Jean Coutu hopes Quebec can reach deal with drugmakers to avoid tendering

Jean Coutu hopes Quebec can reach deal with drugmakers to avoid tendering

MONTREAL — The Jean Coutu Group hopes Quebec can reach an agreement with generic drug manufacturers to reduce drugs costs without resorting to the tendering of certain medications that will hurt its business.

“It’s always best when you have a deal with the players of the industry,” CEO Francois Coutu said Thursday during a conference call about its latest financial results.

Canadian generic drug manufacturers like Jean Coutu’s Pro Doc fear they would lose business if others won the exclusive rights to distribute blockbuster generic drugs in Quebec.

Quebec Health Minister Gaetan Barrette has said he prefers to negotiate a deal with the generic drug industry to reduce costs, however the province put in place last week a regulation that allows it to tender the provincial supply of individual medications.

A spokeswoman for Barrette has declined to indicate if or when the minister might issue requests for proposals.

The negotiations with the generic drugmakers follow a recent agreement between the Quebec government and the provincial association of pharmacy owners.

The province agreed to restore $133 million a year it had cut from pharmacist fees while also restoring a 15 per cent cap on professional allowances paid to pharmacists by generic drug manufacturers.

Jean Coutu said it believes the minister knows he has to ensure the generic drugmaking business remains strong and not risk drug shortages by making moves that would reduce the number of industry players.

Jean Coutu (TSX:PJC.A) said its net profits took a hit in the fourth quarter of its fiscal year as the contribution from Pro Doc fell mainly because of higher professional allowances. The maximum payments were raised twice last year and ceiling removed entirely in January.

The Quebec-based pharmacy company earned $47.8 million or 26 cents per share in the period ended March 4 — down seven per cent from the comparable period last year.

Higher expenses related to its transition a new head office and distribution centre in Varennes, Que., near Montreal, was also a factor in lower profits.

Revenue grew 11.7 per cent to $789 million, including an extra 14th week due to the timing of the company’s year-end.

Same-store sales grew by 4.0 per cent overall, although pharmacy sales grew less than front-of-store sales.

For the full year, Jean Coutu earned $199.5 million or $1.08 per share on $2.7 billion of revenues. That compared to $213.7 million or $1.14 per share on $2.57 billion of sales in fiscal 2016.

Despite the ongoing uncertainty about Quebec’s generic drug efforts, the company is increasing its quarterly dividend by 8.3 per cent to 13 cents per share.

Jean Coutu’s shares closed up 5.5 per cent to $23.32 in Thursday trading after hitting a 52-week high of $23.47 on the Toronto Stock Exchange earlier in the day.

Ross Marowits, The Canadian Press

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