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Shares of the Toronto-based Concordia Healthcare Corp., which sells legacy pharmaceuticals that treat conditions such as asthma and attention-deficit hyperactivity disorder, have risen almost 600 per cent since the company went public late last year.

A bet on medications no longer of interest to Big Pharma but still being sold to patients across North America is proving hugely profitable for investors in Concordia Healthcare Corp.

Shares of the Toronto-based company, which sells legacy pharmaceuticals that treat conditions such as asthma and attention-deficit hyperactivity disorder, have risen almost 600 per cent since the company went public late last year.

Concordia also sells orphan drugs – which are used to treat patient populations typically less than 200,000 who suffer from rare diseases – and medical devices for diabetics.

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The company has been on an acquisition spree as it builds out its specialty pharma business.

While some investors may believe the stock has had its run, others see more growth ahead as long as the company fulfills its promise to buy more products to boost and diversify the business.

"We still like it," said Bruce Campbell, president and portfolio manager at StoneCastle Investment Management, which has owned the stock since it went public at $6.25 in December, 2013.

It's one of his company's largest holdings, at around 4 per cent.

"They're probably a bit more richly valued than what most investors will look at, but we feel confident they'll continue to execute on their acquisition strategy."

Concordia is expected to report its third-quarter earnings on Thursday, which Mr. Campbell said could be another buying opportunity, depending on the results. Analysts are expecting quarterly revenues of $35.6-million (U.S.), up from $26-million in the second quarter, according to S&P Capital IQ.

Concordia benefits from Big Pharma's focus on new blockbuster drugs, which leads them to dispose of their legacy off-patent drugs. Concordia was founded by chief executive Mark Thompson, who was also co-founder of Trimel Pharmaceuticals Corp. and former vice-president of business development at Biovail Corp.

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About half of Concordia's revenues are from Donnatal, a treatment for irritable bowel syndrome, which it bought in the spring from Revive Pharmaceuticals.

In an interview, Mr. Thompson said the plan is to grow Concordia through acquisitions, with a focus on the massive U.S. market where he sees more opportunities.

"The goal now is to diversify the product base," Mr. Thompson said.

Among six analysts who cover the stock, five have a "buy" or equivalent rating and one says "hold," with a consensus price target over the next year of $44.75, according to Bloomberg.

"We believe there are ample acquisition opportunities for Concordia given the continuing trend of large U.S. pharmaceutical companies divesting non-core assets," GMP Securities analyst Martin Landry said in a note. He has a "buy" and $45 target.

RBC Dominion Securities analyst Douglas Miehm has an "outperform" (equal to "buy") and $46 target, calling Concordia "an exciting new specialty pharma company."

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The company has grown to the point now that it should be able to grow quickly "and generate outsized returns over the next several years," he said in a note.

Locating its subsidiaries in Barbados, which allows Concordia to pay lower corporate tax rates, is also an advantage compared to its peers, Mr. Miehm said.

The risks, according to analysts and investors, are that Concordia could stumble on acquisitions or have trouble managing its growing product list. There are also the usual pharmaceutical risks including competition and the reliance on third parties for manufacturing and distribution of products.

Robert "Hap" Sneddon, president and portfolio manager at CastleMoore Inc., doesn't own the stock but says it's becoming more interesting for his clients now that its market capitalization has surpassed $1-billion.

"From an industry perspective, this is a good space to be in," he said, believing there's a bull market in the health-care sector today.

He says he might consider buying the stock on a dip, once he sees more growth that would help stabilize the company.

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