Concordia Healthcare Corp. T.CXR.R

The Big Bad CMA in the UK

[Marcel7]

So there has been a lot written about the CMA in the press in the UK and by the shorts.

The Secretary of State for Health Jeremy Hunt has asked the CMA to "urgently" investigate this drug price scandal.

Well, unfortunately he may be waiting some time for resolution.

A quick look at pending and closed CMA cases under "CA98 and civil cartels" the type that this investigation would be show 105 cases, from "Hotel Online booking Investigations", to "Distribution of road fuels in parts of Scotland", to "Sports bras RPM investigation".

Here is a list of all 10 pharmaceuticals investigations:
https://www.gov.uk/cma-cases?keywords=&case_type%5B%5D=ca98-and-civil-cartels&market_sector%5B%5D=pharmaceuticals&closed_date%5Bfrom%5D=&closed_date%5Bto%5D=

5 are open and 5 are closed.

The average time from open to closed is at least 3 years, and that is before the right to appeal. Not only that, initially it takes months initially in gathering evidence before they make a decision on whether to proceed with the investigation. 

Here is one that was opened in Jun 2014, took until November to decide on whether to proceed with the investigation, and then decided not to proceed in June 2015 a full year later on "administrative priority grounds".
https://www.gov.uk/cma-cases/investigation-into-conduct-in-the-pharmaceutical-sector

The case against Pfizer started in May 2013 and they estimate they will have a decision in August 2016. And then Pfizer has the right of appeal, so add another 6 months.

In 3 years CXR will have been able to pay down at least 1B in debt with current earnings estimates.

Keep in mind, as CXR is new to the UK market, and the largest increases did not come on their watch, they are in a great place to negotiatie a settlement with the government to "clean up" the industry and resolve these pricing issues. The Times articles in fact state that the governmenr is already in negotiations with generics companies on new pricing regulations.

GLTA

Marcel

[WillyWally]

Man, you're too good for this board because what you're saying actuall makes lot of sense. Now take a break so that I can gobble up cheap shares ;-)

[gravedigger51]

Thank you Marcel! Some of this I had already dug up like our reporter friend.  This last post is gold

[puma1]

really good collection of comments particularly given most won't read the articles  - gives them some context rather than jumping to conclusions.. a soap opera writer couldn't have devised a plot as crooked as these shorts. it really gives an insight into how these short hedge funds follow no rules but their own, no wonder the financial system lurches around

[CLtrader1]

Well Said Marcel.. In addition, these are not new issues/articles.  They have been ongoing for years.  the only reason they have gotton so much attention is the shorts are feeding them information to protect their own interests.  Below article identifies the exact same drug from the original london times article in 2010..(10 mg hydrocortisone).  NHS wants and needs competition

[terminator007]

welcome to the board, CLtrader1. 

[CLtrader1]

Thanks.  i also found this blog that reports shortages of the drug. (again hydrocortison).  The articles have zero context to other factors that go into pricing drugs.. Clearly the shortages are not a result of the prices being to high... These references are only to the headline drug referenced in the times.. There is always more to the story.... https://healthunlocked.com/asthmauk

[terminator007]

I don't think PEs are concerned about this, they made an offer to take this co private. Let's talk about these if the deal does not go thorugh, but I think the deal is going through.

[CLtrader1]

I don't disagree.  my point is the short interest pushing articles as if they are real issues has created a panic that CXR is doing something wrong.   I think it is important to fully understand what we are dealing with... Shorts instill fear until longs puke..  headline articles can be scary and should be taken with context.  I agree, CXR is a perfect PE candidate

[Bloodinstreets]

BINGO! Excellent, excellent post. Welcome to the board.

[sunshine7]

Apollo does not have an existing drug portfolio. About time they had one though:)

[CLtrader1]

Sorry I should have said adding to their healthcare portfolio. https://blogs.wsj.com/privateequity/2016/01/08/apollo-delves-into-health-care-investing-leverages-credit-experience/

[curiousbuild]

Interesting article. Thanks for posting. Amber should read and dig deeper.. CB

[tag]

Thanks for posting.  Very relevant and makes you wonder just how long Cocordia and Apollo have been talking.  I remember hearing MT say something at the CIBC conference in January about how the malaise in the market was creating lots of opportunity for Private Equity (I think there is still a link on the website to the interview).   Also interesting to see how 14 multiples were

[Bloodinstreets]

 Canadian. I thought I said 71% premium. thats what Amber tweeted to FD.