* Q3 EPS C$0.21 vs estimate C$0.19
* Q3 revenue ebbs, misses expectations
* Generics reach 55 pct of drug prescriptions
TORONTO, Jan 7 (Reuters) - Canada's Jean Coutu Group (PJCa.TO) on Friday reported a higher quarterly profit that topped expectations and said growth of its drugstore operations should offset the impact of government measures to cut generic drug prices.
The Quebec provincial government, following the lead of neighboring Ontario, has outlined steps in a plan aimed at reducing the cost of generic prescription drugs.
Jean Coutu, whose rivals include Shoppers Drug Mart SC.TO-owned Pharmaprix, operates drug stores mostly in Quebec, as well as in New Brunswick and Ontario, under such banners as Jean Coutu, Clinique, Sante and Sante Beaute.
The company will feel the first impact of the reforms in the current quarter, it said during a conference call.
Its shares dropped about 0.8 percent to C$9.58 in early trading on the Toronto Stock Exchange. The stock has gained about 9 percent since the company posted second-quarter results in October.
In the short term, the normal growth of the company's operations should mitigate the effect of the legislation, it said.
For its third quarter ended Nov. 27, Jean Coutu's earnings rose to C$48 million, ($48 million) or 21 Canadian cents a share, up from C$44.6 million, or 19 Canadian cents, a year earlier.
Analysts on average were expecting earnings of 19 Canadian cents, according to Thomson Reuters I/B/E/S.
Revenue receded to C$677.3 million, missing market estimates by C$7.8 million.
The company's increasing reliance on generic prescription sales could exacerbate the impact of the reform.
Generic drugs reached 55 percent of all prescriptions sold by Jean Coutu in the third quarter, the company said on Friday, compared with 51.3 percent a year ago. The increase in part reflected the introduction of generic versions of large-volume drugs.
The stock, which has gained about 9 percent since the company posted second-quarter results in October, closed at C$9.66 on Thursday on the Toronto Stock Exchange. (Reporting by S. John Tilak in Toronto and Isheeta Sanghi in Bangalore; Editing by Frank McGurty) (firstname.lastname@example.org; +1 416 687 7918)