Pharmaceutical companies make drugs and vaccines from chemical bases.
As of 2025, the global pharmaceutical industry has experienced significant growth, with revenues totaling around US$1.77 trillion(1). In Canada, pharmaceutical sales represent approximately 2.1% of the global market, positioning the country as the eighth-largest market worldwide(2). The Canadian pharmaceutical market is projected to grow at a compound annual growth rate (CAGR) of 7.1%, reaching an estimated US$76.9 billion by 2030(3).
This growth is driven by three powerful factors and two major trends:
- Demographics: Canada’s population is rapidly aging, with approximately 19.5% of Canadians aged 65 years and older as of July 2025(4). This cohort requires long-term management of chronic diseases.
- Specialty Drugs: There is a surge in demand and spending on high-cost, high-value treatments, particularly biologics and biosimilars. Specialty drugs are driving the highest growth in the sector.
- Therapeutic Focus: Global investment continues to pour into Oncology (Cancer) and Endocrinology (Diabetes and Obesity, specifically GLP-1 drugs), which are seeing double-digit sales growth.
Key trends shaping 2026 include the impact of National Universal Pharmacare initiatives and increased government investment in AI for drug discovery. Given the heightened demand for advanced medicines and a supportive R&D environment, many Canadian investors remain optimistic about the sector’s prospects. Below, we’ll look at the growth opportunities with Canada’s top pharmaceutical stocks and see if they’re right for you.
Related: List of stocks in the Canadian healthcare sector
What are pharmaceutical stocks?
Pharmaceutical stocks are companies that build drugs and vaccines from chemical bases. This distinguishes them from biotech stocks, which make drugs from living organisms.
Pharmaceutical stocks show the most promise when their underlying companies have robust drug pipelines and numerous regulatory-approved drugs.
“Drug pipelines” have various stages of development, from clinical testing to regulatory approval. These stages involve testing new products (or old products but for new purposes) on increasingly larger groups of human subjects. Once the drug passes regulatory review, it leaves the pipeline and becomes a new product.
Drugs can cost billions to develop and take decades to pass through a pipeline. The safest pharmaceutical stocks, then, will already have drug patents and numerous other drugs in their final stages of the pipeline (phase III or regulatory approval).
Top pharmaceutical stocks in Canada
For Canadian investors, here are some of the top pharmaceutical stocks trading in Canada.
| Pharmaceutical stock | Description |
| Knight Therapeutics (TSX:GUD) | Develops drugs that treat Alzheimer’s, cancer, and rare diseases |
| Cipher Pharmaceutics (TSX: CPH) | Makes drugs for dermatological purposes |
| HLS Therapeutics (TSX:HLS) | Treats problems in the cardiovascular and central nervous systems |
1. Knight Therapeutics
Based in Montreal, Knight Therapeutics (TSX: GUD) is a multinational specialty pharmaceutical company that focuses on acquiring or in-licensing and commercializing innovative pharmaceutical products, primarily in Canada and Latin America. Knight’s diverse product profile has been recently strengthened, and includes marketed drugs and pipeline assets for oncology/hematology, infectious diseases, and specialty therapeutics (including products for women’s health and ADHD).
The company does not manufacture its own drugs. Instead, it utilizes an external growth strategy, primarily through in-licensing (funding drug development or acquiring rights) and out-licensing (helping companies market their completed drugs to suitable healthcare facilities in its target geographies). Both licenses allow Knight to earn a portion of the drugs’ sales. This strategy was significantly expanded in 2025 with the completion of the Paladin acquisition and exclusive licensing agreements for the Sumitomo Pharma Canadian portfolio, adding over 50 products.
Knight’s business model is now delivering record financial performance and maintaining a strong M&A focus. In the third quarter of 2025, Knight Therapeutics reported GAAP revenues of C$121.5 million, a significant 32% increase over the same period in the prior year. This record revenue was driven by contributions from the Paladin and Sumitomo transactions and 12% organic growth from its key promoted products. Adjusted EBITDA for the quarter soared 56% year-over-year to C$21.0 million, underscoring the successful integration of its recent deals and affirming its continued strategic focus on profitable portfolio expansion.
2. Cipher Pharmaceuticals
Cipher (TSX: CPH) is a specialty pharmaceutical company focused on acquiring, developing, and commercializing a portfolio of drugs that fulfill “unmet medical needs.” The company leverages a strategy of acquiring established, patented products and maximizing their market potential in North America.
As of late 2025, Cipher’s core product portfolio is heavily focused on dermatology, with key treatments for conditions such as severe acne, skin infections, and actinic keratosis. Additionally, the company offers products addressing pain management and anti-infectives. Its product pipeline continues to mature, with assets in Phase III development, including MOB-015 for nail fungus and CF-101 for psoriasis, signaling future growth drivers .
Cipher’s growth is being rapidly driven by its 2024 acquisition of the U.S.-based Natroba™ business, which treats head lice and scabies. Natroba™ and its authorized generic are now the company’s leading revenue drivers. Its flagship Canadian products remain Epuris (oral medication to treat acne) and Ozenoxacin (topical cream to treat the skin infection impetigo). The company is actively pursuing the launch of Natroba™ in Canada in 2026 and is exploring a direct-to-consumer sales model to accelerate U.S. sales.
Financially, the company has delivered substantial growth and demonstrated strong operating leverage. In the third quarter of 2025, Cipher reported total net revenue of $12.8 million, representing a 24% increase over the same period in 2024. Most importantly, Adjusted EBITDA soared to $7.3 million, a 79% increase year-over-year, largely attributable to the high-margin Natroba™ business. The company is in excellent financial health, having reduced its debt significantly and aiming to be virtually debt-free by the end of 2025, providing ample cash flexibility for future acquisitions.
3. HLS Therapeutics
Headquartered in Toronto, HLS Therapeutics (TSX: HLS) is a specialty pharma focused on acquiring and commercializing branded medicines for cardiovascular disease (Vascepa) and psychiatric disorders (Clozaril). While Q3 2025 revenue was $13.5 million (a slight decline Y/Y), the company demonstrated strong financial discipline, achieving a 19% increase in Adjusted EBITDA to $4.9 million due to a 22% reduction in operating expenses.
HLS is positioning for future growth with the planned Q2 2026 Canadian launch of NILEMDO/NEXLETOL, a key cardiovascular drug, supported by a successful debt restructuring and an ongoing focus on driving profitability.
The company has a small market cap but strong positive cash flow. It also pays a modest dividend to shareholders.
Pros of pharmaceutical stocks
- New patented drugs can lead to sustained growth. Pharmaceuticals with numerous products can grow their revenues significantly.
- Limited competition. It’s not easy to become a pharmaceutical company. Research costs are high, clinical trials can fail, and lab equipment is expensive. The high barrier to entry makes competition less severe.
Cons of pharmaceutical stocks
- Drugs can fail clinical trials. Many pre-clinical and early-phase drugs fail to make it to shelves. Even some phase III drugs – or those in regulatory reviews – will come back ineffective or unsafe under closer scrutiny.
- Liability risks. Consumers can sue pharmaceutical companies and have them remove drugs from their product portfolio. Over the years, lawsuits have been a significant drain on the profits of pharmaceutical companies.
- Expired patents. Once a pharmaceutical company’s patents end, generic drugmakers can make the same drug at a lower price. This threatens a company’s top-line sales and can make marketing efforts more expensive.
Are pharmaceutical stocks right for you?
Since many pharmaceutical companies in Canada are small-cap stocks in their growth stage, they’re well-suited for growth and value stock investors.
For Canadian investors with smaller appetites for risk, however, pharmaceutical stocks may not be the best fit for your investing strategy. These stocks can be highly volatile, especially if clinical trials fail. Federal regulations and political decisions can also delay drugs in a pipeline, and companies with drugs on shelves can face litigation and lawsuits if drugs have adverse effects.
But the payoff for certain pharmaceutical stocks can be sweet, especially for long-term investors who have time and patience to wait for new drug releases. If you’re okay with jumpy price movements, exposing your portfolio to the pharmaceutical industry might benefit you in the long run.