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Many pharmaceutical companies have had a tough month. Between renewed concerns over government intervention, increased volatility and well publicized short reports on some of the best performers in the industry, namely Valeant, many companies have seen nothing short of carnage in the share prices. Concordia Healthcare (CXR) is a prime example but where some companies may be deserving of plummeting prices, we think Concordia has simply been lumped in and cast aside with all of the others.
Concordia is based out of Canada and generates revenues through Legacy Pharmaceuticals, Specialized Healthcare Distribution, and the acquisition or development of Orphan Drugs, with the majority of revenues coming from Legacy Pharmaceuticals. They have been quite acquisitive in the past, with the acquisition of Covis Pharmaceuticals in March, 2015 for $1.2 billion and a transformative acquisition recently of Amdipharm Mercury Limited (AMCo) for $3.5 billion. It was this acquisition that has led to a lot of the issues at CXR currently, which largely seems unwarranted. Let us first examine what has been leading to some of the price declines at CXR.
Concern over government intervention:
Hilary Clinton brought the healthcare sector under the microscope recently with a tweet mentioning that she plans to look at reform in the healthcare sector,