Concordia Healthcare Corp. T.CXR.R

Cohodes Short Summary

[Cowtownskier]

What is the basis of Cohodes short on the company?  It obviously seems him and MT have a general disgust of each other, but what is the company specific reasons he is short?

Disclosure: Long

GLTA

[CookieMonster]

Amco's very aggressive pricing exploiting an NHS loophole.  Amco did this all over the last 3 years before it was purchased by CXR.  That's why the talk of fines and price roll-backs.

[Roller007]

Cookie Monster:  true amco did that as it was within the legal boundaries, my question is why no one is focusing on the other genetic drug companies that did the same. These 5 companies account for almost all the generic drug market. 

[CookieMonster]

2 of the 4 or 5 were Amdipharm and the other was Mercury.

[Roller007]

What you have to understand is that the UK is a relatively small market dominated by one or two generic names for each aliement. This paves the ground to price increases since the cost of entering this market by another generic name is not justified by the potential future returns. This is called smart business. Do you realize how long it will take the politicians to fine these companies and

[CookieMonster]

Amco exploited a loophole.  Acquired brand named drugs that were off patent.  They then de branded them which allowed them to increases the price multi-fold.  They were small or difficult to manufacture drugs, so competition was unlikely or slow to develop.  Price increases in some instances were 1000% or more over a 3 year period.  It was all part of Amco's strategy.

[Roller007]

Exploiting a loophole is not the same as breaking the law. If the UK government departments doesn't like amco practices then they can lower or eliminate licensing fees so I the companies can introduce their comparable generics in that market. Legally nothing can be held against amco. And the U.K. Government has better things to do their limited budgets than get involved in courts with pharma.

[CookieMonster]

The CMA is looking into it and they can impose significant fines (percentage of revenues).

[Roller007]

Nothing will hold up in court.  Exactly how many fines have we seen in the US where this issue is a year old?  Non. Wake up and smell the unfair world we live in. Even if fines were imposed the amount s will be negligible 

[Craigbad]

The bigger concern would be the pipeline. If they were selling the fact of  exploiting the loophole to hedge funds as an investment thesis, that money will leave long before the loophole is actually closed. If you take away the growth engine, this is a just a highly leveraged company, with questionable cashflow if the legacy assets are in decline which will not be an exciting opportunity that

[Roller007]

Graigbad:  yes that's the concern.  But that's not to say that they can increase by 10% or 30% just as an example and use the reformalation as the reason.  Remember that we are trading at $30 and not $117 so the SP is reflecting worst case scenario already regarding this matter.  

[visionaryfool]

If I recall, the maximum penalty that can be imposed is 10% of the revenues ... althought I might be mistaken. Given the sales mix of Concordia, this would be aroun what, $60 to $70 million? The fundamental problem is that these medicines are being provided and you can force a Company to roll back prices or impose fines but at the end, if the Company is no longer able to make money (as would be

[WillyWally]

The UK government won't want something that drags in courts for years and cost tax payers more money than they'll actually recover. I'm pretty sure they'll reach a deal where CXR will give the UK government a specific amount of money to settle the matter, and things will go on. The loopholes will probably be closed or at least a few regulations amended to please the public

[CookieMonster]

Well said!

[CookieMonster]

Watch the Pfizer/Flynn ruling in August to see what fines are imposed.

[CookieMonster]

https://www.gov.uk/government/news/cma-issues-statement-of-objections-to-pfizer-and-flynn-pharma-in-anti-epilepsy-drug-investigation 

[visionaryfool]

CookieMonster, thank you for posting useful information. Although long, I ALWAYS like to hear both sides of the story. From the article, its clear that the maxium fine would be 10% of the total sales of a year. The CMA may impose a financial penalty on any business found to have infringed the Chapter II prohibition or Article 102 (or both) of up to 10% of its annual worldwide group turnover

[Marcel7]

Yes. The decision is expected in August. https://www.gov.uk/cma-cases/investigation-into-the-supply-of-pharmaceutical-products

[visionaryfool]

Thanks Marcel. Something to add to the calendar (if the Company is around then). I've started looking through the CMA's website and found this little timbit. A fine imposed on GSK for $45M for a period over 2001 to 2004. GSK made $90M in sales in 2001 alone. Its clear that altough CMS CAN impose the maximum of 10% of sales, it doesn't mean it does. GSK still made more money even

[CookieMonster]

The Pfizer/Flynn ruling is supposed to come out in August of this year.