Jean Coutu Group (PJC) Inc. sees positive signs going into talks with the Quebec government over measures to offset the negative impact of lower generic drug prices.
"So far, so good. The government of Quebec says it will definitely talk to all the participants," François Coutu, president and chief executive officer of Quebec's biggest drugstore chain, said on a conference call Tuesday.
"It's not an aggressive tone that has begun the conversation."
He contrasted that with the bitter feud in Ontario over the same issue, with Shoppers Drug Mart facing off against the provincial government.
"The Ontario situation was certainly not appropriate for all the participants," said Mr. Coutu, who unveiled first-quarter results Tuesday that included profit of $43.2-million, compared with $10.3-million in the year-earlier period.
Quebec's health-care policy requires the province to match the lowest generic-drug prices available in Canada. Ontario recently went ahead with its own low-price policy, reducing generic drug prices to 25 per cent of the price of patented drugs, down from 50 per cent, and Quebec is proceeding with a similar cutback.
Analysts have warned that Jean Coutu, based in Longueuil, Que., could be negatively affected by the Quebec reform.
Generic-drug manufacturers, who have a significant presence in Quebec, said last week that they may be forced to scale back investments, research-and-development and cut jobs if the Quebec reform is too harsh.
Quebec has so far not disclosed what offsets it is contemplating to help the drug manufacturers and pharmacy chains.
Mr. Coutu said Tuesday he's optimistic Quebec will be reasonable in talks.
"A reduction in prices has to be evaluated or compensated somehow," he said on a conference call with analysts.
Besides its network of pharmacies, Jean Coutu also owns generic-drug manufacturer Pro Doc.
Asked what steps his company could take to offset a drop in prices, Mr. Coutu said: "We always look at volume. There is growth in the industry. Should there be a setback it should be mitigated in future by an increase in volume."