Shoppers Drug Mart says generic pricing to hit 2013 same-store sales

Thu Apr 25, 2013 6:43pm EDT
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By Krithika Krishnamurthy

(Reuters) - Shoppers Drug Mart Corp, Canada's biggest pharmacy chain, said tightened pricing controls for generic drugs will push its 2013 pharmacy same-store sales outlook to the lower end of its previous guidance.

The company had previously forecast pharmacy same-store sales growth of between 1.5 percent to 2.5 percent for 2013.

Canada's provinces and territories agreed in January to tighten caps on prices of six widely prescribed generic drugs to cut costs for private and government health programs.

Saskatchewan Premier Brad Wall then told Reuters that more could be done to cut the cost of generics, among the highest in the world.

The new rules mandate drugstores charge no more than 18 percent of the price of the brand-name equivalent, lower than the previous 25 percent to 40 percent cap. The rules kicked off on April 1.

On a post-earnings conference call, Chief Executive Domenic Pilla said "there will be several impacts" of this new rule in the second quarter.

Price controls have crimped growth at Shoppers and rivals such as Jean Coutu Group Inc in recent years.

Average prescription value fell 4.8 percent in the first quarter ended March 23.   Continued...