Loblaw targets drug store market share
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Hey there, time traveller!
This article was published 05/05/2010 (5802 days ago), so information in it may no longer be current.
TORONTO — The country’s largest grocery retailer plans to “aggressively” increase market share in its drug store business to help offset a move by the Ontario government to cut the funding pharmacies receive.
Loblaw Companies Ltd. (TSX:L) has nearly 500 pharmacies in its grocery stores across the country, and said that if Ontario eliminates the professional allowances currently paid to drug stores by generic drug manufacturers, the impact on its pharmacy business will be “substantial.”
“The (profit and loss) impact on our business is substantial but not material and we intend to mitigate as much as we can by aggressively driving share in our drug store business,” president and deputy chairman Allan Leighton said on a conference call Tuesday.
Loblaw is already implementing a variety of plans to increase its market share in the competitive pharmacy business, Leighton said. These plans include extending operating hours and services, introducing state-of-the-art technology, as well as a pilot program to create a smaller pharmacy that could fit in smaller stores.
Loblaw also sees an opportunity to expand the number of medical centres in its stores from 84 now to more than 200 over “the next few years,” Leighton said. This would boost the amount of business at its pharmacies, as more customers could see a doctor and get a prescription filled at the same place.
“I’ve always felt we underperform (in our pharmacy business),” Leighton said.
“We see this as a big opportunity for us to drive our drug store business and frankly we’re going to have to do that as part of our mitigation.”
He added that Loblaw has been working to increase market share in its drug store business for “four or five months” and is well prepared to deal with the changes once they’re implemented.
The Ontario government says ending the professional allowances will cut the price of generic drugs by at least 50 per cent, knocking $500 million a year off the cost to the province’s public drug plan for seniors and others. The province hopes this will help it control health spending.
— The Canadian Press