{"id":521719,"date":"2010-04-09T09:19:00","date_gmt":"2010-04-09T13:19:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:421000"},"modified":"2010-04-09T09:19:00","modified_gmt":"2010-04-09T13:19:00","slug":"shoppers-should-prevail-despite-destabilizing-changes","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/521719","title":{"rendered":"Shoppers should prevail despite destabilizing changes"},"content":{"rendered":"<p>Calling the provincial government\u2019s <a href=\"http:\/\/www.financialpost.com\/news-sectors\/story.html?id=2777670\" >proposed changes<\/a> to the Ontario Drug Benefit program \u201canything but progressive,\u201d Scotia Capital analyst Patrica Baker says they will likely destabilize Ontario\u2019s pharmacy industry and seriously impact patient access to services and pharmacists.<\/p>\n<p>\u201cThe reforms in aggregate were more harsh than expected and although much rhetoric in related speeches was addressed to large chains, it\u2019s the little guy here who has been dealt the hardest blow,\u201d she told clients.<\/p>\n<p>After more than nine months of discussions, Dalton McGuinty\u2019s Liberal government says it wants to reduce reimbursement rates for generic drugs from 50% to 25% of the branded drug cost. It also wants to eliminate professional allowances.<\/p>\n<p>Ms. Baker says this will cripple independent pharmacies. \u201cWhere we are perplexed is in the government\u2019s assertion that their priority in this process (beyond saving money) is to broaden access for patients. These changes as proposed, alas, will see anything but and as such they will have failed in their mandate, in our opinion.\u201d<\/p>\n<p>In the absence of available offsets, she expects profitability at <a href=\"http:\/\/www.financialpost.com\/markets\/company\/index.html?symbol=SC&amp;id=4251973\" >Shoppers Drug Mart Corp.<\/a> will be seriously curtailed. However, the analyst noted that reimbursement pressures \u2013 as demonstrated in the United States over two decades \u2013 favour large scale players, so Shoppers should prevail over time.<\/p>\n<p>The company has been preparing for this situation for some time but has now indicated that it will review longer-term strategic priorities and initiatives. Ms. Baker expects this relates to any targeted plans for expansion in Ontario and any capital injection in that market.<\/p>\n<p>Despite the extended period of uncertainty as these proposals are digested, she left her Sector Outperform rating and $54 one-year price target on the stock unchanged. The analyst sees downside support at $40 to $42 and says Shoppers should be able to make adjustments to protect returns within its robust operating model.<\/p>\n<p>However, she did note that in the absense of any ability by the company to offset the margin impact, earnings per share in fiscal 2011 could be impacted by as much as 59\u00a2.<\/p>\n<p>Shoppers closed down 10% at $38.92 on Thursday. <\/p>\n<p><a href=\"mailto:jratner@nationalpost.com\">Jonathan Ratner<\/a> <\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/network.nationalpost.com\/NP\/aggbug.aspx?PostID=421000\" width=\"1\" height=\"1\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Calling the provincial government\u2019s proposed changes to the Ontario Drug Benefit program \u201canything but progressive,\u201d Scotia Capital analyst Patrica Baker says they will likely destabilize Ontario\u2019s pharmacy industry and seriously impact patient access to services and pharmacists. \u201cThe reforms in aggregate were more harsh than expected and although much rhetoric in related speeches was addressed [&hellip;]<\/p>\n","protected":false},"author":4059,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-521719","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/521719","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4059"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=521719"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/521719\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=521719"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=521719"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=521719"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}