Trudeau’s Drug Price Overhaul Threatens This Company

BELLUS Health Inc. (TSX:BLU) is the latest revelation on the TSX. The healthcare stock is soaring this year. We hope the growth would continue and not be slowed down by the political uncertainties in Canada.

| More on:
Test tubes

Image source: Getty Images

After more than 30 years, Canada is making a big step to lower drug prices. Prime Minister Justin Trudeau is set to overhaul drug pricing in the country. However, this plan of the Trudeau administration could cost drug makers, including Bellus (TSX:BLU), billions in sales.

Trudeau seems to be pushing new regulations as a way to fend off a conservative challenger in the upcoming election. But according to Health Minister Ginette Petitpas Taylor, the move is part of a broader revamp.

In the U.S., President Donald Trump has a proposal to align U.S. pharmaceutical costs more closely with Canadian prices and other large countries. Among the developed nations, the U.S. pays more on average for prescription drugs.

The proposal would pave the way for patients to buy medicines in Canada at a cheaper cost. But many Canadians are against Trump’s plan.

Health care would be an important political issue since, according to a poll, 50% of Canadians list health care as one of their top three concerns.

Issue of prescription drugs

Although Canada has universal health care, prescription drugs are not covered. Although the government regulates prices, patients have to pay more for brand-name medicines. According to a government advisory panel, just 10% of Canadians fill their prescriptions — the other 90% can’t afford to do so.

The new universal drug-coverage proposal of the Trudeau administration would be called national pharmacare. But a group consisting of five drug companies is challenging the policy changes in court.

Industry groups believe that national pharmacare would only make it harder for Canadians to access innovative new therapies.

Rising star

Bellus is the most promising stock in the healthcare sector. This $526.5 million biotech firm is one of the top performers on the TSX so far in 2019. Bellus is up 164.7% year to date, and analysts are forecasting its current price of $9.74 to triple or quadruple in the next 12 months.

Back in April, the U.S. Food and Drug Administration (FDA) accepted Bellus’ Investigational New Drug (IND) application. As such, the Quebec-based firm could begin the phase two study for BLU-5937. If the results of the study show high efficacy to reduce coughing, the drug would have massive long-term potential.

Bellus has a strong cash position to undertake more research and development in 2019; BLU-5937 is one of the innovative new therapies industry groups are talking about.

For Bellus, the drug could be a best-in-class therapeutic for the treatment of chronic cough — a blockbuster drug that could rake in billions in sales.

According to Bellus President and CEO Roberto Bellinis, BLU-5937is just one of many essential drugs the company is developing. In the pipeline are drugs for the treatment of sarcoidosis, Phelan McDermid syndrome and Alzheimer’s disease.

Political impact

The healthcare issue would be a significant issue when Prime Minister Trudeau and his challengers begin their political debates. We’re not sure whether Trudeau’s plan would prove to be unaffordable. Let’s also hope that there won’t be a cut in the government’s healthcare spending.

Nevertheless, hold tight if you’re interested in Bellus. This stock has substantial upside potential and could deliver very high returns. However, the company could face pressure because of politics. We’re hoping the impact won’t be enough to stifle the growth of TSX’s rising star.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned.

More on Investing


These 2 Stocks Carry a Lot of Risk, But Their Upside Is Huge

These two stocks have some significant risks, but they trade so cheaply that they offer unbelievable capital gains potential.

Read more »

Payday ringed on a calendar
Dividend Stocks

Boost Your Monthly Dividend Income With This TSX Gem

A high-yield TSX gem in the real estate sector can boost your monthly dividend income.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Bank Stocks Look Like a Steal: Here’s My Favourite for October 2023

TD Bank (TSX:TD) stock looks dirt cheap, as it continues to fluctuate in this rocky economic environment.

Read more »

little girl in pilot costume playing and dreaming of flying over the sky

Better Buy: Air Canada Stock or WestJet Airlines?

With the airline industry yet to recover fully from the pandemic, is Air Canada one of the top stocks to…

Read more »

oil and gas pipeline
Dividend Stocks

Is Enbridge Stock a Buy for its 7.6% Dividend Yield?

Enbridge stock is a TSX giant that offers investors a tasty dividend yield of 7.6%. Is this high-dividend stock a…

Read more »

Early retirement handwritten in a note
Dividend Stocks

Retire Early With These 3 Canadian Passive-Income Stocks

Three Canadian passive-income stocks are smart choices for people with early retirement goals.

Read more »

Businessperson's Hand Putting Coin In Piggybank
Energy Stocks

This 7 Percent Dividend Stock is My Top Pick for Immediate Income

Looking for a solid dividend stock that can provide an immediate income source? Consider this dividend gem now while its…

Read more »

man sitting in front of 3 screens programming
Tech Stocks

Shopify Stock or Microsoft Shares: Better Buy for the AI Revolution?

Shopify (TSX:SHOP) and Microsoft (NASDAQ:MSFT) are two of the most impressive growth stocks to watch, as tech slips further from…

Read more »