3 Top Canadian Pharmaceutical Stocks in October 2023

Posted on September 30, 2023 by Dan Kent
Canadian stocks

When investors discuss striking it rich in the stock market, they often discuss a few industries. One of them being technology and the other being pharmaceutical stocks.

Buying a clinical trial-stage Canadian pharmaceutical stock and hoping it takes off is a popular strategy among hyper-aggressive investors.

Judging by the fact you've landed on our page that will discuss the top Canadian pharmaceutical stocks to buy right now, you might fit the description above.

For the most part, chasing after these types of Canadian pharmaceutical stocks will only leave you with an empty wallet

This isn't the proper way to invest, and it isn't something we advocate for here at Stocktrades. The good news, though? Among all of the Canadian stocks, many solid pharmaceutical companies are established, with stable revenue streams and strong reputations.

As the Canadian population gets older, the need for pharmaceutical companies will grow

In 2019, healthcare spending per Canadian eclipsed $7000 a year. This is the average number for every single Canadian in the country. $7000 doesn't seem like a lot. Still, when you consider some people don't visit the doctor or utilize the medical system for the whole year, this average is relatively high.

Healthcare spending is expected to exceed $310B in 2021 and shows no signs of slowing down. So if you'd like to take advantage of this by purchasing Canadian pharmaceutical stocks, we've got 3 of the best in the country right here.

3 top Canadian pharmaceutical stocks to buy today

  • Knight Therapeutics (TSE:GUD)
  • Viemed Healthcare (TSE:VMD)
  • HLS Therapeutics (TSE:HLS)

Knight Therapeutics (TSX:GUD)

Canadian Healthcare Stocks - Knight Therapeutics

Knight Therapeutics (TSE:GUD) manufactures both generic and specialty drugs. The company has an exciting way of operating its business. Knight Therapeutics will look to identify and purchase underrated drugs from Big Pharma, ones that these major companies do not want to invest the time and capital into getting approved in nations like Canada.

Knight Therapeutic's CEO, Jonathan Goodman, has been involved in the pharma business his whole life.

When he was 26 years old, Goodman took Paladin Labs public and earned a whopping 27% annual return for shareholders over nearly two decades.

After Paladin, Goodman started Knight, and many investors expected the same results. Thus far, it has generally been a disappointment. The company hasn't made any significant moves, at least not ones to drive growth and many investors have become impatient.

However, when it comes to Goodman, if there is one thing he does have, it is patience. The company has over $70M in cash and a solid balance sheet. The company has minimal debt and over 100 products in its portfolio.

Most of the company's revenue comes from Brazil, and most of its revenue comes from products used to treat infectious diseases and oncology. The company is partnered with some of the largest pharmaceutical companies in the world, like AstraZeneca, Bristol Myers Squibb, and Pierre Fabre.
An investment in Knight Therapeutics is a large play on the company's management, notably Goodman.

He's frustrated investors up to this point. Still, he has shown he can execute exceptionally well in the past. If he continues to do so, Knight could become a solid Canadian pharmaceutical stock moving forward.

Viemed Healthcare (TSX:VMD)

Viemed stock

Viemed Healthcare (TSE:VMD) isn't a pharmaceutical stock in the traditional drug production sense. Instead, it plays on home respiratory care, a booming industry. With a market cap of just over $500M, Viemed is middle of the line in terms of small cap stocks.

Viemed is one of the largest non-invasive ventilation companies in the US home respiratory health care industry. 

The company has grown revenue fourfold since 2016 and serves over 30,000 customers.

The company started in 2006 as Sleep Management before expanding into non-invasive ventilators. In 2015, a public company in PHM acquired it and spun out to create Viemed Healthcare in 2017. It was listed on the Venture, but due to solid results quickly up-listed to the TSX and NASDAQ the next few years.

The company's primary focus is on treating COPD. When we look at the fact that not only are 10,000 baby boomers turning 65 every single day in the United States, but over $50B of annual healthcare costs in the United States go to treating COPD, we can see the enormous potential for Viemed right now.

25 million people in the US have COPD, 2.5 million being stage 4. This is where a company like Viemed comes in. With only 10% of the market share in non-invasive ventilators, this company has plenty of room to grow.

Revenue was dipping, and there had been some concerns that growth was starting to sputter for the company moving forward. However, it has picked things up again recently, and it will be interesting to see how well Viemed can perform in a typical operating environment. It's a pharmaceutical stock you should keep a close eye on moving forward.

HLS Therapeutics (TSX:HLS)

HLS Therapeutics stock

Much like Knight, HLS Therapeutics (TSE:HLS) is a pharmaceutical company focusing on acquiring late-stage and commercial-stage branded pharmaceutical products. The key difference here being the company focuses on the North American markets.

The company focuses on drugs targeting the central nervous and cardiovascular systems.

The company's flagship product is Vascepa, a drug used to reduce the risk of cardiovascular events like heart attacks in those with diabetes, heart disease, or patients with high triglycerides.

The company has partnered with Pfizer to expand physician coverage and be a promotion partner. The company figures the promotional partnership will result in a 3x increase in sales representatives and a 4x increase in coverage.

This partnership was a significant event. Pfizer doesn't just choose to promote any drug. It's pretty picky. The fact it picked Vascepa is a sign the drug has strong potential. The company now has the backing of one of the largest pharmaceutical companies in the world, and even pre-partnership, we saw strong growth in prescriptions with Vascepa. This should not only solidify but increase that momentum moving forward.

The company is relatively young and has struggled in terms of performance. This is typical of a younger pharmaceutical company with "irons in the fire," so to speak. But if we look to forward estimates, analysts expect some significant growth from HLS moving forward, likely because of this flagship product.

Analysts have the company posting revenue of $100M in Fiscal 2023, followed by $145M in 2024 and $220M in 2025. Another notable estimate, earnings are expected to grow from a loss of $0.81 this year to earnings of $0.37 per share in 2025.

Overall, these 3 top Canadian pharmaceutical stocks all have some potential

You don't need to be chasing what I would call the "bingo cards" of the investment world in early to mid-stage clinical trial pharmaceutical stocks. There is money, albeit less, to be made in companies with developed products - not as seemingly "boring" as Canadian banks or Canadian insurance stocks, and still some exposure to the Canadian pharma industry.

Will you strike it rich by buying more established companies versus ones with no developed product but many promising ones in the pipeline? No.

However, there is a significantly lower risk of ruin. Especially if you are learning how to buy stocks, it is essential to remember that, as investors, preserving the capital we currently have should be our top priority.

Disclaimer: The writer of this article or employees of Stocktrades Ltd may have positions in securities listed in this article. Stocktrades Ltd may also be compensated via affiliate links in this post. Stocktrades Ltd will run advertisements on our posts. These advertisements do not represent an endorsement by us.

Dan Kent

About the author

An active dividend and growth investor, Dan has been involved with the website since its inception. He is primarily a researcher and writer here at Stocktrades.ca, and his pieces have numerous mentions on the Globe and Mail, Forbes, Winnipeg Free Press, and other high authority financial websites. He has become an authority figure in the Canadian finance niche, primarily due to his attention to detail and overall dedication to achieving the highest returns on his investments. Investing on his own since he was 19 years old, Dan has compiled the experience and knowledge needed to be successful in the world of self-directed investing, and is always happy to bring that knowledge to Stocktrades.ca readers and any other publications that give him the opportunity to write. He has completed the Canadian Securities Course, manages his TFSA, RRSPs and a LIRA at Qtrade, and has compiled a real estate portfolio of his primary residence and 2 rental properties, all before his 30th birthday.