Concordia Healthcare Corp. T.CXR.R

RBC STATES RISKS ON THEIR LAST REPORT

[Health123]

Risks

The company faces a number of risks related to integration/ execution of acquisitions, the inability to identify new products, Donnatal exposure as a DESI product, clinical trial failures, unexpected new generic drugs, reliance on third parties for various operational items such as manufacturing, price increase pushback, a significant debt load, and risks associated with managing a larger suite of products. However, the AMCo and Covis deals reduce the overall exposure to Donnatal. Given Concordia's international exposure to the UK and EU, the recent Brexit vote and the subsequent effects on the GBP are a risk to Concordia. The recently tabled NHS bill in the UK could further limit potential future price increases and could also potentially see the NHS impose lower prices for unbranded drugs in the UK. There remains a lack of clarity surrounding the NHS's intentions when it comes to potentially lowering drug prices. We also believe that there is significant potential that the UK's Flynn/Pfizer CMA investigation ruling could be negative and the companies could be fined etc... - we believe this would place an overhang on Concordia.