Fifty years. That's how long it's been since the U.S. Food and Drug Administration (FDA) first approved Opill, a daily oral contraceptive. The birth control pill is manufactured by Perrigo's (PRGO 2.14%) France-based HRA Pharma unit. 

On Thursday, the FDA added another huge approval for Opill. It became the first oral contraceptive to receive a green light from the agency to be prescribed over the counter (OTC).

Perrigo's shares initially jumped nearly 8% on the news before giving up most of the gains. But is the pill maker's stock set to soar going forward?

A big go for Perrigo

The FDA's decision wasn't a huge surprise. Only two months ago, two advisory committees -- the Nonprescription Drugs Advisory Committee (NDAC) and the Obstetrics, Reproductive, and Urologic Drugs Advisory Committee (ORUDAC) -- voted unanimously in favor of approval of Opill as an OTC medication.

Even unanimous recommendations don't obligate the FDA to go along with its advisory committees. In this case, though, the agency agreed with its two expert panels.

Perrigo was obviously hoping for a positive decision. It wasn't alone. Medical organizations including the American College of Obstetricians and Gynecologists, the American Medical Association, the Society for Adolescent Health and Medicine, and the American Academy of Family Physicians have also supported FDA approval for OTC oral contraception.

Assessing the potential impact

The FDA approval of Opill could have a major impact on women's health in the U.S. Perrigo CEO Patrick Lockwood-Taylor stated in a press release, "Opill has the potential to radically transform women's access to contraception."

But what impact will the approval of the OTC birth control pill have on Perrigo? That's a tougher question to answer.

There could be a significant demand for OTC oral contraceptives. An estimated 45% of the 6 million pregnancies in the U.S. each year are unintended, according to the company. Research conducted in 2011 found that almost one-third of U.S. adult women who attempted to get a prescription or refill for contraceptives including pills, patches, or rings had problems doing so.

It remains to be seen, though, what price tag Perrigo will give to its OTC version of Opill. However, Frederique Welgryn, Perrigo's global vice president for women's health, said that the company intends to make Opill "accessible and affordable."

Will the stock soar?

Opill probably won't be available over the counter in the U.S. until early 2024. Will the OTC birth control pill provide a huge catalyst for Perrigo stock? Don't count on it.

For one thing, it might not move the needle enough. In 2022, Perrigo generated over $45 million in sales from its women's health unit. That sales figure was only a drop in the bucket compared to Perrigo's total revenue of more than $2.9 billion. And it included many more products in addition to the prescription version of Opill.

Also, competition could be on the way. Cadence Health is also in discussions with the FDA about a path to OTC approval for its birth control pill.

Investors should consider valuation as well. Perrigo's shares trade at a forward earnings multiple of around 12.5. While that's cheap compared to the S&P 500, it's well above the valuations of several other major generic-drug makers.

Perrigo's approval for OTC Opill is no doubt a major milestone win. Whether or not it makes a big difference for the stock over the short term or the long term is another story altogether.