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Jurgen Schreiber is leaving the helm of Shoppers Drug Mart Corp. following a year of dramatic changes in the pharmacy sector that dealt Shoppers its first earnings decline since going public in 2001.

In a surprise move, the country's largest drugstore chain announced late Wednesday that Mr. Schreiber is stepping down on Feb. 15 to pursue a private-equity position outside North America. He will be replaced temporarily by chairman David Williams, a former food retail executive, until a permanent successor is found.

Mr. Schreiber faced considerable controversy last spring when Ontario introduced harsh generic drug reforms that banned an estimated $750-million a year in so-called professional allowances that pharmacies collected from generic drug firms to stock their goods. Mr. Schreiber led a high-profile fight to oppose the new rules, threatening to shorten stores' opening hours and reduce free pharmacy services. But Ontario adopted the rules in the summer, and other provinces, including Quebec and British Columbia, followed with their own restrictions, cutting into pharmacy profits.

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Candice Williams, an analyst at Canaccord Genuity, said the timing of Mr. Schreiber's departure is "inopportune" given that Shoppers is on the verge of launching new initiatives to offset the impact of the reforms, including financial services and private-label generics.

Ms. Williams said Mr. Schreiber's "hardline approach" during the negotiations with the Ontario government was probably "too confrontational" and did not contribute to the best possible outcome.

Some of his moves included cutting hours of opening in stores in London, Ont., where Health Minister Deb Matthews' riding is located. "If you take into account all of those things, it was a rather antagonistic approach … And in that light, one could argue that that was mishandled," said Ms. Williams.

Mr. Schreiber, who declined to be interviewed on Wednesday, had dealt head-on with the new hurdles. "There's a big challenge coming to us over the next few years," he told analysts last November. "We know what it is - we know the numbers."

Shoppers, which reports its fourth quarter results Feb. 10, felt the squeeze of the changes in its third quarter - the first period in which the impact of the new Ontario legislation surfaced. The Toronto-based chain of 1,310 stores reported its first quarterly year-over-year profit drop since it became a public company in 2001. Its stock has tumbled almost 9 per cent over the past year.

The fight with Ontario over professional allowances was not Mr. Schreiber's only struggle. Late last year, two Shoppers owners lodged a $1-billion lawsuit against the chain, claiming among other matters that the retailer kept money collected under the generic-drug arrangements that should have gone to its drugstore owners. The owners, who are essentially like franchisees, are seeking class-action status. Shoppers has said that the lawsuit is without merit, and it will defend the claim.

Still, Mr. Schreiber was racing to introduce new initiatives, including exporting private-label products, rolling out financial services, and increasing Shoppers' offering of high-margin beauty items.

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Patricia Baker, retail analyst at Scotia Capital, said that Shoppers is well-positioned to weather the drug reforms and to gain market share, in part by taking over weaker drug-store players.

"Over the longer term, inevitable industry consolidation will provide an unprecedented opportunity as a result," she said in a recent report.

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