Why this investor likes Apotex Health stock

First Avenue Investment Counsel chief investment officer Brian Madden says Apotex Health (Apotex Health Stock Quote, Chart, News, Analysts, Financials TSX:APTX) has good growth prospects after its June IPO, helped by a cleaner balance sheet and a near-term opportunity in generic obesity drugs.

Speaking on BNN Bloomberg’s Market Call on Aug. 10, Madden said Apotex is Canada’s largest manufacturer of conventional, specialty and biosimilar generic drugs, with a growing U.S. footprint.

Apotex went public June 10, raising about $850-million.

Madden said the near-term catalyst is semaglutide, a GLP-1 weight-loss and obesity drug whose Canadian patent expired earlier this year. He said Apotex has a first-mover advantage and could capture 20% or more of the Canadian market.

IQVIA estimated the Canadian market opportunity at about $3.5-billion last year, with expected compound annual growth of 14%, Madden said.

Beyond GLP-1 drugs, Madden said a number of branded pharmaceuticals are expected to lose patent protection in Canada over the next five years, creating further opportunities for Apotex.

“We see good growth prospects here in front of us,” Madden said.

Of the analysts covering Apotex, 14 rate it “Buy,” none rate it “Hold” and none rate it “Sell,” with a consensus target of $41.24.

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