RBC Analyst: "Investment summary"
"We believe Concordia will outperform the peer group for the
following reasons:
• Inversion crackdown benefits low-tax corporations. The
US is cracking down on corporate inversions (reducing a
corporation's tax rate via a transaction that moves or creates
an organization in a lower-tax jurisdiction), so Canadian
companies like Concordia with lower tax rates (~5%) have an
advantage over their US peers from an earnings and M&A
perspective.
• Increased global presence. With the AMCo acquisition,
Concordia now has a platform that it can use to introduce
drugs to new markets. In particular, Concordia could
introduce drugs to emerging markets, where there is a
higher percentage of private payors.
• New orphan indications could sustain long-term growth.
The company is pursuing two new orphan indications for
Photofrin, a well characterized product approved in 1996.
We view the new trials as relatively low-risk due to the longterm
safety profile of the drug and believe approvals could
sustain organic growth in the long term.
• Integration strategy requires minimal investment.
Concordia has been a selective acquirer of assets. Most
of the products it acquires are mature and require
little investment to maintain compared to the significant
expenditures associated with developing and launching new
products. If management can continue to find assets that
meet its standards, the company should be able to leverage
its existing infrastructure to generate improved returns on
those assets."