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Sep 16, 2016

Concordia shares sink nearly 20% after U.K. introduces generic drug pricing bill

Pharmaceuticals

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Concordia International (CXRX.O) shares plummeted on Friday after the U.K. government introduced legislation that could allow it to limit generic drug pricing.

If it’s approved, the bill would allow the U.K.’s health secretary to impose pricing limits on unbranded drugs and issue fines to control the cost of health services.

Shares in Concordia were down nearly 20 per cent to US$7.14 on the Nasdaq in mid-day trading on Friday.

In a statement, Concordia chairman and CEO Mark Thompson said that the Oakville, Ont.-based pharmaceutical company expects growth from its international segment "going forward will primarily come from new product launches."

"We are monitoring the bill and evaluating its timing and its impact, if any, on our business," Thompson said. 

The company also reaffirmed its full-year revenue of US$859 million to US$888 million, the level that Concordia lowered to last month after missing second-quarter expectations. That guidance includes the expectation that the company will generate two-thirds of its total 2016 revenues from its international segment, which includes the U.K.

“[Concordia] will need to demonstrate growth from its international business, stability and North America, and substantial deleveraging before the stock can move higher,” Laurentian Bank Securities analyst Joseph Walewicz wrote in an Aug. 15 note to clients, in which he also downgraded his rating on the stock to hold from buy.

The stock has lost nearly 40 per cent of its value in the month since that note was published.

With files from BNN's Jameson Berkow