Desjardins says Apotex Health is a buy

Desjardins Securities analyst Gary Ho says Apotex Health (Apotex Health Stock Quote, Chart, News, Analysts, Financials TSX:APTX) is “Canada’s generic champion,” with market leadership, scale and a deep product pipeline supporting growth.

As reported by the Globe and Mail, Ho initiated coverage of Apotex with a “Buy” rating and $40.00 target. The average target is $40.67.

Apotex raised $1.3-billion in its June 10 market debut, selling shares at $24 each in the largest Canadian IPO since Definity Financial’s $1.4-billion offering in 2021.

Ho said Apotex holds 23% of the Canadian generic market, with one in five generic prescriptions in Canada filled by an Apotex product. He said that position is supported by more than 50 years of brand equity, deep pharmacy relationships and a manufacturing footprint competitors cannot easily replicate.

The analyst said demand is supported by an aging population and healthcare system cost pressures, making the business less tied to the economic cycle. He also pointed to Apotex’s diversification, with conventional generics falling to 46% of fiscal 2026 revenue from 59% in fiscal 2023, excluding VLLP, as specialty generics, brands and biosimilars gained share.

Apotex has a pipeline of more than 480 products across Canada, the U.S. and international markets, with about 70% expected to be first to market. Ho also sees Apo-Semaglutide, approved in May 2026 as one of Canada’s first generic semaglutides, as a near-term catalyst in a Canadian Ozempic and Wegovy market estimated at $2.8-billion in 2025.

Ho said his industry checks show first-to-market status is the largest driver of value in generics, with sticky share because of the friction of switching suppliers. He said first-to-market products can generate EBITDA margins more than twice consolidated margins.

He said Canada remains an attractive and cash-generative market, helped by pricing stability under the pan-Canadian Pharmaceutical Alliance’s Tiered Pricing Framework, though stronger growth is increasingly coming from complex generics, injectables and biosimilars.

Ho said Apotex’s risks are manageable and mostly industry-wide rather than company-specific. Those include regulatory timing, generic pricing pressure and manufacturing risk, including the Richmond Hill facility, which received an FDA warning letter and Official Action Indicated classification in 2025.

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