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Jean Coutu profit gets boost from generic drug sales

An exterior shot of Jean Coutu store in Longueuil, Que.

Christinne Muschi/The Globe and Mail

Generic drug sales helped boost third-quarter net profit at pharmacy chain Jean Coutu Group (PJC) Inc.

The Longueuil, Que.-based company posted net profit of $56.2-million or 26 cents per share in the quarter, up 10 per cent from $51.2-million or 23 cents in the year-earlier period.

The quarterly profit beat analysts' estimates by 1 cent per share.

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Revenue rose 2.4 per cent to $716.6-million, from $700.1-million.

Gross sales at the company generic drug division, Pro Doc Ltd., reached $41.4-million in the third quarter, up from $37.1-million in the year-earlier period. The unit's contribution to income before amortization was $16.1-million, compared with $15.4-million.

Coutu decided to move into generic drug manufacturing about six years ago and the decision has proven to be astute.

Generic drug sales in North America are increasingly robust thanks to the so-called U.S. patent cliff, as a raft of brand-name drug patents reach their expiry date and help expand the generic pipeline.

Pro Doc, a small generic drug manufacturer based in Laval, Que., is helping offset the impact of provincial drug-reform aimed at reducing the cost of generic drugs sold in pharmacies as well as rebates from generic drug makers.

Coutu said on Thursday that generic drugs reached 61.8 per cent of drug prescriptions during the latest third quarter, compared with 57.2 per cent during the same quarter of the previous year.

Coutu said on Thursday that it also realized a gain of $82.8-million on the sale of 56 million common shares of U.S. drugstore chain Rite Aid Corp.

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"We are very satisfied with the results of the third quarter of fiscal 2013 and with the excellent performance of our network whose sales have reached over one billion dollars during this period," Coutu president and chief executive officer Fran├žois Coutu said in a news release.

The company also announced on Thursday a quarterly dividend of 7 cents per share.

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