With a spinoff for its prescription business on the ropes, Perrigo is treading water in its plans to reinvent its flagging business. Could a merger with another struggling drugmaker—à la Pfizer and Mylan—be the cure?

A "creative deal" between Perrigo and Amneal could bring up to $1.5 billion in cash to the Irish pharma as it works to back away from a disastrous stock price plummet in recent months, according to RBC Capital Markets analyst Randall Stanicky.

In a Sunday note to investors, Stanicky outlined four possible options for Perrigo as it looks to an uncertain future for its prescription business. Earlier this month, the drugmaker opted to postpone its spinoff plans as pricing pressure threatened to upend a branded OTC business that would be left behind by a split.

A generics merger with Amneal—which has recently faced a troubled road of its own—would help both companies diversify their portfolios and leave the remaining Perrigo prescription business with serious cash flow to weather the storm, Stanicky said.

A merger of that magnitude could mirror the recent deal between Mylan and Pfizer’s Upjohn unit, creating a potential $20 billion behemoth. Stanicky pointed to Pfizer’s $12 billion cash influx in the merger—and a 48% stake for Pfizer shareholders in the new company—as a positive example for Perrigo.

That said, while the merger might be of interest to Perrigo, Stanicky acknowledged the most likely road would involve the drugmaker holding on to its generics business and riding out the storm.

"This doesn't solve the goal of turning (Perrigo) into a consumer self-care pure play," Stanicky noted. "But market realities may necessitate this."

Stanicky said holding on to the business would limit the drugmaker’s cash flow and take away opportunities for bolt-on additions to the existing business. Stanicky also ruminated on a possible sale of Perrigo’s prescription business or a reconsidered spinoff but called both options "unlikely" given market pressures.

A merger could prove a salve for Perrigo’s business, but would it be a worthy option for Amneal, which recently said goodbye to its board chairman and CEO after internal strife?

Earlier this month, Paul Bisaro, Amneal’s executive chairman, and Rob Stewart, the president and CEO he recruited, stepped down from their posts as the drugmaker aimed to rework its executive team.

Co-founders Chirag Patel and Chintu Patel took over as co-CEOs, while Paul Meister, a co-founder of Liberty Lane Partners and former president of MacAndrews & Forbes Incorporated, assumed the interim role of executive chairman. Three independent directors, Robert Burr, Janet Vergis and Dharmendra Rama, also resigned.

Amneal faces many of the same challenges other major generics players face, with pricing headwinds in the U.S. driving down revenues. The drugmaker posted a 12.5% drop in combined net revenue in the second quarter from the previous year, down to $404.6 million. The company’s generics and specialty drug businesses both declined.

In a follow-up note to investors Tuesday, Stanicky said Amneal was one of the few options left for a Pfizer-Mylan-esque deal, as others players such as Teva and Endo have moved away from generics.

"The opioid exposure of (Endo) and Teva likely makes them less viable while Mylan is focused on a shift away from U.S. generics," Stanicky wrote. "But as we’ve said, given industry challenges that are likely limiting both financial and strategic buyer interest, there may be need for more creative approaches to deals."

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