Apotex workers in Toronto in 2021. The company has filed to go public on the Toronto Stock Exchange.Nathan Denette/The Canadian Press
Apotex Health Corp. has filed to go public on the Toronto Stock Exchange in an offering that is expected to establish the generic drug maker as Canada’s most valuable life-sciences company.
The Toronto-based company is expected to raise between $500-million and $1-billion in the deal, a source familiar with the matter said. The preliminary prospectus, filed publicly with regulators Thursday, doesn’t disclose how much the company intends to raise; that will be revealed in subsequent filings after it canvasses investor interest and books orders.
Apotex plans to use net proceeds from the initial public offering to repay indebtedness owing under its credit facilities. It added the debt last year as part of a recapitalization in which it paid $1.1-billion in dividends to certain shareholders.
With comparable drug companies trading at eight to 12 times enterprise value to operating earnings, underwriters hope that Apotex, which generated $1.3-billion in adjusted operating earnings last year on $3.5-billion of sales, can achieve an equity valuation exceeding $10-billion, the source said.
The Globe and Mail is not identifying the source as they are not authorized to discuss the matter publicly.
Apotex is the latest in a slew of Canadian companies to test the public markets after a dry spell for new issues. Last year saw two IPOs on the TSX. Agriculture giant AGT Food and Ingredients Inc. AGTF-T and quantum computer developer Xanadu Quantum Technologies Ltd. XNDU-T have gone public this year on the TSX – the latter through a cross-listing after merging with a Nasdaq-listed special-purpose acquisition company. Fusion energy developer General Fusion Inc. and last-mile delivery company Uni Express Inc. (known as UniUni), both of British Columbia, also plan to merge with publicly traded SPACs.
The flurry of activity comes as OpenAI and Space Exploration Technologies Corp. (SpaceX) prepare to go public in the United States.
The Apotex offering is being co-led by underwriters RBC Capital Markets, TD Securities and Bank of Nova Scotia. BMO Capital Markets and Jefferies Securities are joint bookrunners; 11 other banks are participating. Goodmans LLP, Apotex’s long-time law firm, is Canadian lead counsel to the company on the deal.
With the offering, New York-based SK Capital Partners plans to sell a minority stake in Apotex, which it bought in 2023, six years after founder Barry Sherman and his wife Honey were killed in their home. The case remains unsolved.
Apotex is Canada’s largest pharmaceutical company, with more than 6,000 employees, making 25 billion doses of medicine each year and selling in 70 countries, primarily Canada, the U.S. and Latin America.
Mr. Sherman founded the business in 1974, establishing it as a leading maker of generic versions of branded drugs as their patents expired. Health Canada approved Apotex’s generic version of the blockbuster drug Ozempic on May 1, and the product hit pharmacies this week.
The founder was famously litigious, fighting court battles over drug patents with Big Pharma and generic rivals.
The prospectus lists a number of continuing or recently resolved legal cases. Some are patent disputes or antitrust allegations related to product pricing. Apotex also discloses it is one of multiple pharmaceutical companies caught up in opioids litigation, including class actions commenced in multiple provinces.
SK Capital, a private equity fund focused on life sciences, bought Apotex for an estimated $3-billion. It hired investment bankers last fall to begin preparing the IPO, when Allan Oberman was chief executive officer of Apotex; he was replaced in March by Jeff Watson, who previously led the company for five years after the founder’s slaying.
In recent years Apotex has expanded beyond generic pills. It now sells generic versions of a range of treatments including liquids, inhalers and topicals, as well as biosimilars – approved versions of existing injectable biologic drugs. In 2024, Apotex bought specialty drug seller Searchlight Pharma Inc. for $502-million. That marked a strategic shift, as Searchlight sold patented drugs exclusively in jurisdictions where it has licensed that right from foreign pharmaceutical companies.
Last year, Apotex moved into vitamins by purchasing Toronto-based CanPrev Natural Health Products, one of the country’s largest supplement manufacturers, for $184.5-million. CanPrev sells more than 250 branded products online and through 3,400 retail outlets in Canada, the U.S. and international markets.
Conventional generic drugs now account for 51 per cent of Apotex revenues, down from 59 per cent in 2023; the company expects that to drop to 33 per cent by 2031 as it increasingly focuses on its newer, faster-growing therapeutic offerings. Overall revenues have grown by 8 per cent on average over the past three years, while operating earnings have more than doubled. Apotex earned net income of $373.8-million in its fiscal year ended March 31.
“We believe the market opportunity ahead of Apotex is substantial and durable,” Mr. Watson wrote in the prospectus. “Our strategy is designed to expand our impact across the full health continuum, while continuing to do what Apotex has always done best: deliver high quality, trusted, and affordable healthcare solutions, at scale.”
With a report from Chris Hannay