Jean Coutu sees generics hurting sales
(Reuters) - Canada's Jean Coutu (PJCa.TO: Quote) said on Tuesday it expects a rise in generic drug prescriptions to dent retail sales generated by the drugstore chain in the coming quarters, sending its stock down as much as 5.3 percent.
Generic drugs, which carry lower retail prices than brand-name medicines, are becoming an increasingly large part of the Longueuil, Quebec-based company's business.
Generics rose to 57.2 percent of all prescriptions filled by the chain during the quarter ended August 27, compared with 53.2 percent a year earlier, it said in a statement.
While the trend is likely to hold back revenue, the company expects its Pro Doc Ltd generic drug-making unit to contribute to improved consolidated profit margins.
In the latest quarter, revenue edged higher to C$635.2 million from C$625.6 million, even though generic prices have dropped since tighter provincial government regulations have taken effect in Quebec and Ontario.
Net profit rose to C$66.4 million, or 29 Canadian cents a share, from C$43.4 million, or 18 Canadian cents, a year earlier.
Excluding a gain of 10 Canadian cents a share from the sale of shares of Rite Aid (RAD.N: Quote), a U.S. drugstore chain, the company earned 19 Canadian cents a share, in line with analysts' estimates, according to Thomson Reuters I/B/E/S.
Jean Coutu, whose rivals include Shoppers Drug Mart-owned SC.TO Pharmaprix, operates nearly 400 drugstores in Quebec, New Brunswick and Ontario under such banners as Jean Coutu, Clinique, Sante and Sante Beaute.
The stock was down 4.5 percent to C$11.35 in early trading on the Toronto Stock Exchange on Tuesday.
(Reporting by Gowri Jayakumar in Bangalore, additional reporting by Allison Martell in Toronto; Editing by Frank McGurty)
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