employees from coming to work. We have responded to such impacts by, among other things, implementing protocols to protect the health of factory workers, adjusting production schedules, and seeking alternate suppliers where available, and so far, most of our facilities have continued to produce at high levels despite these challenges. However, a number of jurisdictions that relaxed such restrictions, or have experienced limited public adherence with suggested safety measures, have experienced new surges in COVID-19 cases. Many of these jurisdictions are now contemplating or implementing new or renewed restrictions. As such, as the pandemic continues or intensifies, it is possible that these or other challenges may begin having a larger impact on our operations. Additionally, concerns over the economic impact of COVID-19 have caused extreme volatility in financial and other capital markets which has adversely impacted, and may continue to adversely impact our stock price and our ability to access capital markets. The situation surrounding COVID-19 remains fluid, and we are actively managing our response and assessing potential impacts to our financial condition, supply chains and other operations, employees, results of operations, consumer demand for our products, and our ability to access capital. The magnitude of any such adverse impact cannot currently be determined due to a number of uncertainties surrounding COVID-19 (refer to Item 1A. Risk Factors for related risks).

We also experienced a decrease in our effective tax rate due to additional interest and depreciation deductions provided for in the CARES Act enacted on March 27, 2020 resulting in a reduction of income tax expense by approximately $26.0 million in the first half of 2020. Given our financial strength, we expect to be able to maintain adequate liquidity as we manage through the current environment.



RESULTS OF OPERATIONS

CONSOLIDATED

Consolidated Financial Results

Three Month Comparison


                      Three Months Ended
                    June 27,      June 29,
(in millions)         2020          2019
Net sales          $ 1,219.1     $ 1,149.0
Gross profit       $   434.7     $   430.8
Gross profit %          35.7 %        37.5 %
Operating income   $   117.4     $    55.0
Operating income %       9.6 %         4.8 %



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                                                                    Consolidated


                [[Image Removed: chart-8ab53a64169a5f08a83.jpg]]

                [[Image Removed: chart-8f453e73563e5a09828.jpg]]

* Total net sales by geography is derived from the location of the entity that sells to a third party.

Three Months Ended June 27, 2020 vs. Three Months Ended June 29, 2019



Net sales increased $70.1 million, or 6%, due to:
•      $111.8 million, or a 10%, net increase due primarily to an increase of
       $81.8 million from our acquisitions of Ranir and the oral care assets of
       High Ridge Brands, an increase of $73.2 million from the launch of
       albuterol sulfate inhalation aerosol, increased OTC sales in response to
       COVID-19 in the U.S. driven by strong e-commerce performance, and
       additional new product sales. These increases were partially offset by
       lower U.S. prescription dermatology volumes in the RX segment and lower
       consumer demand in certain product categories in the CSCI segment, which
       were impacted by consumer behavior, travel bans and country lock-downs
       resulting from COVID-19, consumer pantry de-load, and a $10.9 million
       decrease due to discontinued products; partially offset by

$41.7 million decrease due primarily to:

$16.1 million primarily from unfavorable Euro and Mexican peso
             foreign currency translation; and


•            $25.6 million due to our divested animal health business previously
             included in our CSCA segment and Canoderm prescription product
             previously included in the Nordic region of our CSCI segment.


Operating income increased $62.4 million, or 113%, due to:

$3.9 million increase in gross profit due primarily to increased net sales
       as described above. Gross profit as a percentage of net sales decreased
       180 basis points due primarily to unfavorable product mix partially due to
       the prioritization of products most needed by consumers in response to the
       COVID-19 pandemic, which are lower gross margin products; and


$58.5 million decrease in operating expenses due primarily to:




•            The absences of a $27.8 million impairment charge related to a
             definite-lived intangible asset, $11.8 million of restructuring
             expenses related primarily to the reorganization of our sales force
             in France, and $8.0 million of expenses related to the divested
             animal health business;


•            $17.5 million decrease due primarily to the reduction and delay in
             selling, advertising, and promotion expenses in response to consumer
             behavior during the COVID-19 pandemic and the movement restrictions
             to combat spreading of the virus; and


•            A decrease in administration expenses due primarily to a reduction
             in legal and professional fees and a decrease in expenses related to
             our current cost savings initiative; partially offset by


•            The inclusion of $21.7 million of expenses from our acquisitions of
             Ranir and the oral care assets of High Ridge Brands; and


•            Incremental costs of operating in the current COVID-19 environment,
             including costs related to



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                                                                    Consolidated


measures implemented to keep employees safe and rewarded.

Six Month Comparison


                       Six Months Ended
                    June 27,      June 29,
(in millions)         2020          2019
Net sales          $ 2,560.1     $ 2,323.5
Gross profit       $   917.9     $   879.6
Gross profit %          35.9 %        37.9 %
Operating income   $   263.1     $   157.3
Operating income %      10.3 %         6.8 %



                [[Image Removed: chart-c3a4f611f8dbbdb950f.jpg]]


                [[Image Removed: chart-fd200ce6bca49e81be4.jpg]]

* Total net sales by geography is derived from the location of the entity that sells to a third party.

Six Months Ended June 27, 2020 vs. Six Months Ended June 29, 2019



Net sales increased $236.6 million, or 10% due to:
•      $314.8 million, or a 14%, net increase due primarily to an increase of
       $158.1 million from our acquisitions of Ranir and the oral care assets of
       High Ridge Brands, an increase of $116.9 million from the launch of
       albuterol sulfate inhalation aerosol, which includes the positive impact
       in demand related to customer behavior surrounding the COVID-19 pandemic,
       an increase in OTC sales in response to COVID-19 in the U.S. driven by
       strong e-commerce performance, as well as additional new product sales.
       These increases were partially offset by lower U.S. prescription
       dermatology volumes in the RX segment, consumer pantry de-load, and lower
       consumer demand in certain product categories in the CSCI segment, which
       were impacted by consumer behavior, travel bans and country lock-downs
       resulting from COVID-19, pricing pressure, and a $25.7 million decrease
       due to discontinued products; further partially offset by

$78.2 million decrease due primarily to:

$29.3 million primarily from unfavorable Euro and Peso foreign
             currency translation; and


•            $48.9 million due to our divested animal health business previously
             included in our CSCA segment and Canoderm prescription product
             previously included in the Nordic region of our CSCI segment.


Operating income increased $105.8 million, or 67%, due to:

$38.3 million increase in gross profit due primarily to increased net
       sales as described above, partially offset by operational inefficiencies
       primarily in our CSCA and RX segments. Gross profit as a percentage of net



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                                                                    Consolidated


sales decreased 200 basis points due primarily to unfavorable product mix, pricing pressure, and operational inefficiencies; and

$67.5 million decrease in operating expenses due primarily to:




•            The absences of $32.0 million of impairment charges related to a
             definite-lived intangible asset and IPR&D asset, $21.2 million of
             restructuring expenses related primarily to the reorganization of
             our sales force in France and the reorganization of our executive
             management team, and $16.9 million of expenses related to the
             divested animal health business;


•            $21.9 million decrease due primarily to the reduction and delay in
             selling, advertising, and promotion expenses in response to consumer
             behavior during the COVID-19 pandemic and the movement restrictions
             to combat spreading of the virus; and


•            A decrease in administration expenses due primarily to a reduction
             in legal and professional fees and a reduction in employee related
             expenses, partially offset by an increase in insurance expense;
             partially offset by


•            The inclusion of $39.1 million of expenses from our acquisitions of
             Ranir and the oral care assets of High Ridge Brands;


•            $3.5 million increase in R&D expense due primarily to the timing of
             clinical studies; and


•            Incremental costs of operating in the current COVID-19 environment,
             including costs related to measures implemented to keep employees
             safe and rewarded.


Recent Developments

Internal Revenue Service Complaint

As previously disclosed, on August 15, 2017, we filed a complaint in the United States District Court for the Western District of Michigan to recover $163.6 million of Federal income tax, penalties, and interest assessed and collected by the IRS, plus statutory interest thereon from the dates of payment, for the fiscal tax years ended June 27, 2009, June 26, 2010, June 25, 2011, and June 30, 2012. In response to our complaint, the United States District Court for Western District of Michigan scheduled a trial date for late May 2020, which has now been delayed due to the ongoing COVID-19 pandemic (refer to Item 1. Note 13 ).

Internal Revenue Service Notice of Proposed Adjustment

As previously disclosed, on April 26, 2019, we received a revised Notice of Proposed Adjustment ("NOPA") from the IRS regarding transfer pricing positions related to the IRS audit of Athena for the years ended December 31, 2011, December 31, 2012 and December 31, 2013. We strongly disagree with the IRS position and will pursue all available administrative and judicial remedies, including those available under the U.S. - Ireland Income Tax Treaty to alleviate double taxation. Accordingly, on April 14, 2020, we filed a request for Competent Authority Assistance with the IRS (refer to Item 1. Note 13 ).

Internal Revenue Service Notice of Proposed Adjustment

On May 7, 2020, we received a final NOPA from the IRS, which was unchanged from the draft NOPA previously received, regarding the deductibility of interest related to the IRS audit of Perrigo Company for the years ended June 28, 2014 and June 27, 2015. We strongly disagree with the IRS position and will pursue all available administrative and judicial remedies (refer to Item 1. Note 13 ).

Irish Tax Appeals Commission Notice of Amended Assessment

On October 30, 2018, we received an audit finding letter from the Irish Office of the Revenue Commissioners ("Irish Revenue") for the years ended December 31, 2012 and December 31, 2013 relating to the tax treatment of the 2013 sale of the Tysabri® intellectual property and other assets related to Tysabri® to Biogen Idec from Elan Pharma. We strongly disagree with this assessment and believe that the Notice of Amended Assessment ("NoA") is without merit and incorrect as a matter of law and appealed the assessment to the Tax Appeals Commission. We were granted leave by the Irish High Court on February 25, 2019 to seek judicial review



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                                                                    Consolidated


of the issuance of the NoA by Irish Revenue. The High Court held a hearing in June 2020 regarding the judicial review proceedings and we are now awaiting the Court's judgment (refer to Item 1. Note 13 ).

CONSUMER SELF-CARE AMERICAS

Recent Trends and Developments



•      In March and April of 2020, we experienced a surge in demand for many of
       our OTC and infant nutrition products, which we attributed to consumer
       reaction to the outbreak of COVID-19. In May and June, we experienced a
       slow-down in demand for some of these products, which we attributed
       primarily to consumer pantry stocking during the initial March and April
       surge. It is possible that we could continue to see a slow- down in demand
       for some of these products as consumers continue to pantry de-load,
       however, this could depend on the duration and severity of the COVID-19
       pandemic and related illnesses. Alternatively, it is possible that we
       could experience another surge in demand if a concentrated second wave of
       COVID-19 occurs.



•      On June 17, 2020, we announced our entrance into the CBD market through a
       strategic investment in and long-term supply agreement with Kazmira LLC
       ("Kazmira"), a leading supplier of hemp-based, THC-free CBD products. In
       addition to the supply agreement, we acquired an approximate 20% equity
       stake in Kazmira for $50.0 million with $15.0 million paid at close of the
       transaction and the balance due within 18 months. Our minority equity
       investment initiates the first phase of the partnership in which we will
       collaborate to scale-up Kazmira's facilities and laboratories, in
       accordance with current Good Manufacturing Practices and to produce
       THC-free CBD from industrial hemp that meets our standards for reliability
       and consistency. In the second phase of the partnership, we will work to
       launch THC-free, hemp-based CBD products in a number of global markets,
       while leveraging our supply agreement with Kazmira, which is exclusive for
       the U.S. store brand market (refer to   Item 1. Note 7   and   Note 10  ).



•      On April 6, 2020, we received approval from the U.S. Food and Drug
       Administration on our abbreviated new drug application ("ANDA") for OTC
       diclofenac sodium topical gel 1%, the store brand equivalent to Voltaren®
       gel. When launched, this product will be marketed under store brand labels
       and will provide consumers with a high-quality, value alternative for the
       temporary relief of arthritis pain. We expect to launch the new OTC
       product later this year.



•      On April 1, 2020, we acquired the oral care assets of High Ridge Brands
       for total purchase consideration of $113.0 million, subject to customary
       post-closing adjustments, including a working capital settlement. After
       post-closing adjustments as of June 27, 2020, total cash consideration
       paid was $106.0 million. This acquisition includes the children's oral
       care value brand, Firefly®, in addition to the REACH® and Dr. Fresh®
       brands, and a licensing portfolio. The addition of these brands positions
       us as the number one fastest-growing value brand player in the children's
       oral care category and the licensing portfolio will enable creative
       solutions for our customers (refer to   Item 1. Note 3  ).



•      On January 3, 2020, we acquired Steripod®, a leading toothbrush accessory
       brand and innovator in the toothbrush protector market, from Bonfit
       America Inc. Total consideration paid was $26.0 million. The transaction
       was accounted for as an asset acquisition, in which we capitalized $24.9
       million as a brand-named intangible asset. The remainder of the purchase
       price was allocated to working capital. The acquisition, which includes a
       portfolio of antibacterial toothbrush protectors, kids' toothbrush
       protectors and tongue cleaners, complements our current portfolio of oral
       self-care products, and leverages our manufacturing and marketing platform
       (refer to   Item 1. Note 3  ).




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                                                                            CSCA


Segment Financial Results

Three Month Comparison
                      Three Months Ended
                     June 27,      June 29,
(in millions)          2020          2019
Net sales          $   627.6      $  582.1
Gross profit       $   199.6      $  196.8
Gross profit %          31.8 %        33.8 %
Operating income   $   106.3      $  107.8
Operating income %      16.9 %        18.5 %


Three Months Ended June 27, 2020 vs. Three Months Ended June 29, 2019



Net sales increased $45.5 million, or 8%, due to:
•      $72.1 million, or a 12%, net increase due primarily to an increase of
       $63.2 million from our acquisitions of Ranir and the oral care assets of
       High Ridge Brands. OTC net sales growth was due primarily to e-commerce
       growth, which more than offset category declines due to lower foot traffic
       at brick and mortar customers, increased consumer COVID-19 related demand,
       increased distribution of our products to retail customers, and
       $8.7 million of new product sales primarily from Prevacid® and
       Esomeprazole Mini, all of which led to share gains of 60 basis points in
       product categories where we compete. The OTC growth was partially offset
       by the lost net sales on products we de-prioritized while we focused on
       providing products most needed by consumers during the COVID-19 pandemic
       and competitive pricing pressure on certain products. Nutrition net sales
       growth was due primarily to new product sales from an infant formula
       launch at a major retailer in the prior year and Complete Comfort Formula,
       growth in the infant formula contract manufacturing business, and
       e-commerce growth, which were partially offset by pantry de-load of oral
       electrolyte solution products and multi-year pricing contracts; further
       partially offset by

$26.6 million decrease due primarily to:

$22.3 million related to our divested animal health business; and

$4.3 million of unfavorable Mexican peso foreign currency translation.

Operating income decreased $1.5 million, or 1%, due primarily to:

$2.8 million increase in gross profit due primarily to increased net sales
       as described above. Gross profit as a percentage of net sales decreased
       200 basis points due primarily to pricing pressure on specific products,
       the divested animal health business, and the acquisition of the lower
       gross margin oral self-care category; more than offset by


•      $4.3 million increase in operating expenses due primarily to the inclusion
       of expenses from our acquisitions of Ranir and the oral care assets of
       High Ridge Brands; partially offset by the absence of expenses from the
       divested animal health business and a decrease in R&D expenses related to
       delays in timing of projects.




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                                                                            CSCA


Six Month Comparison
                       Six Months Ended
                    June 27,      June 29,
(in millions)         2020          2019
Net sales          $ 1,328.2     $ 1,163.9
Gross profit       $   415.1     $   380.8
Gross profit %          31.3 %        32.7 %
Operating income   $   230.8     $   202.0
Operating income %      17.4 %        17.4 %



Six Months Ended June 27, 2020 vs. Six Months Ended June 29, 2019



Net sales increased $164.3 million, or 14%, due to:
•      $211.5 million, or an 18%, net increase due primarily to an increase of
       $118.5 million from our acquisitions of Ranir and the oral care assets of
       High Ridge Brands. OTC net sales growth was due primarily to e-commerce
       growth, increased consumer COVID-19 related demand, favorable consumer
       conversion in digestive health products, overall market growth, and
       $16.7 million of new product sales primarily from Prevacid® and
       Esomeprazole Mini, which were partially offset by pricing pressure on
       certain products. Nutrition net sales growth was due primarily to new
       product sales from an infant formula launch at a major retailer in the
       prior year and Complete Comfort Formula and e-commerce growth, which were
       partially offset by multi-year pricing contracts and a $5.8 million
       decrease due to discontinued products; further partially offset by

$47.2 million decrease due primarily to:

$41.9 million due to our divested animal health business; and

$5.3 million of unfavorable Mexican peso foreign currency translation.

Operating income increased $28.8 million, or 14%, due to:

$34.3 million increase in gross profit due primarily to increased net
       sales as described above, partially offset by operating inefficiencies at
       one of our infant nutrition facilities. Gross profit as a percentage of
       net sales decreased 140 basis points due primarily to operating
       inefficiencies, pricing pressure on certain products and the divested
       animal health business, partially offset by favorable product mix;
       partially offset by



•      $5.5 million increase in operating expenses due primarily to the inclusion
       of expenses from our acquisitions of Ranir and the oral care assets of
       High Ridge Brands; partially offset by the absence of expenses from the
       divested animal health business, a reduction in employee related expenses,
       and a decrease in R&D expenses related to delays in timing of projects.


CONSUMER SELF-CARE INTERNATIONAL

Recent Trends and Developments



•      During the first half of 2020, we experienced demand shifts for certain
       products, which we attribute to consumer reactions related to the COVID-19
       pandemic and the movement restrictions put in place to combat spreading of
       the virus, such as travel bans, school closings and country lock-downs.
       Certain products in our upper respiratory, vitamins, minerals and
       supplements ("VMS"), and pain and sleep-aids categories increased, while
       products in our skincare and personal hygiene and healthy lifestyle
       categories decreased. It is possible that demand in our skincare and
       personal hygiene and healthy lifestyle categories may continue to
       decrease, and that well-stocked consumer pantries may temporarily reduce
       demand for products in our upper respiratory, VMS, and pain and sleep-aids
       categories. Both factors could depend on the duration and severity of the
       COVID-19 pandemic and related illnesses.



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                                                                            CSCI



•      Consistent with our strategy to reconfigure our portfolio to focus on our
       consumer self-care businesses, on June 19, 2020, we completed the sale of
       our U.K.- based Rosemont Pharmaceuticals business, a generic prescription
       pharmaceuticals manufacturer focused on liquid medicines, to a U.K.
       headquartered private equity firm for cash consideration of £155.6 million
       (approximately $195.0 million), which resulted in a pre-tax loss of
       $17.4 million (refer to   Item 1. Note 3  ).



•      On February 13, 2020, we acquired Dexsil®, a silicon supplement brand,
       from RXW Group Nv, for total cash consideration paid of approximately
       $8.0 million. The transaction was accounted for as an asset acquisition,
       in which we capitalized the consideration paid as a brand-named intangible
       asset. The acquisition provides additional opportunities for growth
       through new product launches and geographic expansion (refer to   Item 1.
       Note 3  ).



Segment Financial Results

Three Month Comparison
                             Three Months Ended
                           June 27,      June 29,
(in millions)                2020          2019
Net sales                 $   321.1     $ 327.5
Gross profit              $   149.3     $ 155.4
Gross profit %                 46.5 %      47.4  %
Operating income (loss)   $    10.5     $  (2.9 )
Operating income (loss) %       3.3 %      (0.9 )%



Three Months Ended June 27, 2020 vs. Three Months Ended June 29, 2019



Net sales decreased $6.4 million, or 2%, due to:
•      $9.2 million, or a 3%, net increase due primarily to new product sales of
       $23.0 million, driven partially by XLS-Medical Forte 5 and products in the
       skincare and personal hygiene category, and an $18.6 million increase from
       our acquisitions of Ranir and the oral care assets of High Ridge Brands.
       These increases were partially offset by lower consumer demand of certain
       self-care products due to consumer behavior, travel bans, school closings
       and country lock-downs resulting from COVID-19, consumer pantry de-load of
       products purchased during the initial March surge, and a $1.1 million
       decrease due to discontinued products; more than offset by


$15.6 million decrease due primarily to:

$12.3 million from unfavorable foreign currency translation
             primarily related to the Euro; and


•            $3.3 million due to our divested Canoderm prescription product
             previously included in the Nordic region.


Operating income increased $13.4 million, or 462%, due to:

$6.1 million decrease in gross profit due primarily to the decrease in net
       sales as described above, partially offset by improved operational
       efficiencies. Gross profit as a percentage of net sales decreased 90 basis
       points due primarily to the addition of the oral self-care category, which
       has a relatively lower gross margin than the overall portfolio and
       unfavorable product mix, partially offset by improved operational
       efficiencies; more than offset by




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Perrigo Company plc - Item 2
                                                                            CSCI


•      $19.5 million decrease in operating expenses due primarily to a reduction
       and partial delay in selling, advertising, and promotion expenses in
       response to consumer behavior during the COVID-19 pandemic and the
       movement restrictions to combat spreading of the virus, favorable Euro
       foreign currency translation, and the absence of restructuring expenses
       related to the reorganization of our sales force in France, partially
       offset by the inclusion of expenses from our acquisitions of Ranir and the
       oral care assets of High Ridge Brands and increased R&D expense.


Six Month Comparison


                      Six Months Ended
                    June 27,     June 29,
(in millions)         2020         2019
Net sales          $  703.8     $  678.3
Gross profit       $  329.2     $  323.7
Gross profit %         46.8 %       47.7 %
Operating income   $   35.6     $    5.1
Operating income %      5.1 %        0.8 %



Six Months Ended June 27, 2020 vs. Six Months Ended June 29, 2019



Net sales increased $25.5 million, or 4%, due to:
•      $58.1 million, or a 9%, net increase due primarily to new product sales of
       $53.1 million, driven partially by XLS-Medical Forte 5 and products in the
       skincare and personal hygiene category, and a $39.6 million increase from
       our acquisitions of Ranir and the oral care assets of High Ridge Brands.
       These increases were partially offset by lower consumer demand of certain
       self-care products due to consumer behavior, travel bans, school closings
       and country lock-downs resulting from COVID-19, and a $2.4 million
       decrease due to discontinued products; partially offset by

$32.6 million decrease due primarily to:

$25.6 million from unfavorable foreign currency translation
             primarily related to the Euro; and


•            $7.0 million due to our divested Canoderm prescription product
             previously included in the Nordic region.


Operating income increased $30.5 million, or 598%, due to:

$5.5 million increase in gross profit due primarily to increased net sales
       as described above and a 90 basis point decrease in gross profit as a
       percentage of net sales, due primarily to the addition of the oral
       self-care category, which has a relatively lower gross margin than the
       overall portfolio and unfavorable product mix; and



•      $25.0 million decrease in operating expenses due primarily to a reduction
       and partial delay in selling, advertising, and promotion expenses in
       response to consumer behavior during the COVID-19 pandemic and the
       movement restrictions to combat spreading of the virus, favorable Euro
       foreign currency translation, and the absence of restructuring expenses
       related to the reorganization of our sales force in France, partially
       offset by the inclusion of expenses from our acquisitions of Ranir and the
       oral care assets of High Ridge Brands and increased R&D expense.


PRESCRIPTION PHARMACEUTICALS

Recent Trends and Developments



•      We experienced moderate pricing reductions compared to the prior year in
       our RX segment due to competitive approvals against products in our
       portfolio and overall competitive pressures. We expect softness in pricing
       to continue to impact the segment for the foreseeable future.




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Perrigo Company plc - Item 2
                                                                              RX


•      On February 24, 2020, along with our partner Catalent Pharma Solutions, we
       received approval from the U.S. Food and Drug Administration on our
       abbreviated new drug application for generic albuterol sulfate inhalation
       aerosol, the first AB-rated generic version of ProAir® HFA. We launched
       commercially shortly after the approval.



•      During the second quarter, we experienced a reduction in demand for
       certain of our existing base products due to a lower volume of
       prescriptions written related to the reduction in doctor visits resulting
       from restrictions put in place to combat spreading of the COVID-19 virus.
       The decrease in demand of existing base products appeared to be
       market-wide and did not result in market share loss. We did, however, see
       continued high demand for our AB-rated generic albuterol sulfate
       inhalation aerosol.



Segment Financial Results

Three Month Comparison


                      Three Months Ended
                     June 27,      June 29,
(in millions)          2020          2019
Net sales          $   270.4      $  239.4
Gross profit       $    85.8      $   78.6
Gross profit %          31.7 %        32.8 %
Operating income   $    47.8      $   14.7
Operating income %      17.6 %         6.1 %


Three Months Ended June 27, 2020 vs. Three Months Ended June 29, 2019



Net sales increased $31.0 million, or 13%, due primarily to:
•      $30.4 million, or a 13%, net increase due primarily to new product sales
       of $80.5 million driven by the launches of generic albuterol sulfate
       inhalation aerosol and diclofenac sodium topical gel 1%. This includes the
       positive impact on demand for albuterol sulfate inhalation aerosol related
       to customer behavior surrounding the COVID-19 pandemic. This increase was
       partially offset by a decline in the base business, which was affected by
       fewer doctor visits compared to the prior year period leading to lower
       U.S. prescription dermatology volumes due to COVID-19, and a $9.1 million
       decrease due to discontinued low margin distribution products.

Operating income increased $33.1 million, or 225%, primarily due to:

$7.2 million increase in gross profit due primarily to the increase in net
       sales as described above, partially offset by third party operational
       inefficiencies on partnered products. Gross profit as a percentage of net
       sales decreased 110 basis points, due primarily to unfavorable product mix
       and third party operational inefficiencies on partnered products,
       partially offset by the incremental sales driven by generic albuterol
       sulfate inhalation aerosol pre-launch inventory that was expensed as
       pre-commercialization product in the prior year; and



•      $25.9 million decrease in operating expenses due primarily to the absence
       of an impairment charge related to a definite-lived intangible asset,
       partially offset by an increase in R&D expense to continue to support
       future growth initiatives.




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Perrigo Company plc - Item 2
                                                                              RX


Six Month Comparison
                      Six Months Ended
                    June 27,     June 29,
(in millions)         2020         2019
Net sales          $  528.1     $  481.3
Gross profit       $  173.6     $  175.1
Gross profit %         32.9 %       36.4 %
Operating income   $   99.4     $   75.3
Operating income %     18.8 %       15.7 %



Six Months Ended June 27, 2020 vs. Six Months Ended June 29, 2019



Net sales increased $46.8 million, or 10%, due primarily to:
•      $45.1 million, or a 9%, net increase due primarily to new product sales of
       $138.7 million driven mainly by the launch of generic albuterol sulfate
       inhalation aerosol, the scopolamine relaunch, and diclofenac sodium
       topical gel 1%. This includes the positive impact on demand for albuterol
       sulfate inhalation aerosol related to customer behavior surrounding the
       COVID-19 pandemic. This increase was partially offset by a decline in the
       base business, which was affected by fewer doctor visits compared to the
       prior year period leading to lower U.S. prescription dermatology volumes
       due to COVID-19, pricing pressure due partially to testosterone gel 1.62%
       (which still had 180-day market exclusivity in the prior year period), and
       $17.5 million of discontinued low margin distribution products.

Operating income increased $24.1 million, or 32%, due to:

$1.5 million decrease in gross profit due primarily to the increase in net
       sales as described above being more than offset by third party operational
       inefficiencies on partnered products. Gross profit as a percentage of net
       sales decreased 350 basis points, due primarily to pricing pressure,
       unfavorable product mix, and third party operational inefficiencies on
       partnered products, partially offset by the incremental sales driven by
       generic albuterol sulfate inhalation aerosol pre-launch inventory that was
       expensed as pre-commercialization product in the prior year. The decreases
       described above were more than offset by



•      $25.6 million decrease in operating expenses due primarily to the absence
       of an impairment charge related to a definite-lived intangible asset,
       partially offset by an increase in R&D expense to continue to support
       future growth initiatives.

Unallocated Expenses

Unallocated expenses are comprised of certain corporate services not allocated to our reporting segments and are recorded in Operating income on the Condensed Consolidated Statements of Operations. Unallocated expenses were as follows (in millions):


       Three Months Ended              Six Months Ended
     June 27,         June 29,      June 27,      June 29,
       2020             2019          2020          2019
$     47.2           $     64.6    $    102.7    $    125.1

The decrease of $17.4 million in unallocated expenses during the three months ended June 27, 2020 compared to the prior year period was primarily due to a $12.0 million decrease in legal and consulting fees, a $3.0 million decrease in Restructuring expense related primarily to the reorganization of our executive management team in the prior year period, and additional decreases related to our current cost savings initiative, partially offset by an increase of $4.2 million in insurance related expenses.




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Perrigo Company plc - Item 2
                                         Unallocated, Interest, Other, and Taxes


The decrease of $22.4 million in unallocated expenses during the six months ended June 27, 2020 compared to the prior year period was due to a $22.3 million decrease in legal and consulting fees, a $10.9 million decrease in Restructuring expense related primarily to the reorganization of our executive management team, and additional decreases related to our current cost savings initiative, partially offset by an increase of $8.4 million in insurance related expenses and an $8.9 million increase in employee incentive compensation expenses.

Change in Financial Assets, Interest expense, net, and Other (income) expense,

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