Jean Coutu Group reports increase in revenue

LONGUEUIL, Quebec The Jean Coutu Group on Tuesday reported a 3.8% increase in revenues to $611.6 million for the first quarter.

"The expansion of our network [by nine locations] and the solid operating performance of our organization have allowed us to reach our objectives," stated Francois Coutu, JCG president and CEO.

During the first quarter of fiscal year 2011, on a same-store basis, PJC network retail sales grew 2.9%, pharmacy sales gained 3.8% and front-end sales increased by 1%, compared with the first quarter of the previous fiscal year. Sales of non-prescription drugs, which represent 9% of total retail sales, increased by 2.2%, whereas these sales had increased by 7.2% during the first quarter of the previous fiscal year, Coutu noted.

The recent announcement from the Minister of Health and Social Services of Quebec around lower reimbursement rates associated with generic drugs may pose a challenge going forward. The Minister on June 25 stated that as of July, 2010, the price of generic drugs will generally be established at 25% of the price for the original equivalent. The Minister also mentioned that the implementation of this reduction in prices will be postponed for a period of 4 to 8 weeks in order to consult interested parties.

In the nearby Ontario province, the Minister there recently enacted “prescription drug reform”  that will not only reduce the price of generic drugs but also reduce the professional allowances paid to pharmacists by generic drug manufacturers. If that legislation were replicated in Quebec, that could have a material impact on sales, Coutu said.

“We strongly believe that the government of Quebec must recognize that a reduction in the price of generic drugs must be adopted concurrently with measures in order to assist market participants with the transition to lower generic drug prices,” Coutu said.